UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-1352
Fidelity Devonshire Trust
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Eric D. Roiter, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | January 31 |
Date of reporting period: | January 31, 2006 |
Item 1. Reports to Stockholders
| Fidelity® Equity-Income Fund |
| Annual Report January 31, 2006 |
| Contents | ||||
| Chairman’s Message | 4 | Ned Johnson’s message to shareholders. | ||
| Performance | 5 | How the fund has done over time. | ||
| Management’s Discussion | 6 | The manager’s review of fund | ||
| performance, strategy and outlook. | ||||
| Shareholder Expense | 7 | An example of shareholder expenses. | ||
| Example | ||||
| Investment Changes | 8 | A summary of major shifts in the fund’s | ||
| investments over the past six months. | ||||
| Investments | 9 | A complete list of the fund’s investments | ||
| with their market values. | ||||
| Financial Statements | 23 | Statements of assets and liabilities, | ||
| operations, and changes in net assets, | ||||
| as well as financial highlights. | ||||
| Notes | 27 | Notes to the financial statements. | ||
| Report of Independent | 33 | |||
| Registered Public | ||||
| Accounting Firm | ||||
| Trustees and Officers | 34 | |||
| Distributions | 44 | |||
| Board Approval of | 45 | |||
| Investment Advisory | ||||
| Contracts and | ||||
| Management Fees | ||||
| To view a fund’s proxy voting guidelines and proxy voting record for the 12 month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission’s (SEC) web site at www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines. 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. |
Annual Report 2
| This report and the financial statements contained herein are submitted for the general informa tion 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. A fund files its complete schedule of portfolio holdings with the SEC for the first and third quar ters of each fiscal year on Form N Q. Forms N Q are available on the SEC’s web site at http://www.sec.gov. A fund’s Forms N Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund’s portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity’s web site at http://www.fidelity.com/holdings. NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE Neither the fund nor Fidelity Distributors Corporation is a bank. |
3 Annual Report
Chairman’s Message
(photograph of Edward C. Johnson 3d)
Dear Shareholder:
During the past year or so, much has been reported about the mutual fund industry, and much of it has been more critical than I believe is warranted. Allegations that some companies have been less than forthright with their shareholders have cast a shadow on the entire industry. I continue to find these reports disturbing, and assert that they do not create an accurate picture of the industry overall. Therefore, I would like to remind every one where Fidelity stands on these issues. I will say two things specifically regarding allegations that some mutual fund companies were in violation of the Securities and Exchange Commission’s forward pricing rules or were involved in so called “market timing” activities.
First, Fidelity has no agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not a new policy. This is not to say that some one could not deceive the company through fraudulent acts. However, we are extremely diligent in preventing fraud from occurring in this manner and in every other. But I underscore again that Fidelity has no so called “agreements” that sanction illegal practices.
Second, Fidelity continues to stand on record, as we have for years, in opposition to predatory short term trading that adversely affects shareholders in a mutual fund. Back in the 1980s, we initiated a fee which is returned to the fund and, therefore, to investors to discourage this activity. Further, we took the lead several years ago in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. I am confident we will find other ways to make it more difficult for predatory traders to operate. However, this will only be achieved through close cooperation among regulators, legislators and the industry.
Yes, there have been unfortunate instances of unethical and illegal activity within the mutual fund industry from time to time. That is true of any industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. But we are still concerned about the risk of over regulation and the quick application of simplistic solutions to intricate problems. Every system can be improved, and we support and applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors’ holdings.
For nearly 60 years, Fidelity has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/ Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report 4
Performance: The Bottom Line
Average annual 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) and assuming a constant rate of perfor mance each year. The $10,000 table and the fund’s returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
| Average Annual Total Returns | ||||||
| Periods ended January 31, 2006 | Past 1 | Past 5 | Past 10 | |||
| year | years | years | ||||
| Fidelity® Equity Income Fund | 11.87% | 4.25% | 9.50% |
$10,000 Over 10 Years
Let’s say hypothetically that $10,000 was invested in Fidelity® Equity Income Fund on January 31, 1996. The chart shows how the value of your investment would have changed, and also shows how the Russell 3000® Value Index performed over the same period.
5 Annual Report
5
Management’s Discussion of Fund Performance
Comments from Stephen Petersen, Portfolio Manager of Fidelity® Equity Income Fund
Most major U.S. stock benchmarks had double digit returns for the year ending January 31, 2006. Market performance was driven largely by oil. Heightened demand from the United States and China, among others, plus Hurricane Katrina’s devastation of domestic refining capacity in the Gulf Coast region, propelled oil prices to record highs. The energy compo nent of the Standard & Poor’s 500SM Index soared nearly 46% during the period, while the next closest utilities rose about 17%. The overall return for the S&P 500® was 10.38% . In 2005, the S&P 500 beat the small cap Russell 2000® Index for the first time in six years, but quickly lost that advantage when the Russell benchmark jumped 9% in January, pushing its 12 month return to 18.89% . Mid caps did even better: The 21.45% return of the Russell Midcap® Index doubled the broader market’s performance for the period. The NASDAQ Composite® Index fared well, gaining 12.75%, but the Dow Jones Industrial AverageSM increased only 6.00% .
Fidelity Equity Income Fund gained 11.87% during the past year, trailing the Russell 3000® Value Index, which returned 13.63%, and beating the LipperSM Equity Income Objective Funds Average, which rose 11.00% . The fund lagged the index in an environment where taking larger positions in fewer sectors and in smaller companies would have helped short term performance. The fund’s slight underweighting in energy hurt relative to the Russell index, as did disappointing stock selection in the sector. We also had a poor showing in consumer staples and industrials, and financials disappointed as well, despite favorable positioning on an industry basis. On the plus side, an overweighting in informa tion technology provided a boost, as did good stock picks in telecommunication services, utilities and consumer discretionary. Contributors included French energy holding Total SA and energy services company Schlumberger. Underweighting lagging pharmaceutical company Pfizer also helped relative performance. Conversely, the fund’s overweighting in mortgage giant Fannie Mae detracted, as the company continued to suffer from an ongoing investigation into its accounting practices and concerns that its business fundamentals were slowing. Elsewhere, investors were disappointed by Tyco International’s pace of recovery during the period, and the fund’s relatively sizable out of benchmark position in the industrial conglomerate amplified its drag on performance. Retailing giant Wal Mart, whose revenue growth continued to disappoint investors, also held back returns.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
| Annual Report |
| 6 6 |
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (August 1, 2005 to January 31, 2006).
| Actual Expenses |
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the share holder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Expenses Paid | ||||||||||||
| Beginning | Ending | During Period* | ||||||||||
| Account Value | Account Value | August 1, 2005 to | ||||||||||
| August 1, 2005 | January 31, 2006 | January 31, 2006 | ||||||||||
| Actual | $ | 1,000.00 | $ | 1,066.40 | $ | 3.59 | ||||||
| Hypothetical (5% return per year | ||||||||||||
| before expenses) | $ | 1,000.00 | $ | 1,021.73 | $ | 3.52 | ||||||
* Expenses are equal to the Fund’s annualized expense ratio of .69%; multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one half year period).
7 Annual Report
| Investment Changes | ||||
| Top Ten Stocks as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Exxon Mobil Corp. | 3.4 | 3.4 | ||
| Bank of America Corp. | 3.0 | 3.0 | ||
| Citigroup, Inc. | 2.5 | 2.4 | ||
| American International Group, Inc. | 2.5 | 2.4 | ||
| Total SA | 2.3 | 2.2 | ||
| JPMorgan Chase & Co. | 2.1 | 2.1 | ||
| AT&T, Inc. | 1.7 | 1.7 | ||
| Schlumberger Ltd. (NY Shares) | 1.6 | 1.2 | ||
| Wachovia Corp. | 1.5 | 1.4 | ||
| Fannie Mae | 1.4 | 1.3 | ||
| 22.0 | ||||
| Top Five Market Sectors as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Financials | 27.8 | 27.5 | ||
| Energy | 13.1 | 12.0 | ||
| Consumer Discretionary | 12.2 | 12.2 | ||
| Industrials | 11.0 | 10.9 | ||
| Information Technology | 8.7 | 9.0 | ||
| Annual Report | 8 |
| Investments January 31, 2006 | ||||||||
| Showing Percentage of Net Assets | ||||||||
| Common Stocks 98.3% | ||||||||
| Shares | Value (Note 1) | |||||||
| (000s) | ||||||||
| CONSUMER DISCRETIONARY – 11.6% | ||||||||
| Auto Components 0.3% | ||||||||
| American Axle & Manufacturing Holdings, Inc. | 664,000 | $ | 12,344 | |||||
| Johnson Controls, Inc. | 688,300 | 47,658 | ||||||
| TRW Automotive Holdings Corp. (a) | 531,220 | 13,652 | ||||||
| 73,654 | ||||||||
| Automobiles – 1.0% | ||||||||
| Ford Motor Co. | 1,809,900 | 15,529 | ||||||
| General Motors Corp. (d) | 1,394,900 | 33,561 | ||||||
| Harley Davidson, Inc. | 599,900 | 32,113 | ||||||
| Hyundai Motor Co. | 99,660 | 9,054 | ||||||
| Monaco Coach Corp. | 454,000 | 6,147 | ||||||
| Renault SA | 554,800 | 52,389 | ||||||
| Toyota Motor Corp. sponsored ADR | 1,048,700 | 108,761 | ||||||
| 257,554 | ||||||||
| Diversified Consumer Services – 0.1% | ||||||||
| Service Corp. International (SCI) | 3,269,900 | 26,748 | ||||||
| Hotels, Restaurants & Leisure 0.4% | ||||||||
| Gaylord Entertainment Co. (a) | 199,200 | 8,566 | ||||||
| McDonald’s Corp. | 2,094,900 | 73,342 | ||||||
| Outback Steakhouse, Inc. | 301,400 | 13,934 | ||||||
| 95,842 | ||||||||
| Household Durables – 1.3% | ||||||||
| Koninklijke Philips Electronics NV (NY Shares) | 1,391,200 | 46,842 | ||||||
| Maytag Corp. | 3,700,220 | 63,718 | ||||||
| Newell Rubbermaid, Inc. | 6,171,700 | 145,899 | ||||||
| Sony Corp. sponsored ADR | 298,700 | 14,606 | ||||||
| Whirlpool Corp. | 882,100 | 71,168 | ||||||
| 342,233 | ||||||||
| Leisure Equipment & Products – 0.3% | ||||||||
| Eastman Kodak Co. | 3,516,100 | 88,254 | ||||||
| Media – 5.6% | ||||||||
| CBS Corp. Class B | 3,632,459 | 94,916 | ||||||
| Clear Channel Communications, Inc. | 6,964,400 | 203,848 | ||||||
| Comcast Corp. Class A (a) | 5,931,637 | 165,018 | ||||||
| Discovery Holding Co. Class A (a) | 893,225 | 13,541 | ||||||
| Knight-Ridder, Inc. | 727,500 | 45,287 | ||||||
| Lagardere S.C.A. (Reg.) | 452,497 | 36,075 | ||||||
| Liberty Media Corp. Class A (a) | 8,707,056 | 72,791 | ||||||
| Live Nation, Inc. (a) | 884,062 | 15,692 | ||||||
See accompanying notes which are an integral part of the financial statements.
| 9 Annual Report |
| Investments continued | ||||||
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| (000s) | ||||||
| CONSUMER DISCRETIONARY – continued | ||||||
| Media – continued | ||||||
| News Corp. Class A | 2,737,884 | $ | 43,149 | |||
| NTL, Inc. (a) | 791,700 | 50,075 | ||||
| The New York Times Co. Class A | 2,255,655 | 63,835 | ||||
| The Reader’s Digest Association, Inc. (non-vtg.) | 3,862,829 | 61,380 | ||||
| Time Warner, Inc. | 14,259,790 | 249,974 | ||||
| Viacom, Inc. Class B (non-vtg.) (a) | 3,632,459 | 150,674 | ||||
| Vivendi Universal SA sponsored ADR | 1,712,600 | 53,622 | ||||
| Walt Disney Co. | 5,684,610 | 143,877 | ||||
| 1,463,754 | ||||||
| Multiline Retail – 1.4% | ||||||
| Big Lots, Inc. (a) | 5,695,500 | 76,149 | ||||
| Dollar Tree Stores, Inc. (a) | 3,270,900 | 81,086 | ||||
| Family Dollar Stores, Inc. | 2,597,700 | 62,215 | ||||
| Federated Department Stores, Inc. | 1,321,800 | 88,072 | ||||
| Kohl’s Corp. (a) | 697,300 | 30,953 | ||||
| Sears Holdings Corp. (a) | 156,744 | 19,035 | ||||
| 357,510 | ||||||
| Specialty Retail – 1.0% | ||||||
| AnnTaylor Stores Corp. (a) | 2,594,300 | 86,442 | ||||
| Gap, Inc. | 3,312,551 | 59,924 | ||||
| RadioShack Corp. | 3,448,800 | 76,563 | ||||
| Tiffany & Co., Inc. | 701,035 | 26,429 | ||||
| 249,358 | ||||||
| Textiles, Apparel & Luxury Goods – 0.2% | ||||||
| Liz Claiborne, Inc. | 1,187,100 | 41,216 | ||||
| VF Corp. | 274,100 | 15,207 | ||||
| 56,423 | ||||||
| TOTAL CONSUMER DISCRETIONARY | 3,011,330 | |||||
| CONSUMER STAPLES 5.7% | ||||||
| Beverages – 0.8% | ||||||
| Anheuser-Busch Companies, Inc. (d) | 3,059,500 | 126,786 | ||||
| Molson Coors Brewing Co. Class B | 298,900 | 18,681 | ||||
| The Coca-Cola Co. | 1,587,700 | 65,699 | ||||
| 211,166 | ||||||
| Food & Staples Retailing – 1.4% | ||||||
| CVS Corp. | 1,504,900 | 41,776 | ||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 10 |
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| (000s) | ||||||
| CONSUMER STAPLES – continued | ||||||
| Food & Staples Retailing – continued | ||||||
| Safeway, Inc. | 896,100 | $ | 21,005 | |||
| Wal-Mart Stores, Inc. | 6,413,700 | 295,736 | ||||
| 358,517 | ||||||
| Food Products 0.5% | ||||||
| ConAgra Foods, Inc. | 845,900 | 17,536 | ||||
| Corn Products International, Inc. | 1,502,200 | 40,965 | ||||
| Kraft Foods, Inc. Class A | 2,392,800 | 70,444 | ||||
| 128,945 | ||||||
| Household Products – 1.6% | ||||||
| Colgate-Palmolive Co. | 4,842,600 | 265,810 | ||||
| Kimberly Clark Corp. | 1,859,400 | 106,209 | ||||
| Procter & Gamble Co. | 688,218 | 40,763 | ||||
| 412,782 | ||||||
| Personal Products 0.5% | ||||||
| Avon Products, Inc. | 4,632,200 | 131,184 | ||||
| Tobacco 0.9% | ||||||
| Altria Group, Inc. | 3,235,700 | 234,071 | ||||
| TOTAL CONSUMER STAPLES | 1,476,665 | |||||
| ENERGY 13.1% | ||||||
| Energy Equipment & Services – 3.7% | ||||||
| Baker Hughes, Inc. | 2,727,500 | 211,218 | ||||
| BJ Services Co. | 2,203,310 | 89,212 | ||||
| Halliburton Co. | 1,587,400 | 126,278 | ||||
| Noble Corp. | 1,603,780 | 129,008 | ||||
| Schlumberger Ltd. (NY Shares) | 3,247,800 | 413,932 | ||||
| 969,648 | ||||||
| Oil, Gas & Consumable Fuels – 9.4% | ||||||
| Apache Corp. | 1,416,910 | 107,019 | ||||
| BP PLC sponsored ADR | 4,963,404 | 358,904 | ||||
| Chevron Corp. | 5,105,882 | 303,187 | ||||
| ConocoPhillips | 1,568,300 | 101,469 | ||||
| Double Hull Tankers, Inc. | 991,000 | 13,497 | ||||
| El Paso Corp. | 2,263,900 | 30,472 | ||||
| EOG Resources, Inc. | 400,200 | 33,833 | ||||
| Exxon Mobil Corp. | 14,047,174 | 881,458 | ||||
| Kerr-McGee Corp. | 350,800 | 38,725 | ||||
See accompanying notes which are an integral part of the financial statements.
11 Annual Report
| Investments continued | ||||||
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| (000s) | ||||||
| ENERGY – continued | ||||||
| Oil, Gas & Consumable Fuels – continued | ||||||
| Total SA: | ||||||
| Series B | 443,043 | $ | 122,572 | |||
| sponsored ADR | 3,371,703 | 466,408 | ||||
| 2,457,544 | ||||||
| TOTAL ENERGY | 3,427,192 | |||||
| FINANCIALS – 27.6% | ||||||
| Capital Markets 4.5% | ||||||
| Ameriprise Financial, Inc. | 1,462,800 | 59,521 | ||||
| Bank of New York Co., Inc. | 6,933,934 | 220,568 | ||||
| Charles Schwab Corp. | 1,688,601 | 24,974 | ||||
| Janus Capital Group, Inc. | 2,776,900 | 58,009 | ||||
| Mellon Financial Corp. | 3,732,500 | 131,645 | ||||
| Merrill Lynch & Co., Inc. | 3,514,000 | 263,796 | ||||
| Morgan Stanley | 4,685,060 | 287,897 | ||||
| Nomura Holdings, Inc. | 3,430,500 | 66,929 | ||||
| State Street Corp. | 1,092,567 | 66,057 | ||||
| 1,179,396 | ||||||
| Commercial Banks – 7.1% | ||||||
| Bank of America Corp. | 17,959,645 | 794,355 | ||||
| Comerica, Inc. | 1,353,039 | 75,053 | ||||
| FirstRand Ltd. | 4,484,588 | 14,319 | ||||
| Kookmin Bank sponsored ADR | 934,200 | 74,493 | ||||
| Lloyds TSB Group PLC | 5,140,501 | 46,592 | ||||
| Royal Bank of Scotland Group PLC | 1,452,309 | 44,954 | ||||
| State Bank of India | 758,425 | 16,745 | ||||
| U.S. Bancorp, Delaware | 3,603,502 | 107,781 | ||||
| Wachovia Corp. | 7,108,366 | 389,752 | ||||
| Wells Fargo & Co. | 4,505,868 | 280,986 | ||||
| 1,845,030 | ||||||
| Consumer Finance – 0.6% | ||||||
| American Express Co. | 2,939,400 | 154,172 | ||||
| Diversified Financial Services – 4.8% | ||||||
| CIT Group, Inc. | 881,300 | 47,009 | ||||
| Citigroup, Inc. | 13,907,685 | 647,820 | ||||
| JPMorgan Chase & Co. | 14,258,249 | 566,765 | ||||
| 1,261,594 | ||||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 12 |
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| (000s) | ||||||
| FINANCIALS – continued | ||||||
| Insurance – 7.5% | ||||||
| ACE Ltd. | 5,345,227 | $ | 292,651 | |||
| Allianz AG sponsored ADR | 2,574,300 | 41,575 | ||||
| Allstate Corp. | 3,084,300 | 160,538 | ||||
| American International Group, Inc. | 9,788,857 | 640,779 | ||||
| Genworth Financial, Inc. Class A (non-vtg.) | 2,974,800 | 97,454 | ||||
| Hartford Financial Services Group, Inc. | 2,304,400 | 189,491 | ||||
| MetLife, Inc. unit | 2,020,300 | 55,558 | ||||
| Montpelier Re Holdings Ltd. | 1,590,900 | 30,704 | ||||
| PartnerRe Ltd. | 1,180,680 | 72,942 | ||||
| Swiss Reinsurance Co. (Reg.) | 780,344 | 58,026 | ||||
| The St. Paul Travelers Companies, Inc. | 5,356,590 | 243,082 | ||||
| Willis Group Holdings Ltd. | 448,500 | 15,567 | ||||
| XL Capital Ltd. Class A | 902,880 | 61,089 | ||||
| 1,959,456 | ||||||
| Real Estate 0.6% | ||||||
| CarrAmerica Realty Corp. | 352,100 | 12,957 | ||||
| Developers Diversified Realty Corp. | 707,500 | 34,851 | ||||
| Equity Office Properties Trust | 1,349,070 | 42,927 | ||||
| Equity Residential (SBI) | 1,318,400 | 55,913 | ||||
| The Mills Corp. | 99,700 | 4,133 | ||||
| 150,781 | ||||||
| Thrifts & Mortgage Finance – 2.5% | ||||||
| Countrywide Financial Corp. | 398,500 | 13,326 | ||||
| Fannie Mae | 6,459,900 | 374,287 | ||||
| Freddie Mac | 2,012,700 | 136,582 | ||||
| Golden West Financial Corp., Delaware | 602,400 | 42,541 | ||||
| Sovereign Bancorp, Inc. | 3,334,000 | 72,681 | ||||
| 639,417 | ||||||
| TOTAL FINANCIALS | 7,189,846 | |||||
| HEALTH CARE – 6.8% | ||||||
| Health Care Equipment & Supplies – 0.9% | ||||||
| Baxter International, Inc. | 5,710,800 | 210,443 | ||||
| Boston Scientific Corp. (a) | 1,095,200 | 23,952 | ||||
| 234,395 | ||||||
| Health Care Providers & Services – 0.3% | ||||||
| Cardinal Health, Inc. | 1,055,100 | 76,009 | ||||
See accompanying notes which are an integral part of the financial statements.
13 Annual Report
| Investments continued | ||||||
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| (000s) | ||||||
| HEALTH CARE – continued | ||||||
| Pharmaceuticals – 5.6% | ||||||
| Abbott Laboratories | 1,744,000 | $ | 75,254 | |||
| Bristol-Myers Squibb Co. | 5,549,000 | 126,462 | ||||
| Eli Lilly & Co. | 701,400 | 39,713 | ||||
| GlaxoSmithKline PLC sponsored ADR | 958,100 | 49,093 | ||||
| Johnson & Johnson | 4,356,600 | 250,679 | ||||
| Merck & Co., Inc. | 4,958,000 | 171,051 | ||||
| Novartis AG sponsored ADR | 1,173,500 | 64,730 | ||||
| Pfizer, Inc. | 11,988,800 | 307,872 | ||||
| Schering-Plough Corp. | 8,161,200 | 156,287 | ||||
| Wyeth | 4,809,400 | 222,435 | ||||
| 1,463,576 | ||||||
| TOTAL HEALTH CARE | 1,773,980 | |||||
| INDUSTRIALS – 10.9% | ||||||
| Aerospace & Defense – 2.9% | ||||||
| EADS NV | 2,701,482 | 105,880 | ||||
| Honeywell International, Inc. | 6,268,750 | 240,845 | ||||
| Lockheed Martin Corp. | 2,771,500 | 187,492 | ||||
| The Boeing Co. | 1,053,500 | 71,965 | ||||
| United Technologies Corp. | 2,428,560 | 141,755 | ||||
| 747,937 | ||||||
| Building Products 0.2% | ||||||
| Masco Corp. | 1,743,604 | 51,698 | ||||
| Commercial Services & Supplies – 0.6% | ||||||
| Cendant Corp. | 3,859,300 | 64,605 | ||||
| Waste Management, Inc. | 2,855,500 | 90,177 | ||||
| 154,782 | ||||||
| Electrical Equipment – 0.3% | ||||||
| Emerson Electric Co. | 1,214,200 | 94,040 | ||||
| Industrial Conglomerates – 3.0% | ||||||
| 3M Co. | 1,197,400 | 87,111 | ||||
| General Electric Co. | 11,248,750 | 368,397 | ||||
| Textron, Inc. | 785,800 | 66,369 | ||||
| Tyco International Ltd. | 9,704,861 | 252,812 | ||||
| 774,689 | ||||||
| Machinery – 2.8% | ||||||
| Briggs & Stratton Corp. | 798,300 | 27,773 | ||||
| Caterpillar, Inc. | 1,785,100 | 121,208 | ||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 14 |
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| (000s) | ||||||
| INDUSTRIALS – continued | ||||||
| Machinery – continued | ||||||
| Deere & Co. | 576,100 | $ | 41,341 | |||
| Dover Corp. | 3,039,500 | 139,604 | ||||
| Eaton Corp. | 400,800 | 26,533 | ||||
| Illinois Tool Works, Inc. | 362,600 | 30,564 | ||||
| Ingersoll-Rand Co. Ltd. Class A | 3,552,992 | 139,526 | ||||
| Navistar International Corp. (a) | 1,161,400 | 31,590 | ||||
| SPX Corp. (e) | 3,583,700 | 170,978 | ||||
| 729,117 | ||||||
| Road & Rail 1.1% | ||||||
| Burlington Northern Santa Fe Corp. | 2,406,600 | 192,817 | ||||
| Laidlaw International, Inc. | 649,300 | 17,661 | ||||
| Union Pacific Corp. | 837,800 | 74,112 | ||||
| 284,590 | ||||||
| TOTAL INDUSTRIALS | 2,836,853 | |||||
| INFORMATION TECHNOLOGY – 8.6% | ||||||
| Communications Equipment – 1.0% | ||||||
| Avaya, Inc. (a) | 1,992,700 | 21,023 | ||||
| Cisco Systems, Inc. (a) | 4,733,600 | 87,903 | ||||
| Lucent Technologies, Inc. (a) | 11,624,900 | 30,690 | ||||
| Lucent Technologies, Inc. warrants 12/10/07 (a) | 17,513 | 9 | ||||
| Motorola, Inc. | 5,899,370 | 133,975 | ||||
| 273,600 | ||||||
| Computers & Peripherals – 2.0% | ||||||
| EMC Corp. (a) | 3,442,500 | 46,130 | ||||
| Hewlett-Packard Co. | 7,611,261 | 237,319 | ||||
| International Business Machines Corp. | 2,391,400 | 194,421 | ||||
| Sun Microsystems, Inc. (a) | 9,038,400 | 40,673 | ||||
| 518,543 | ||||||
| Electronic Equipment & Instruments – 1.1% | ||||||
| Agilent Technologies, Inc. (a) | 2,242,600 | 76,047 | ||||
| Arrow Electronics, Inc. (a) | 1,876,900 | 64,490 | ||||
| Avnet, Inc. (a) | 3,641,100 | 89,025 | ||||
| Solectron Corp. (a) | 13,619,800 | 52,028 | ||||
| Tektronix, Inc. | 127,240 | 3,754 | ||||
| 285,344 | ||||||
See accompanying notes which are an integral part of the financial statements.
15 Annual Report
| Investments continued | ||||||
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| (000s) | ||||||
| INFORMATION TECHNOLOGY – continued | ||||||
| IT Services – 0.3% | ||||||
| MoneyGram International, Inc. | 2,577,209 | $ | 68,451 | |||
| Office Electronics – 0.3% | ||||||
| Xerox Corp. (a) | 6,101,200 | 87,308 | ||||
| Semiconductors & Semiconductor Equipment – 2.6% | ||||||
| Analog Devices, Inc. | 2,804,800 | 111,547 | ||||
| Applied Materials, Inc. | 5,094,000 | 97,041 | ||||
| Freescale Semiconductor, Inc.: | ||||||
| Class A (a) | 493,400 | 12,414 | ||||
| Class B (a) | 3,891,183 | 98,252 | ||||
| Intel Corp. | 9,562,860 | 203,402 | ||||
| Micron Technology, Inc. (a) | 4,093,800 | 60,097 | ||||
| Samsung Electronics Co. Ltd. | 79,300 | 61,135 | ||||
| Teradyne, Inc. (a) | 1,625,500 | 28,316 | ||||
| 672,204 | ||||||
| Software 1.3% | ||||||
| Citrix Systems, Inc. (a) | 796,900 | 24,576 | ||||
| Microsoft Corp. | 8,191,200 | 230,582 | ||||
| Oracle Corp. (a) | 998,500 | 12,551 | ||||
| Symantec Corp. (a) | 3,337,200 | 61,338 | ||||
| 329,047 | ||||||
| TOTAL INFORMATION TECHNOLOGY | 2,234,497 | |||||
| MATERIALS 5.4% | ||||||
| Chemicals – 3.0% | ||||||
| Air Products & Chemicals, Inc. | 1,512,900 | 93,331 | ||||
| Albemarle Corp. | 850,300 | 37,218 | ||||
| Arch Chemicals, Inc. | 386,150 | 11,971 | ||||
| Ashland, Inc. | 703,100 | 46,348 | ||||
| Celanese Corp. Class A | 1,873,000 | 38,340 | ||||
| Chemtura Corp. | 4,955,665 | 62,293 | ||||
| Dow Chemical Co. | 3,026,900 | 128,038 | ||||
| E.I. du Pont de Nemours & Co. | 1,566,600 | 61,332 | ||||
| Eastman Chemical Co. | 904,200 | 43,591 | ||||
| Georgia Gulf Corp. | 1,697,360 | 58,050 | ||||
| Lyondell Chemical Co. | 4,193,811 | 100,693 | ||||
| PolyOne Corp. (a) | 2,729,700 | 19,545 | ||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 16 |
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| (000s) | ||||||
| MATERIALS – continued | ||||||
| Chemicals – continued | ||||||
| Praxair, Inc. | 851,560 | $ | 44,860 | |||
| Rohm & Haas Co. | 500,700 | 25,486 | ||||
| 771,096 | ||||||
| Containers & Packaging – 0.3% | ||||||
| Amcor Ltd. | 4,282,900 | 22,245 | ||||
| Smurfit-Stone Container Corp. (a) | 5,604,421 | 71,681 | ||||
| 93,926 | ||||||
| Metals & Mining – 1.3% | ||||||
| Alcan, Inc. | 1,553,300 | 75,691 | ||||
| Alcoa, Inc. | 5,861,476 | 184,636 | ||||
| Freeport-McMoRan Copper & Gold, Inc. Class B | 866,630 | 55,681 | ||||
| Phelps Dodge Corp. | 223,200 | 35,824 | ||||
| 351,832 | ||||||
| Paper & Forest Products 0.8% | ||||||
| Bowater, Inc. | 753,600 | 20,603 | ||||
| International Paper Co. | 3,091,700 | 100,882 | ||||
| Weyerhaeuser Co. | 1,149,700 | 80,203 | ||||
| 201,688 | ||||||
| TOTAL MATERIALS | 1,418,542 | |||||
| TELECOMMUNICATION SERVICES – 5.4% | ||||||
| Diversified Telecommunication Services – 4.7% | ||||||
| AT&T, Inc. | 17,256,844 | 447,815 | ||||
| BellSouth Corp. | 11,020,201 | 317,051 | ||||
| Consolidated Communications Holdings, Inc. | 950,100 | 12,038 | ||||
| Philippine Long Distance Telephone Co. sponsored ADR | 1,521,600 | 54,458 | ||||
| Qwest Communications International, Inc. (a) | 14,226,800 | 85,645 | ||||
| Verizon Communications, Inc. | 9,329,744 | 295,380 | ||||
| 1,212,387 | ||||||
| Wireless Telecommunication Services – 0.7% | ||||||
| Sprint Nextel Corp. | 5,199,300 | 119,012 | ||||
| Vodafone Group PLC sponsored ADR | 3,473,400 | 73,323 | ||||
| 192,335 | ||||||
| TOTAL TELECOMMUNICATION SERVICES | 1,404,722 | |||||
See accompanying notes which are an integral part of the financial statements.
17 Annual Report
| Investments continued | ||||||||
| Common Stocks continued | ||||||||
| Shares | Value (Note 1) | |||||||
| (000s) | ||||||||
| UTILITIES – 3.2% | ||||||||
| Electric Utilities – 0.4% | ||||||||
| Entergy Corp. | 1,458,500 | $ | 101,380 | |||||
| Independent Power Producers & Energy Traders – 0.8% | ||||||||
| AES Corp. (a) | 2,706,800 | 46,124 | ||||||
| Duke Energy Corp. | 2,212,100 | 62,713 | ||||||
| TXU Corp. | 1,920,822 | 97,270 | ||||||
| 206,107 | ||||||||
| Multi-Utilities – 2.0% | ||||||||
| Dominion Resources, Inc. | 2,547,000 | 192,375 | ||||||
| NorthWestern Energy Corp. | 1,005,600 | 31,516 | ||||||
| Public Service Enterprise Group, Inc. | 2,334,500 | 162,528 | ||||||
| Wisconsin Energy Corp. | 3,164,000 | 131,338 | ||||||
| 517,757 | ||||||||
| TOTAL UTILITIES | 825,244 | |||||||
| TOTAL COMMON STOCKS | ||||||||
| (Cost $18,562,294) | 25,598,871 | |||||||
| Convertible Preferred Stocks 0.8% | ||||||||
| CONSUMER DISCRETIONARY – 0.3% | ||||||||
| Automobiles – 0.2% | ||||||||
| Ford Motor Co. Capital Trust II 6.50% | 976,600 | 31,105 | ||||||
| General Motors Corp.: | ||||||||
| Series B, 5.25% | 863,700 | 14,113 | ||||||
| Series C, 6.25% | 577,800 | 10,476 | ||||||
| 55,694 | ||||||||
| Hotels, Restaurants & Leisure 0.1% | ||||||||
| Six Flags, Inc. 7.25% PIERS | 821,600 | 18,897 | ||||||
| Media – 0.0% | ||||||||
| J.N. Taylor Holdings Ltd. 9.5% (a) | 956,400 | 0 | ||||||
| TOTAL CONSUMER DISCRETIONARY | 74,591 | |||||||
| FINANCIALS – 0.2% | ||||||||
| Capital Markets 0.0% | ||||||||
| State Street Corp. COVERS 4% | 56,801 | 1,049 | ||||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 18 |
| Convertible Preferred Stocks continued | ||||||||
| Shares | Value (Note 1) | |||||||
| (000s) | ||||||||
| Convertible Preferred Stocks continued | ||||||||
| FINANCIALS – continued | ||||||||
| Insurance – 0.2% | ||||||||
| Conseco, Inc. Series B, 5.50% | 323,900 | $ | 9,442 | |||||
| The Chubb Corp. Series B, 7.00% | 274,000 | 9,201 | ||||||
| Travelers Property Casualty Corp. 4.50% | 500,000 | 12,638 | ||||||
| XL Capital Ltd. 6.50% | 1,137,200 | 25,178 | ||||||
| 56,459 | ||||||||
| TOTAL FINANCE | 57,508 | |||||||
| HEALTH CARE – 0.2% | ||||||||
| Health Care Equipment & Supplies – 0.1% | ||||||||
| Baxter International, Inc. 7.00% | 343,300 | 17,759 | ||||||
| Pharmaceuticals – 0.1% | ||||||||
| Schering-Plough Corp. 6.00% | 429,200 | 21,889 | ||||||
| TOTAL HEALTH CARE | 39,648 | |||||||
| INFORMATION TECHNOLOGY – 0.1% | ||||||||
| Office Electronics – 0.1% | ||||||||
| Xerox Corp. Series C, 6.25% | 328,778 | 39,344 | ||||||
| MATERIALS 0.0% | ||||||||
| Chemicals – 0.0% | ||||||||
| Celanese Corp. 4.25% | 157,200 | 4,612 | ||||||
| TOTAL CONVERTIBLE PREFERRED STOCKS | ||||||||
| (Cost $249,444) | 215,703 | |||||||
See accompanying notes which are an integral part of the financial statements.
19 Annual Report
| Investments continued | ||||||||
| Corporate Bonds 0.6% | ||||||||
| Principal | Value (Note 1) | |||||||
| Amount (000s) | (000s) | |||||||
| Convertible Bonds 0.5% | ||||||||
| CONSUMER DISCRETIONARY – 0.3% | ||||||||
| Hotels, Restaurants & Leisure 0.1% | ||||||||
| Royal Caribbean Cruises Ltd. liquid yield option note 0% | ||||||||
| 2/2/21 | $ | 18,844 | $ | 9,648 | ||||
| Six Flags, Inc. 4.5% 5/15/15 | 8,460 | 16,137 | ||||||
| 25,785 | ||||||||
| Media – 0.2% | ||||||||
| Liberty Media Corp.3.5% 1/15/31 (f) | 24,460 | 25,409 | ||||||
| News America, Inc. liquid yield option note 0% | ||||||||
| 2/28/21 (f) | 49,080 | 29,019 | ||||||
| 54,428 | ||||||||
| TOTAL CONSUMER DISCRETIONARY | 80,213 | |||||||
| FINANCIALS – 0.0% | ||||||||
| Diversified Financial Services – 0.0% | ||||||||
| Navistar Financial Corp. 4.75% 4/1/09 (f) | 5,734 | 5,226 | ||||||
| INDUSTRIALS – 0.1% | ||||||||
| Airlines – 0.0% | ||||||||
| US Airways Group, Inc. 7% 9/30/20 (f) | 7,530 | 10,803 | ||||||
| Industrial Conglomerates – 0.1% | ||||||||
| Tyco International Group SA yankee 3.125% 1/15/23 . | 11,750 | 14,785 | ||||||
| TOTAL INDUSTRIALS | 25,588 | |||||||
| TELECOMMUNICATION SERVICES – 0.1% | ||||||||
| Diversified Telecommunication Services – 0.1% | ||||||||
| Level 3 Communications, Inc. 5.25% 12/15/11 (f) | 28,080 | 28,571 | ||||||
| TOTAL CONVERTIBLE BONDS | 139,598 | |||||||
| Nonconvertible Bonds – 0.1% | ||||||||
| MATERIALS 0.1% | ||||||||
| Chemicals – 0.1% | ||||||||
| Hercules, Inc. 6.5% 6/30/29 unit | 31,600 | 24,076 | ||||||
| TOTAL CORPORATE BONDS | ||||||||
| (Cost $158,845) | 163,674 | |||||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 20 |
| Money Market Funds 0.4% | ||||||||
| Shares | Value (Note 1) | |||||||
| (000s) | ||||||||
| Fidelity Cash Central Fund, 4.46% (b) | 64,704,318 | $ | 64,704 | |||||
| Fidelity Securities Lending Cash Central Fund, | ||||||||
| 4.48% (b)(c) | 30,212,100 | 30,212 | ||||||
| TOTAL MONEY MARKET FUNDS | ||||||||
| (Cost $94,916) | 94,916 | |||||||
| TOTAL INVESTMENT PORTFOLIO 100.1% | ||||||||
| (Cost $19,065,499) | 26,073,164 | |||||||
| NET OTHER ASSETS – (0.1)% | (30,667) | |||||||
| NET ASSETS 100% | $ | 26,042,497 | ||||||
| Security Type Abbreviation | ||
| PIERS | - | Preferred Income Equity |
| Redeemable Securities | ||
| Legend (a) Non-income producing (b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund’s holdings as of its most recent quarter end is available upon request. |
| (c) Investment made with cash collateral received from securities on loan. (d) Security or a portion of the security is on loan 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 $99,028,000 or 0.4% of net assets. |
Affiliated Central Funds
Information regarding fiscal year to date income received by the fund from the affiliated Central funds is as follows:
| Fund | Income received | |||
| (Amounts in | ||||
| thousands) | ||||
| Fidelity Cash Central Fund | $ | 4,068 | ||
| Fidelity Securities Lending Cash Central Fund | 2,566 | |||
| Total | $ | 6,634 |
See accompanying notes which are an integral part of the financial statements.
21 Annual Report
Investments continued
Other Affiliated Issuers
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Value, | ||||||||||||||||||||
| Affiliate | beginning of | Sales | Dividend | Value, end of | ||||||||||||||||
| (Amounts in thousands) | period | Purchases | Proceeds | Income | period | |||||||||||||||
| Big Lots, Inc. | $ | 59,770 | $ | 4,801 | $ | — | $ | — | $ | — | ||||||||||
| SPX Corp. | 150,157 | — | — | 3,584 | 170,978 | |||||||||||||||
| Total | $ | 209,927 | $ | 4,801 | $ | — | $ | 3,584 | $ | 170,978 | ||||||||||
Other Information
Distribution of investments by country of issue, as a percentage of total net assets, is as follows:
| United States of America | 87.8% | |
| France | 2.8% | |
| United Kingdom | 2.3% | |
| Netherlands Antilles | 1.6% | |
| Bermuda | 1.6% | |
| Others (individually less than 1%) . | 3.9% | |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Annual Report 22
| Financial Statements | ||||||||
| Statement of Assets and Liabilities | ||||||||
| Amounts in thousands (except per share amount) | January 31, 2006 | |||||||
| Assets | ||||||||
| Investment in securities, at value (including securities | ||||||||
| loaned of $29,086) See accompanying schedule: | ||||||||
| Unaffiliated issuers (cost $18,822,980) | $ | 25,807,270 | ||||||
| Affiliated Central Funds (cost $94,916) | 94,916 | |||||||
| Other affiliated issuers (cost $147,603) | 170,978 | |||||||
| Total Investments (cost $19,065,499) | $ | 26,073,164 | ||||||
| Foreign currency held at value (cost $6,923) | 6,942 | |||||||
| Receivable for investments sold | 79,286 | |||||||
| Receivable for fund shares sold | 19,247 | |||||||
| Dividends receivable | 29,531 | |||||||
| Interest receivable | 1,088 | |||||||
| Prepaid expenses | 117 | |||||||
| Other affiliated receivables | 190 | |||||||
| Other receivables | 1,184 | |||||||
| Total assets | 26,210,749 | |||||||
| Liabilities | ||||||||
| Payable for investments purchased | $ | 82,656 | ||||||
| Payable for fund shares redeemed | 40,086 | |||||||
| Accrued management fee | 10,143 | |||||||
| Other affiliated payables | 4,985 | |||||||
| Other payables and accrued expenses | 170 | |||||||
| Collateral on securities loaned, at value | 30,212 | |||||||
| Total liabilities | 168,252 | |||||||
| Net Assets | $ | 26,042,497 | ||||||
| Net Assets consist of: | ||||||||
| Paid in capital | $ | 18,513,314 | ||||||
| Undistributed net investment income | 23,857 | |||||||
| Accumulated undistributed net realized gain (loss) on | ||||||||
| investments and foreign currency transactions | 497,611 | |||||||
| Net unrealized appreciation (depreciation) on | ||||||||
| investments and assets and liabilities in foreign | ||||||||
| currencies | 7,007,715 | |||||||
| Net Assets, for 477,745 shares outstanding | $ | 26,042,497 | ||||||
| Net Asset Value, offering price and redemption price per | ||||||||
| share ($26,042,497 ÷ 477,745 shares) | $ | 54.51 | ||||||
See accompanying notes which are an integral part of the financial statements.
23 Annual Report
| Financial Statements continued | ||||||
| Statement of Operations | ||||||
| Amounts in thousands | Year ended January 31, 2006 | |||||
| Investment Income | ||||||
| Dividends (including $3,584 received from other | ||||||
| affiliated issuers) | $ | 567,469 | ||||
| Interest | 7,948 | |||||
| Income from affiliated Central Funds | 6,634 | |||||
| Total income | 582,051 | |||||
| Expenses | ||||||
| Management fee | $ | 122,426 | ||||
| Transfer agent fees | 52,763 | |||||
| Accounting and security lending fees | 1,870 | |||||
| Independent trustees’ compensation | 115 | |||||
| Appreciation in deferred trustee compensation account | 26 | |||||
| Custodian fees and expenses | 668 | |||||
| Registration fees | 89 | |||||
| Audit | 291 | |||||
| Legal | 144 | |||||
| Interest | 99 | |||||
| Miscellaneous | 344 | |||||
| Total expenses before reductions | 178,835 | |||||
| Expense reductions | (4,123) | 174,712 | ||||
| Net investment income (loss) | 407,339 | |||||
| Realized and Unrealized Gain (Loss) | ||||||
| Net realized gain (loss) on: | ||||||
| Investment securities: | ||||||
| Unaffiliated issuers | 1,282,650 | |||||
| Foreign currency transactions | (467) | |||||
| Total net realized gain (loss) | 1,282,183 | |||||
| Change in net unrealized appreciation (depreciation) on: | ||||||
| Investment securities | 1,218,912 | |||||
| Assets and liabilities in foreign currencies | 56 | |||||
| Total change in net unrealized appreciation | ||||||
| (depreciation) | 1,218,968 | |||||
| Net gain (loss) | 2,501,151 | |||||
| Net increase (decrease) in net assets resulting from | ||||||
| operations | $ | 2,908,490 | ||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 24 |
| Statement of Changes in Net Assets | ||||||||
| Year ended | Year ended | |||||||
| January 31, | January 31, | |||||||
| Amounts in thousands | 2006 | 2005 | ||||||
| Increase (Decrease) in Net Assets | ||||||||
| Operations | ||||||||
| Net investment income (loss) | $ | 407,339 | $ | 380,867 | ||||
| Net realized gain (loss) | 1,282,183 | 879,689 | ||||||
| Change in net unrealized appreciation (depreciation) . | 1,218,968 | 528,835 | ||||||
| Net increase (decrease) in net assets resulting | ||||||||
| from operations | 2,908,490 | 1,789,391 | ||||||
| Distributions to shareholders from net investment income . | (414,731) | (390,294) | ||||||
| Distributions to shareholders from net realized gain | (1,034,144) | (801,084) | ||||||
| Total distributions | (1,448,875) | (1,191,378) | ||||||
| Share transactions | ||||||||
| Proceeds from sales of shares | 3,497,358 | 4,643,118 | ||||||
| Reinvestment of distributions | 1,414,736 | 1,162,171 | ||||||
| Cost of shares redeemed | (6,059,215) | (4,365,933) | ||||||
| Net increase (decrease) in net assets resulting from | ||||||||
| share transactions | (1,147,121) | 1,439,356 | ||||||
| Total increase (decrease) in net assets | 312,494 | 2,037,369 | ||||||
| Net Assets | ||||||||
| Beginning of period | 25,730,003 | 23,692,634 | ||||||
| End of period (including undistributed net investment | ||||||||
| income of $23,857 and undistributed net investment | ||||||||
| income of $22,343, respectively) | $ | 26,042,497 | $ | 25,730,003 | ||||
| Other Information | ||||||||
| Shares | ||||||||
| Sold | 66,868 | 92,015 | ||||||
| Issued in reinvestment of distributions | 26,872 | 22,715 | ||||||
| Redeemed | (115,420) | (86,581) | ||||||
| Net increase (decrease) | (21,680) | 28,149 | ||||||
See accompanying notes which are an integral part of the financial statements.
25 Annual Report
| Financial Highlights | ||||||||||
| Years ended January 31, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||
| Selected Per Share Data | ||||||||||
| Net asset value, beginning of | ||||||||||
| period | $ 51.52 | $ 50.27 | $ 38.32 | $ 48.15 | $ 53.91 | |||||
| Income from Investment | ||||||||||
| Operations | ||||||||||
| Net investment income (loss)B | 82 | .79 | .71 | .68 | .71 | |||||
| Net realized and unrealized | ||||||||||
| gain (loss) | 5.14 | 2.93 | 12.88 | (9.69) | (4.53) | |||||
| Total from investment operations | 5.96 | 3.72 | 13.59 | (9.01) | (3.82) | |||||
| Distributions from net investment | ||||||||||
| income | (.84) | (.81) | (.71) | (.68) | (.76) | |||||
| Distributions from net realized | ||||||||||
| gain | (2.13) | (1.66) | (.93) | (.14) | (1.18) | |||||
| Total distributions | (2.97) | (2.47) | (1.64) | (.82) | (1.94) | |||||
| Net asset value, end of period | $ 54.51 | $ 51.52 | $ 50.27 | $ 38.32 | $ 48.15 | |||||
| Total ReturnA | 11.87% | 7.51% | 35.95% | (18.95)% | (7.06)% | |||||
| Ratios to Average Net AssetsC | ||||||||||
| Expenses before reductions | 69% | .70% | .71% | .72% | .69% | |||||
| Expenses net of fee waivers, if | ||||||||||
| any | 69% | .70% | .71% | .72% | .69% | |||||
| Expenses net of all reductions | 67% | .69% | .70% | .71% | .67% | |||||
| Net investment income (loss) | 1.57% | 1.56% | 1.63% | 1.57% | 1.41% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (in | ||||||||||
| millions) | $26,042 | $25,730 | $23,693 | $17,239 | $21,553 | |||||
| Portfolio turnover rate | 19% | 19% | 25% | 23% | 23% | |||||
| A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund. |
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 26 |
Notes to Financial Statements
| For the period ended January 31, 2006 (Amounts in thousands except ratios) |
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 (the 1940 Act), as an open end management investment company organized as a Massachusetts business trust. The fund may invest in affiliated money market central funds (Money Market Central Funds) which are open end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affili ates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require manage ment 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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open end mutual funds, are valued at their closing net asset value each business day. Short term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securi ties markets, reviewing developments in foreign markets and evaluating the perfor mance of ADRs, futures contracts and exchange traded funds. Because the fund’s utilization of fair value pricing depends on market activity, the frequency with which fair
27 Annual Report
| Notes to Financial Statements continued |
| (Amounts in thousands except ratios) |
| 1. Significant Accounting Policies continued |
Security Valuation continued |
value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts’ terms.
Foreign denominated assets, including investment securities, and liabilities are trans lated into U.S. dollars at the exchange rate at period end. Purchases and sales of invest ment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transac tion date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex dividend date, except for certain dividends from foreign securities where the ex dividend date may have passed, which 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securi ties. 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 each fund in the trust.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent 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
| Annual Report |
| 28 |
| 1. Significant Accounting Policies continued |
Deferred Trustee Compensation continued |
though equivalent dollar amounts had been invested in shares of the fund or are invested in a cross section of other Fidelity funds, and are marked to market. Deferred amounts remain in the fund until distributed in accordance with the Plan.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex dividend date. Income and capital gain distribu tions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book tax differences will reverse in a subsequent period.
Book tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), market discount, deferred trustees compensation and losses deferred due to wash sales.
The tax basis components of distributable earnings and the federal tax cost as of period end were as follows:
| Unrealized appreciation | $ | 8,052,346 | ||||||
| Unrealized depreciation | (1,053,547) | |||||||
| Net unrealized appreciation (depreciation) | 6,998,799 | |||||||
| Undistributed ordinary income | 74,555 | |||||||
| Undistributed long term capital gain | 342,415 | |||||||
| Cost for federal income tax purposes | $ | 19,074,365 | ||||||
| The tax character of distributions paid was as follows: | ||||||||
| January 31, 2006 | January 31, 2005 | |||||||
| Ordinary Income | $ | 492,802 | $ | 492,414 | ||||
| Long term Capital Gains | 956,073 | 698,964 | ||||||
| Total | $ | 1,448,875 | $ | 1,191,378 | ||||
29 Annual Report
| Notes to Financial Statements continued | ||
| (Amounts in thousands except ratios) | ||
| 2. Operating Policies. | ||
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non government securities. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transac tions 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. Information regarding restricted securities is included at the end of the fund’s Schedule of Investments.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short term securities and U.S. government securities, aggregated $4,884,197 and $6,954,858, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment manage ment related services for which the fund pays a monthly management fee. The manage ment fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the fund’s average net assets and a group fee rate that averaged .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual man agement fee rate was ..47% of the fund’s 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 ac count. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .20% of average net assets.
| Annual Report |
| 30 |
4. Fees and Other Transactions with Affiliates continued
Accounting and Security Lending Fees. FSC maintains the fund’s accounting rec ords. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. The fund may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Invest ments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $120 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The fund’s activity in this program during the period for which loans were outstanding was as follows:
| Average Daily Loan | Weighted Average | |||||||||
| Borrower or Lender | Balance | Interest Rate | Interest Expense | |||||||
| Borrower | $ | 34,301 | 3.70% | $ | 99 | |||||
| 5. Committed Line of Credit. | ||||||||||
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the “line of credit”) to be utilized for temporary or emergency purposes to fund share holder redemptions or for other short term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
| 6. Security Lending. |
The fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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
31 Annual Report
| Notes to Financial Statements continued |
| (Amounts in thousands except ratios) |
| 6. Security Lending continued |
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, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the fund’s Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from affiliated central funds. Net income from lending portfolio securities during the period amounted to $2,566.
| 7. Expense Reductions. |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $2,928 for the period. 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 the fund’s expenses. During the period, these credits reduced the fund’s custody and transfer agent expenses by $1 and $1,194, respectively.
| 8. Other. |
The fund’s organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the fund. In the normal course of business, the fund may also enter into contracts that provide general indemnifications. The fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the fund. The risk of material loss from such claims is considered remote.
| Annual Report |
| 32 |
Report of Independent Registered Public Accounting Firm
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 sched ule 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, 2006 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 of America. These financial statements and financial highlights (hereaf ter 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
| /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts March 14, 2006 |
33 Annual Report
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund’s activities, review contractual arrangements with companies that provide services to the fund, and review the fund’s performance. Except for William O. McCoy and Albert R. Gamper, Jr., each of the Trustees oversees 326 funds advised by FMR or an affiliate. Mr. McCoy oversees 328 funds advised by FMR or an affiliate. Mr. Gamper oversees 251 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instru ment signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Members may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
| Interested Trustees*: |
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
| Name, Age; Principal Occupation Edward C. Johnson 3d (75) |
Year of Election or Appointment: 1985
Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Research & Analysis Company; Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001 present) and a Director (2000 present) of FMR Co., Inc.
| Annual Report |
| 34 |
| Name, Age; Principal Occupation Stephen P. Jonas (53) |
Year of Election or Appointment: 2005
Mr. Jonas is Senior Vice President of Equity Income (2005 present). He also serves as Senior Vice President of other Fidelity funds (2005 present). Mr. Jonas is Executive Director of FMR (2005 present). Pre viously, Mr. Jonas served as President of Fidelity Enterprise Operations and Risk Services (2004 2005), Chief Administrative Officer (2002 2004), and Chief Financial Officer of FMR Co. (1998 2000). Mr. Jonas has been with Fidelity Investments since 1987 and has held various fi nancial and management positions including Chief Financial Officer of FMR. In addition, he serves on the Boards of Boston Ballet (2003 present) and Simmons College (2003 present).
| Robert L. Reynolds (53) |
Year of Election or Appointment: 2003
Mr. Reynolds is a Director (2003 present) and Chief Operating Officer (2002 present) of FMR Corp. He also serves on the Board at Fidelity Investments Canada, Ltd. (2000 present). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996 2000).
* Trustees have been determined to be “Interested Trustees” by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
35 Annual Report
Trustees and Officers - continued
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
| Name, Age; Principal Occupation Dennis J. Dirks (57) |
Year of Election or Appointment: 2005
Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999 2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Com pany (DTC) (1999 2003) and President and Board member of the Nat ional Securities Clearing Corporation (NSCC) (1999 2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001 2003) and Chief Executive Officer and Board member of the Mortgage Backed Securities Clearing Corporation (2001 2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005 present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006 present).
| Albert R. Gamper, Jr. (63) |
Year of Election or Appointment: 2006.
Trustee of Fidelity Devonshire Trust. Mr. Gamper also serves as a Trustee (2006 present) or Member of the Advisory Board (2005 present) of other investment companies advised by FMR. Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, includ ing Chairman (1987 1989; 1999 2001; 2002 2004), Chief Executive Officer (1987 2004), and President (1989 2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001 present), Chairman of the Board of Governors, Rutgers University (2004 present), and Chairman of the Board of Saint Barnabas Health Care System.
| Annual Report |
| 36 |
| Name, Age; Principal Occupation Robert M. Gates (62) |
Year of Election or Appointment: 1997
Dr. Gates is Chairman of the Independent Trustees (2006 present). Dr. Gates is President of Texas A&M University (2002 present). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001 present), and Brinker International (restaurant management, 2003 present). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999 2001).
| George H. Heilmeier (69) |
Year of Election or Appointment: 2004
Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (commu nication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineer ing and information technology support for the government), and HRL Laboratories (private research and development, 2004 present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992 2002), Compaq (1994 2002), Auto matic Data Processing, Inc. (ADP) (technology based business outsourc ing, 1995 2002), INET Technologies Inc. (telecommunications network surveillance, 2001 2004), and Teletech Holdings (customer manage ment services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display.
37 Annual Report
Trustees and Officers - continued
| Name, Age; Principal Occupation Marie L. Knowles (59) |
Year of Election or Appointment: 2001
Prior to Ms. Knowles’ retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996 2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare ser vice, 2002 present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
| Ned C. Lautenbach (61) |
Year of Election or Appointment: 2000
Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004 present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005 present), as well as a member of the Council on Foreign Relations.
| William O. McCoy (72) |
Year of Election or Appointment: 1997
Prior to his retirement in December 1994, Mr. McCoy was Vice Chair man of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Duke Realty Corporation (real estate), and Progress Energy, Inc. (electric util ity). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999 2000) and a member of the Board of Visitors for the University of North Carolina at Chapel Hill and currently serves as Chairman of the Board of Directors of the University of North Carolina Health Care Sys tem and the Board of Visitors of the Kenan Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16 school system).
| Annual Report |
| 38 |
| Name, Age; Principal Occupation Cornelia M. Small (61) |
Year of Election or Appointment: 2005
Ms. Small is a member (2000 present) and Chairperson (2002 present) of the Investment Committee, and a member (2002 present) of the Board of Trustees of Smith College. Previously, she served as Chief In vestment Officer (1999 2000), Director of Global Equity Investments (1996 1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990 1997) and Scudder Kemper Investments (1997 1999). In addition, Ms. Small served as Co Chair (2000 2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
| William S. Stavropoulos (66) |
Year of Election or Appointment: 2002
Mr. Stavropoulos is Chairman of the Board (2000 present) and a Member of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993 2000; 2002 2003), CEO (1995 2000; 2002 2004), and Chairman of the Executive Committee (2000 2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solu tions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002 present), and Metalmark Capital (private equity investment firm, 2005 present). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science.
| Kenneth L. Wolfe (66) |
Year of Election or Appointment: 2005
Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993 2001). He currently serves as a member of the boards of Adelphia Communications Corporation (2003 present), Bausch & Lomb, Inc., and Revlon Inc. (2004 present).
39 Annual Report
Trustees and Officers - continued
Advisory Board Members and Executive Officers:
Correspondence intended for Mr. Keyes may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
| Name, Age; Principal Occupation James H. Keyes (65) |
Year of Election or Appointment: 2006
Member of the Advisory Board of Fidelity Devonshire Trust. Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993 2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies, 1984 present), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002 present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions, 1998 present).
| Peter S. Lynch (62) |
Year of Election or Appointment: 2003
Member of the Advisory Board of Fidelity Devonshire Trust. Vice Chairman and a Director of FMR, and Vice Chairman (2001 present) and a Director (2000 present) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990 2003). In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
| Dwight D. Churchill (52) |
Year of Election or Appointment: 2005
Vice President of Equity Income. Mr. Churchill also serves as Vice President of certain Equity Funds (2005 present) and certain High Income Funds (2005 present). He is Executive Vice President of FMR (2005 present) and FMR Co., Inc. (2005 present) and Senior Vice President of Fidelity Investments Money Management, Inc. (2005 present). Previously, Mr. Churchill served as Head of Fidelity’s Fixed Income Division (2000 2005), Vice President of Fidelity’s Money Market Funds (2000 2005), Vice President of Fidelity’s Bond Funds, and Senior Vice President of FMR.
| Annual Report |
| 40 |
| Name, Age; Principal Occupation Stephen Petersen (50) |
Year of Election or Appointment: 1994
Vice President of Equity Income. Mr. Petersen also serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Petersen worked as a research analyst and portfolio manager. Mr. Petersen also serves as Senior Vice President of FMR (1999) and FMR Co., Inc (2001).
| Eric D. Roiter (57) |
Year of Election or Appointment: 1998
Secretary of Equity Income. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001 present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001 present), Fidelity Research & Analysis Company (2001 present), and Fidelity Investments Money Management, Inc. (2001 present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003 present). Previously, Mr. Roiter served as Vice President and Secretary of FDC (1998 2005).
| Stuart Fross (46) |
Year of Election or Appointment: 2003
Assistant Secretary of Equity Income. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003 present), Vice President and Secretary of FDC (2005 present), and is an employee of FMR.
| Christine Reynolds (47) |
Year of Election or Appointment: 2004
President and Treasurer of Equity Income. Ms. Reynolds also serves as President and Treasurer of other Fidelity funds (2004 present) and is a Vice President (2003 present) and an employee (2002 present) of FMR. Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980 2002), where she was most recently an audit partner with PwC’s investment management practice.
| R. Stephen Ganis (39) |
Year of Election or Appointment: 2006
Anti Money Laundering (AML) officer of Equity Income. Mr. Ganis also serves as AML officer of other Fidelity funds (2006 present) and FMR Corp. (2003 present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000 2002).
41 Annual Report
Trustees and Officers - continued
| Name, Age; Principal Occupation Paul M. Murphy (58) |
Year of Election or Appointment: 2005
Chief Financial Officer of Equity Income. Mr. Murphy also serves as Chief Financial Officer of other Fidelity funds (2005 present). He also serves as Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS).
| Kenneth A. Rathgeber (58) |
Year of Election or Appointment: 2004
Chief Compliance Officer of Equity Income. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004 present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002 present). He is Chief Compliance Officer of FMR (2005 present), FMR Co., Inc. (2005 present), Fidelity Management & Research (U.K.) Inc. (2005 present), Fidelity Research & Analysis Company (2005 present), Fidelity Investments Money Management, Inc. (2005 present), and Strate gic Advisers, Inc. (2005 present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998 2002).
| Bryan A. Mehrmann (44) |
Year of Election or Appointment: 2005
Deputy Treasurer of Equity Income. Mr. Mehrmann also serves as Dep uty Treasurer of other Fidelity funds (2005 present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998 2004).
| Kimberley H. Monasterio (42) |
Year of Election or Appointment: 2004
Deputy Treasurer of Equity Income. Ms. Monasterio also serves as Deputy Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000 2004) and Chief Financial Officer (2002 2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000 2004).
| Kenneth B. Robins (36) |
Year of Election or Appointment: 2005
Deputy Treasurer of Equity Income. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2004 present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG’s department of professional practice (2002 2004) and a Senior Manager (1999 2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000 2002).
| Annual Report |
| 42 |
| Name, Age; Principal Occupation Robert G. Byrnes (39) |
Year of Election or Appointment: 2005
Assistant Treasurer of Equity Income. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003 2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000 2003).
| John H. Costello (59) |
Year of Election or Appointment: 1986
Assistant Treasurer of Equity Income. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
| Peter L. Lydecker (52) |
Year of Election or Appointment: 2004
Assistant Treasurer of Equity Income. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR.
| Mark Osterheld (50) |
Year of Election or Appointment: 2002
Assistant Treasurer of Equity Income. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
| Gary W. Ryan (47) |
Year of Election or Appointment: 2005
Assistant Treasurer of Equity Income. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999 2005).
| Salvatore Schiavone (40) |
Year of Election or Appointment: 2005
Assistant Treasurer of Equity Income. Mr. Schiavone also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Before joining Fidelity Investments, Mr. Schiavone worked at Deutsche Asset Management, where he most re cently served as Assistant Treasurer (2003 2005) of the Scudder Funds and Vice President and Head of Fund Reporting (1996 2003).
43 Annual Report
| Distributions |
The Board of Trustees of Fidelity Equity-Income Fund voted to pay on March 6, 2006, to shareholders of record at the opening of business on March 3, 2006, a distribution of $.83 per share derived from capital gains realized from sales of portfolio securities.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended January 31, 2006, $1,049,469,000, or, if subsequently determined to be differ ent, the net capital gain of such year.
A total of .03% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
The fund designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends received deduction for corporate shareholders.
The fund designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2007 of amounts for use in preparing 2006 income tax returns.
| Annual Report |
| 44 |
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Equity Income Fund
On January 19, 2006, the Board of Trustees, including the Independent Trustees (together, the Board), voted to approve a general research services agreement (the Agreement) between FMR, FMR Co., Inc. (FMRC), Fidelity Investments Money Manage ment, Inc. (FIMM), and Fidelity Research & Analysis Company (FRAC) (together, the Investment Advisers) for the fund, effective January 20, 2006, pursuant to which FRAC may provide general research and investment advisory support services to FMRC and FIMM. The Board considered that it has approved previously various sub advisory agreements for the fund with affiliates of FMR that allow FMR to obtain research, non discretionary advice, or discretionary portfolio management at no additional expense to the fund. The Board, assisted by the advice of fund counsel and independent Trustees’ counsel, considered a broad range of information and determined that it would be beneficial for the fund to access the research and investment advisory support services supplied by FRAC at no additional expense to the fund.
The Board reached this determination in part because the new arrangement will involve no changes in (i) the contractual terms of and fees payable under the fund’s manage ment contract or sub advisory agreements; (ii) the investment process or strategies employed in the management of the fund’s assets; (iii) the nature or level of services provided under the fund’s management contract or sub advisory agreements; (iv) the day to day management of the fund or the persons primarily responsible for such man agement; or (v) the ultimate control or beneficial ownership of FMR, FMRC, or FIMM. The Board also considered that the establishment of the Agreement would not necessi tate prior shareholder approval of the Agreement or result in an assignment and termination of the fund’s management contract or sub advisory agreements under the Investment Company Act of 1940.
Because the Board was approving an arrangement with FRAC under which the fund will not bear any additional management fees or expenses and under which the fund’s portfolio manager would not change, it did not consider the fund’s investment perfor mance, competitiveness of management fee and total expenses, costs of services and profitability, or economies of scale to be significant factors in its decision.
In connection with its future renewal of the fund’s management contract and sub advisory agreements, the Board will consider: (i) the nature, extent, and quality of services provided to the fund, including shareholder and administrative services and investment performance; (ii) the competitiveness of the fund’s management fee and total expenses; (iii) the costs of the services and profitability, including the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering, and servicing the fund and its shareholders; and (iv) whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have
45 Annual Report
Board Approval of Investment Advisory Contracts and Management Fees continued
appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the fund’s Agreement is fair and reasonable, and that the fund’s Agreement should be approved.
| Annual Report |
| 46 |
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.
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.
* 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 guar anteed 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.
47 Annual Report
| Investment Adviser Fidelity Management & Research Company Boston, MA Investment Sub Advisers FMR Co., Inc. Fidelity Research & Analysis Company (formerly Fidelity Management & Research (Far East) Inc.) Fidelity Management & Research (U.K.) Inc. Fidelity Investments Japan Limited Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited General Distributor Fidelity Distributors Corporation Boston, MA Transfer and Service Agent Fidelity Service Company, Inc. Boston, MA Custodian The Northern Trust Company Chicago, IL |
| 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®) (automated phone logo) | 1-800-544-5555 | |
| (automated phone logo) Automated line for quickest service | ||
| EQU-UANN-0306 1.789253.103 |
| Contents | ||||
| Shareholder Expense Example | 3 | An example of shareholder expenses. | ||
| Fidelity Large Cap Value Fund | 4 | Performance | ||
| 5 | Management’s Discussion | |||
| 6 | Investment Changes | |||
| 7 | Investments | |||
| 10 | Financial Statements | |||
| Fidelity Mid Cap Value Fund | 12 | Performance | ||
| 13 | Management’s Discussion | |||
| 14 | Investment Changes | |||
| 15 | Investments | |||
| 18 | Financial Statements | |||
| Fidelity Large Cap Growth Fund | 20 | Performance | ||
| 21 | Management’s Discussion | |||
| 22 | Investment Changes | |||
| 23 | Investments | |||
| 26 | Financial Statements | |||
| Fidelity Mid Cap Growth Fund | 28 | Performance | ||
| 29 | Management’s Discussion | |||
| 30 | Investment Changes | |||
| 31 | Investments | |||
| 34 | Financial Statements | |||
| Notes | 36 | Notes to the Financial Statements | ||
| Report of Independent Registered Public | 41 | |||
| Accounting Firm | ||||
| Trustees and Officers | 42 | |||
| Distributions | 48 | |||
| Board Approval of Investment Advisory | 49 | |||
| Contracts and Management Fees | ||||
| To view a fund’s proxy voting guidelines and proxy voting record for the 12 month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission’s (SEC) web site at www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines. 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 and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by an effective prospectus. A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N Q. Forms N Q are available on the SEC’s web site at http://www.sec.gov. A fund’s Forms N Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund’s portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity’s web site at http://www.fidelity.com/holdings. NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE Neither the funds nor Fidelity Distributors Corporation is a bank. |
Annual Report 2
| Shareholder Expense Example |
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including manage ment fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (August 1, 2005 to January 31, 2006).
| Actual Expenses |
The first line of the table below for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
| Hypothetical Example for Comparison Purposes |
The second line of the table below for each fund provides information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Expenses Paid | ||||||||
| Beginning | Ending | During Period* | ||||||
| Account Value | Account Value | August 1, 2005 to | ||||||
| August 1, 2005 | January 31, 2006 | January 31, 2006 | ||||||
| Fidelity Large Cap Value Fund | ||||||||
| Actual | $ 1,000.00 | $ 1,078.80 | $ 4.66 | |||||
| HypotheticalA | $ 1,000.00 | $ 1,020.72 | $ 4.53 | |||||
| Fidelity Mid Cap Value Fund | ||||||||
| Actual | $ 1,000.00 | $ 1,073.30 | $ 4.44 | |||||
| HypotheticalA | $ 1,000.00 | $ 1,020.92 | $ 4.33 | |||||
| Fidelity Large Cap Growth Fund | ||||||||
| Actual | $ 1,000.00 | $ 1,084.20 | $ 5.25 | |||||
| HypotheticalA | $ 1,000.00 | $ 1,020.16 | $ 5.09 | |||||
| Fidelity Mid Cap Growth Fund | ||||||||
| Actual | $ 1,000.00 | $ 1,141.50 | $ 5.40 | |||||
| HypotheticalA | $ 1,000.00 | $ 1,020.16 | $ 5.09 | |||||
| A 5% return per year before expenses | ||||||||
* Expenses are equal to each Fund’s annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one half year period).
| Annualized | ||
| Expense Ratio | ||
| Fidelity Large Cap Value Fund | 89% | |
| Fidelity Mid Cap Value Fund | 85% | |
| Fidelity Large Cap Growth Fund | 1.00% | |
| Fidelity Mid Cap Growth Fund | 1.00% |
33 Annual Report
| Fidelity Large Cap Value Fund Performance: The Bottom Line |
Average annual 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) and assuming a constant rate of performance each year. The $10,000 table and the fund’s returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
| Average Annual Total Returns | ||||
| Periods ended January 31, 2006 | Past 1 | Life of | ||
| year | fundA | |||
| Fidelity® Large Cap Value Fund | 17.09% | 9.34% | ||
| A From November 15, 2001. | ||||
| $10,000 Over Life of Fund | ||||
Let’s say hypothetically that $10,000 was invested in Fidelity® Large Cap Value Fund on November 15, 2001, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Russell 1000® Value Index performed over the same period.
| Annual Report |
| 4 |
| Fidelity Large Cap Value Fund |
Management’s Discussion of Fund Performance
Comments from Bruce Dirks, Portfolio Manager of Fidelity® Large Cap Value Fund
Most major U.S. stock benchmarks had double digit returns for the year ending January 31, 2006. Market performance was driven largely by oil. Height ened demand from the United States and China, among others, plus Hurricane Katrina’s devastation of domestic refining capacity in the Gulf Coast region, propelled oil prices to record highs. The energy component of the Standard & Poor’s 500SM Index soared nearly 46% during the period, while the next closest utilities rose about 17%. The overall return for the S&P 500® was 10.38% . In 2005, the S&P 500 beat the small cap Russell 2000® Index for the first time in six years, but quickly lost that advantage when the Russell benchmark jumped 9% in January, pushing its 12 month return to 18.89% . Mid caps did even better: The 21.45% return of the Russell Midcap® Index doubled the broader market’s performance for the period. The NASDAQ Composite® Index fared well, gaining 12.75%, but the Dow Jones Industrial AverageSM increased only 6.00% .
For the year ending January 31, 2006, the fund gained 17.09%, outpacing both the Russell 1000® Value Index and the LipperSM Growth Funds Average, which advanced 13.22% and 13.62%, respectively. The fund’s holdings outperformed those reflected in nine of the index’s 10 major market sectors, with most of the gains coming from opportune security selection in energy, which was by far the strongest performing sector of the index. The fund’s biggest contributions came from strong performing oil refiners Valero Energy, Tesoro and Sunoco. Results also were aided by good stock picking in the materials and telecommunication services sectors, as well as in pockets of information technology, while underweighting media and pharmaceutical/ biotechnology stocks also helped. Further helping the fund’s performance were its overweighting in mid cap stocks a market sweet spot during the period and its underweighting in mega caps, which showed some overall weakness. On the flip side, the fund stumbled a bit from some unfavorable stock picking in retailing and pockets of the financials sector. Positive overall returns also were offset somewhat by weak results from credit card company MBNA and apparel retailer American Eagle Outfitters, both of which disappointed on slower earnings growth. Several stocks mentioned here were sold from the portfolio.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
55 Annual Report
Fidelity Large Cap Value Fund
Investment Changes
| Top Ten Stocks as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Exxon Mobil Corp. | 6.2 | 4.8 | ||
| Hewlett Packard Co. | 2.9 | 1.9 | ||
| ConocoPhillips | 2.8 | 1.5 | ||
| Citigroup, Inc. | 2.8 | 1.6 | ||
| Pfizer, Inc. | 2.2 | 1.7 | ||
| Verizon Communications, Inc. | 2.1 | 1.8 | ||
| Devon Energy Corp. | 1.9 | 0.0 | ||
| Merrill Lynch & Co., Inc. | 1.8 | 0.0 | ||
| The Chubb Corp. | 1.8 | 1.6 | ||
| Qwest Communications | ||||
| International, Inc. | 1.8 | 0.0 | ||
| 26.3 | ||||
| Top Five Market Sectors as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Financials | 34.8 | 34.1 | ||
| Energy | 15.0 | 13.7 | ||
| Consumer Discretionary | 8.2 | 9.5 | ||
| Health Care | 7.1 | 6.8 | ||
| Industrials | 6.4 | 6.7 | ||
Annual Report 6
| Fidelity Large Cap Value Fund | ||||
| Investments January 31, 2006 | ||||
| Showing Percentage of Net Assets | ||||
| Common Stocks 97.8% | ||||
| Shares | Value (Note 1) | |||
| CONSUMER DISCRETIONARY 8.2% | ||||
| Auto Components – 1.1% | ||||
| Goodyear Tire & Rubber Co. (a)(d) | 393,800 | $ 6,159,032 | ||
| Hotels, Restaurants & Leisure 1.7% | ||||
| McDonald’s Corp. | 274,600 | 9,613,746 | ||
| Household Durables 2.3% | ||||
| Pulte Homes, Inc. | 153,600 | 6,128,640 | ||
| Ryland Group, Inc. | 77,300 | 5,593,428 | ||
| Toll Brothers, Inc. (a) | 41,300 | 1,404,200 | ||
| 13,126,268 | ||||
| Multiline Retail – 1.6% | ||||
| JCPenney Co., Inc. | 163,700 | 9,134,460 | ||
| Textiles, Apparel & Luxury Goods | 1.5% | |||
| Polo Ralph Lauren Corp. Class A | 153,300 | 8,682,912 | ||
| TOTAL CONSUMER DISCRETIONARY | 46,716,418 | |||
| CONSUMER STAPLES 5.3% | ||||
| Beverages 1.6% | ||||
| The Coca Cola Co. | 214,100 | 8,859,458 | ||
| Food & Staples Retailing – 1.2% | ||||
| BJ’s Wholesale Club, Inc. (a) | 189,900 | 6,103,386 | ||
| Safeway, Inc. | 38,900 | 911,816 | ||
| 7,015,202 | ||||
| Food Products – 1.3% | ||||
| General Mills, Inc. | 149,900 | 7,286,639 | ||
| Tobacco – 1.2% | ||||
| Altria Group, Inc. | 98,700 | 7,139,958 | ||
| TOTAL CONSUMER STAPLES | 30,301,257 | |||
| ENERGY 15.0% | ||||
| Energy Equipment & Services – 0.3% | ||||
| Rowan Companies, Inc. | 35,600 | 1,595,948 | ||
| Oil, Gas & Consumable Fuels 14.7% | ||||
| Burlington Resources, Inc. | 31,000 | 2,829,060 | ||
| ConocoPhillips | 245,300 | 15,870,910 | ||
| Devon Energy Corp. | 160,100 | 10,920,421 | ||
| Exxon Mobil Corp. | 562,900 | 35,321,976 | ||
| Sunoco, Inc. | 98,000 | 9,329,600 | ||
| Tesoro Corp. | 129,300 | 9,370,371 | ||
| 83,642,338 | ||||
| TOTAL ENERGY | 85,238,286 | |||
| FINANCIALS 34.8% | ||||
| Capital Markets 3.5% | ||||
| Bank of New York Co., Inc. | 65,000 | 2,067,650 | ||
| Mellon Financial Corp. | 33,600 | 1,185,072 | ||
| Shares | Value (Note 1) | |||
| Merrill Lynch & Co., Inc. | 138,800 | $ 10,419,716 | ||
| TD Ameritrade Holding Corp. | 326,100 | 6,600,264 | ||
| 20,272,702 | ||||
| Commercial Banks – 5.8% | ||||
| Bank of America Corp. | 219,300 | 9,699,639 | ||
| Comerica, Inc. | 62,900 | 3,489,063 | ||
| U.S. Bancorp, Delaware | 153,900 | 4,603,149 | ||
| UnionBanCal Corp. | 102,800 | 6,896,852 | ||
| Wells Fargo & Co. | 135,410 | 8,444,168 | ||
| 33,132,871 | ||||
| Consumer Finance – 2.0% | ||||
| American Express Co. | 152,500 | 7,998,625 | ||
| Capital One Financial Corp. (d) | 39,000 | 3,248,700 | ||
| 11,247,325 | ||||
| Diversified Financial Services – 4.4% | ||||
| CIT Group, Inc. | 175,500 | 9,361,170 | ||
| Citigroup, Inc. | 339,060 | 15,793,415 | ||
| 25,154,585 | ||||
| Insurance – 15.6% | ||||
| ACE Ltd. | 55,600 | 3,044,100 | ||
| AFLAC, Inc. | 52,900 | 2,483,655 | ||
| AMBAC Financial Group, Inc. | 25,200 | 1,935,612 | ||
| American Financial Group, Inc., Ohio | 125,800 | 4,732,596 | ||
| American International Group, Inc. | 51,900 | 3,397,374 | ||
| Assurant, Inc. | 132,200 | 6,070,624 | ||
| Fidelity National Financial, Inc. | 13,200 | 521,004 | ||
| First American Corp., California | 70,000 | 3,277,400 | ||
| Genworth Financial, Inc. Class A | ||||
| (non vtg.) | 164,900 | 5,402,124 | ||
| Hartford Financial Services Group, Inc. | 40,500 | 3,330,315 | ||
| HCC Insurance Holdings, Inc. | 184,800 | 5,739,888 | ||
| Lincoln National Corp. | 14,500 | 790,685 | ||
| MetLife, Inc. | 180,400 | 9,048,864 | ||
| Old Republic International Corp. | 54,875 | 1,177,069 | ||
| Philadelphia Consolidated Holdings | ||||
| Corp. (a) | 87,689 | 8,518,986 | ||
| Prudential Financial, Inc. | 112,800 | 8,498,352 | ||
| The Chubb Corp. | 108,300 | 10,218,105 | ||
| The St. Paul Travelers Companies, Inc. | 56,300 | 2,554,894 | ||
| W.R. Berkley Corp. | 158,900 | 7,849,660 | ||
| 88,591,307 | ||||
| Real Estate 1.4% | ||||
| Trizec Properties, Inc. | 243,900 | 5,680,431 | ||
| Weingarten Realty Investors (SBI) | 56,500 | 2,289,945 | ||
| 7,970,376 | ||||
| Thrifts & Mortgage Finance – 2.1% | ||||
| MGIC Investment Corp. | 27,000 | 1,782,270 |
See accompanying notes which are an integral part of the financial statements.
7 Annual Report
| Fidelity Large Cap Value Fund | ||||||
| Investments - continued | ||||||
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| FINANCIALS – continued | ||||||
| Thrifts & Mortgage Finance – continued | ||||||
| Radian Group, Inc. | 161,400 | $ 9,236,922 | ||||
| The PMI Group, Inc. | 16,800 | 726,264 | ||||
| 11,745,456 | ||||||
| TOTAL FINANCIALS | 198,114,622 | |||||
| HEALTH CARE 7.1% | ||||||
| Health Care Equipment & Supplies 1.4% | ||||||
| Baxter International, Inc. | 211,500 | 7,793,775 | ||||
| Health Care Providers & Services 2.9% | ||||||
| Aetna, Inc. | 91,400 | 8,847,520 | ||||
| McKesson Corp. | 141,700 | 7,510,100 | ||||
| 16,357,620 | ||||||
| Pharmaceuticals 2.8% | ||||||
| King Pharmaceuticals, Inc. (a) | 173,900 | 3,260,625 | ||||
| Pfizer, Inc. | 494,600 | 12,701,328 | ||||
| 15,961,953 | ||||||
| TOTAL HEALTH CARE | 40,113,348 | |||||
| INDUSTRIALS – 6.4% | ||||||
| Aerospace & Defense – 1.6% | ||||||
| Precision Castparts Corp. | 82,900 | 4,140,855 | ||||
| Raytheon Co. | 114,100 | 4,674,677 | ||||
| 8,815,532 | ||||||
| Airlines – 0.3% | ||||||
| Southwest Airlines Co. | 108,200 | 1,780,972 | ||||
| Commercial Services & Supplies 1.2% | ||||||
| Cendant Corp. | 401,650 | 6,723,621 | ||||
| Machinery – 1.5% | ||||||
| Cummins, Inc. | 87,500 | 8,513,750 | ||||
| Road & Rail 1.8% | ||||||
| CSX Corp. | 63,300 | 3,388,449 | ||||
| Norfolk Southern Corp. | 142,900 | 7,122,136 | ||||
| 10,510,585 | ||||||
| TOTAL INDUSTRIALS | 36,344,460 | |||||
| INFORMATION TECHNOLOGY 4.9% | ||||||
| Communications Equipment – 1.5% | ||||||
| Motorola, Inc. | 383,700 | 8,713,827 | ||||
| Computers & Peripherals 3.4% | ||||||
| Hewlett Packard Co. | 530,100 | 16,528,518 | ||||
| Seagate Technology | 111,500 | 2,907,920 | ||||
| 19,436,438 | ||||||
| TOTAL INFORMATION TECHNOLOGY | 28,150,265 | |||||
| Shares | Value (Note 1) | |||
| MATERIALS 4.9% | ||||
| Chemicals 1.0% | ||||
| Dow Chemical Co. | 57,650 | $ 2,438,595 | ||
| Rohm & Haas Co. | 41,500 | 2,112,350 | ||
| The Scotts Co. Class A | 27,000 | 1,336,500 | ||
| 5,887,445 | ||||
| Metals & Mining – 2.6% | ||||
| Nucor Corp. | 112,700 | 9,492,721 | ||
| Phelps Dodge Corp. | 33,800 | 5,424,900 | ||
| 14,917,621 | ||||
| Paper & Forest Products 1.3% | ||||
| International Paper Co. | 76,500 | 2,496,195 | ||
| Louisiana Pacific Corp. | 103,000 | 3,033,350 | ||
| Weyerhaeuser Co. | 22,700 | 1,583,552 | ||
| 7,113,097 | ||||
| TOTAL MATERIALS | 27,918,163 | |||
| TELECOMMUNICATION SERVICES 4.9% | ||||
| Diversified Telecommunication Services – 4.2% | ||||
| CenturyTel, Inc. | 53,500 | 1,781,550 | ||
| Qwest Communications International, | ||||
| Inc. (a) | 1,686,200 | 10,150,924 | ||
| Verizon Communications, Inc. | 375,600 | 11,891,496 | ||
| 23,823,970 | ||||
| Wireless Telecommunication Services – 0.7% | ||||
| Sprint Nextel Corp. | 171,714 | 3,930,533 | ||
| TOTAL TELECOMMUNICATION SERVICES | 27,754,503 | |||
| UTILITIES 6.3% | ||||
| Electric Utilities – 2.3% | ||||
| Edison International | 206,300 | 9,040,066 | ||
| Entergy Corp. | 31,200 | 2,168,712 | ||
| PPL Corp. | 62,400 | 1,880,112 | ||
| 13,088,890 | ||||
| Gas Utilities 2.3% | ||||
| ONEOK, Inc. | 157,900 | 4,462,254 | ||
| UGI Corp. | 388,200 | 8,334,654 | ||
| 12,796,908 | ||||
| Independent Power Producers & Energy Traders 1.4% | ||||
| TXU Corp. | 159,600 | 8,082,144 | ||
| Multi-Utilities – 0.3% | ||||
| CenterPoint Energy, Inc. | 26,700 | 341,226 | ||
| PG&E Corp. | 41,430 | 1,545,753 | ||
| 1,886,979 | ||||
| TOTAL UTILITIES | 35,854,921 | |||
| TOTAL COMMON STOCKS | ||||
| (Cost $511,735,819) | 556,506,243 | |||
See accompanying notes which are an integral part of the financial statements.
Annual Report 8
| Investment Companies 1.4% | ||||
| Shares | Value (Note 1) | |||
| iShares Russell 1000 Value Index | ||||
| Fund (d) | ||||
| (Cost $8,121,050) | 113,700 | $ 8,140,920 | ||
| U.S. Treasury Obligations 0.1% | ||||
| Principal | ||||
| Amount | ||||
| U.S. Treasury Bills, yield at date of | ||||
| purchase 4.03% 2/2/06 | ||||
| (Cost $749,832) | $ 750,000 | 749,928 | ||
| Money Market Funds 2.9% | ||||
| Shares | ||||
| Fidelity Cash Central Fund, | ||||
| 4.46% (b) | 4,988,496 | 4,988,496 | ||
| Fidelity Securities Lending Cash | ||||
| Central Fund, 4.48% (b)(c) | 11,135,700 | 11,135,700 | ||
| TOTAL MONEY MARKET FUNDS | ||||
| (Cost $16,124,196) | 16,124,196 | |||
| TOTAL INVESTMENT PORTFOLIO 102.2% | ||||
| (Cost $536,730,897) | 581,521,287 | |||
| NET OTHER ASSETS (2.2)% | (12,412,177) | |||
| NET ASSETS 100% | $ 569,109,110 | |||
| Legend (a) Non-income producing (b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund’s holdings as of its most recent quarter end is available upon request. (c) Investment made with cash collateral received from securities on loan. (d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds
Information regarding fiscal year to date income received by the fund from the affiliated Central funds is as follows:
| Fund | Income received | |
| Fidelity Cash Central Fund | $ 170,388 | |
| Fidelity Securities Lending Cash Central Fund | 13,002 | |
| Total | $ 183,390 |
See accompanying notes which are an integral part of the financial statements.
9 Annual Report
| Fidelity Large Cap Value Fund | ||||||||
| Financial Statements | ||||||||
| Statement of Assets and Liabilities | ||||||||
| January 31, 2006 | ||||||||
| Assets | ||||||||
| Investment in securities, at value (in- | ||||||||
| cluding securities loaned of | ||||||||
| $10,140,334) — See accompany- | ||||||||
| ing schedule: | ||||||||
| Unaffiliated issuers (cost | ||||||||
| $520,606,701) | $ | 565,397,091 | ||||||
| Affiliated Central Funds (cost | ||||||||
| $16,124,196) | 16,124,196 | |||||||
| Total Investments (cost | ||||||||
| $536,730,897) | $ | 581,521,287 | ||||||
| Receivable for investments sold | 14,904,956 | |||||||
| Receivable for fund shares sold | 3,231,782 | |||||||
| Dividends receivable | 368,927 | |||||||
| Interest receivable | 28,776 | |||||||
| Prepaid expenses | 1,522 | |||||||
| Other affiliated receivables | 28 | |||||||
| Other receivables | 77,199 | |||||||
| Total assets | 600,134,477 | |||||||
| Liabilities | ||||||||
| Payable for investments purchased | . | $ | 18,573,525 | |||||
| Payable for fund shares redeemed | . | 887,525 | ||||||
| Accrued management fee | 270,865 | |||||||
| Other affiliated payables | 114,428 | |||||||
| Other payables and accrued | ||||||||
| expenses | 43,324 | |||||||
| Collateral on securities loaned, at | ||||||||
| value | 11,135,700 | |||||||
| Total liabilities | 31,025,367 | |||||||
| Net Assets | $ | 569,109,110 | ||||||
| Net Assets consist of: | ||||||||
| Paid in capital | $ | 514,912,678 | ||||||
| Undistributed net investment income | 701,821 | |||||||
| Accumulated undistributed net real- | ||||||||
| ized gain (loss) on investments | 8,704,221 | |||||||
| Net unrealized appreciation (de- | ||||||||
| preciation) on investments | 44,790,390 | |||||||
| Net Assets, for 41,781,061 shares | ||||||||
| outstanding | $ | 569,109,110 | ||||||
| Net Asset Value, offering price and | ||||||||
| redemption price per share | ||||||||
| ($569,109,110 ÷ 41,781,061 | ||||||||
| shares) | $ | 13.62 | ||||||
| Statement of Operations | ||||||
| Year ended January 31, 2006 | ||||||
| Investment Income | ||||||
| Dividends | $ | 7,049,173 | ||||
| Interest | 2,247 | |||||
| Income from affiliated Central Funds | 183,390 | |||||
| Total income | 7,234,810 | |||||
| Expenses | ||||||
| Management fee | ||||||
| Basic fee | $ | 1,910,048 | ||||
| Performance adjustment | 933 | |||||
| Transfer agent fees | 816,667 | |||||
| Accounting and security lending | ||||||
| fees | 125,728 | |||||
| Independent trustees’ compensation | 1,320 | |||||
| Custodian fees and expenses | 16,668 | |||||
| Registration fees | 52,477 | |||||
| Audit | 49,546 | |||||
| Legal | 1,586 | |||||
| Interest | 1,152 | |||||
| Miscellaneous | 1,763 | |||||
| Total expenses before reductions | 2,977,888 | |||||
| Expense reductions | (158,302) | 2,819,586 | ||||
| Net investment income (loss) | 4,415,224 | |||||
| Realized and Unrealized Gain | ||||||
| (Loss) | ||||||
| Net realized gain (loss) on: | ||||||
| Investment securities: | ||||||
| Unaffiliated issuers | 18,785,576 | |||||
| Futures contracts | 62,150 | |||||
| Total net realized gain (loss) | 18,847,726 | |||||
| Change in net unrealized appreci- | ||||||
| ation (depreciation) on investment | ||||||
| securities | 35,430,597 | |||||
| Net gain (loss) | 54,278,323 | |||||
| Net increase (decrease) in net as- | ||||||
| sets resulting from operations | $ | 58,693,547 | ||||
| See accompanying notes which are an integral part of the financial statements. | ||
| Annual Report | 10 |
| Statement of Changes in Net Assets | ||||||
| Year ended | Year ended | |||||
| January 31, | January 31, | |||||
| 2006 | 2005 | |||||
| Increase (Decrease) in Net Assets | ||||||
| Operations | ||||||
| Net investment income (loss) | $ 4,415,224 | $ 547,306 | ||||
| Net realized gain (loss) | 18,847,726 | 4,026,192 | ||||
| Change in net unrealized appreciation (depreciation) | 35,430,597 | 6,303,473 | ||||
| Net increase (decrease) in net assets resulting from operations | 58,693,547 | 10,876,971 | ||||
| Distributions to shareholders from net investment income | (3,816,244) | (446,024) | ||||
| Distributions to shareholders from net realized gain | (11,047,573) | (981,252) | ||||
| Total distributions | (14,863,817) | (1,427,276) | ||||
| Share transactions | ||||||
| Proceeds from sales of shares | 457,595,695 | 174,933,730 | ||||
| Reinvestment of distributions | 14,615,134 | 1,392,255 | ||||
| Cost of shares redeemed | (123,960,783) | (33,953,678) | ||||
| Net increase (decrease) in net assets resulting from share transactions | 348,250,046 | 142,372,307 | ||||
| Redemption fees | 25,496 | 13,417 | ||||
| Total increase (decrease) in net assets | 392,105,272 | 151,835,419 | ||||
| Net Assets | ||||||
| Beginning of period | 177,003,838 | 25,168,419 | ||||
| End of period (including undistributed net investment income of $701,821 and undistributed net investment income | ||||||
| of $102,977, respectively) | $ 569,109,110 | $ 177,003,838 | ||||
| Other Information | ||||||
| Shares | ||||||
| Sold | 35,555,165 | 15,175,650 | ||||
| Issued in reinvestment of distributions | 1,114,320 | 117,391 | ||||
| Redeemed | (9,586,600) | (2,959,725) | ||||
| Net increase (decrease) | 27,082,885 | 12,333,316 |
| Financial Highlights | ||||||||||
| Years ended January 31, | 2006 | 2005 | 2004 | 2003 | 2002F | |||||
| Selected Per Share Data | ||||||||||
| Net asset value, beginning of period | $ 12.04 | $ 10.64 | $ 8.17 | $ 10.17 | $ 10.00 | |||||
| Income from Investment Operations | ||||||||||
| Net investment income (loss)D | 17 | .09E | .09 | .08 | .01 | |||||
| Net realized and unrealized gain (loss) | 1.87 | 1.47 | 2.47 | (2.00) | .17 | |||||
| Total from investment operations | 2.04 | 1.56 | 2.56 | (1.92) | .18 | |||||
| Distributions from net investment income | (.11) | (.05) | (.09) | (.08) | (.01) | |||||
| Distributions from net realized gain | (.35) | (.11) | — | — | — | |||||
| Total distributions | (.46) | (.16) | (.09) | (.08) | (.01) | |||||
| Redemption fees added to paid in capitalD | —H | —H | —H | —H | — | |||||
| Net asset value, end of period | $ 13.62 | $ 12.04 | $ 10.64 | $ 8.17 | $ 10.17 | |||||
| Total ReturnB,C | 17.09% | 14.68% | 31.44% | (18.92)% | 1.80% | |||||
| Ratios to Average Net AssetsG | ||||||||||
| Expenses before reductions | 89% | 1.07% | 1.45% | 1.83% | 3.13%A | |||||
| Expenses net of fee waivers, if any | 89% | 1.07% | 1.20% | 1.20% | 1.20%A | |||||
| Expenses net of all reductions | 84% | 1.05% | 1.18% | 1.19% | 1.20%A | |||||
| Net investment income (loss) | 1.32% | .79%E | .99% | .90% | .55%A | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ 569,109 | $ 177,004 | $ 25,168 | $ 15,582 | $ 11,684 | |||||
| Portfolio turnover rate | 175% | 170% | 72% | 95% | 81%A | |||||
| A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Investment income per share reflects a special dividend which amounted to $.02 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .59%. F For the period November 15, 2001 (commencement of operations) to January 31, 2002. G Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrange ments or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund. H Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
11 Annual Report
| Fidelity Mid Cap Value Fund Performance: The Bottom Line |
Average annual 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) and assuming a constant rate of performance each year. The $10,000 table and the fund’s returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
| Average Annual Total Returns | ||||
| Periods ended January 31, 2006 | Past 1 | Life of | ||
| year | fundA | |||
| Fidelity Mid Cap Value Fund | 19.97% | 14.40% | ||
| A From November 15, 2001. | ||||
| $10,000 Over Life of Fund | ||||
Let’s say hypothetically that $10,000 was invested in Fidelity Mid Cap Value Fund on November 15, 2001, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Russell Midcap® Value Index performed over the same period.
| Annual Report |
| 12 |
| Fidelity Mid Cap Value Fund |
Management’s Discussion of Fund Performance
Comments from Bruce Dirks, Portfolio Manager of Fidelity® Mid Cap Value Fund
Most major U.S. stock benchmarks had double digit returns for the year ending January 31, 2006. Market performance was driven largely by oil. Height ened demand from the United States and China, among others, plus Hurricane Katrina’s devastation of domestic refining capacity in the Gulf Coast region, propelled oil prices to record highs. The energy component of the Standard & Poor’s 500SM Index soared nearly 46% during the period, while the next closest utilities rose about 17%. The overall return for the S&P 500® was 10.38% . In 2005, the S&P 500 beat the small cap Russell 2000® Index for the first time in six years, but quickly lost that advantage when the Russell benchmark jumped 9% in January, pushing its 12 month return to 18.89% . Mid caps did even better: The 21.45% return of the Russell Midcap® Index doubled the broader market’s performance for the period. The NASDAQ Composite® Index fared well, gaining 12.75%, but the Dow Jones Industrial AverageSM increased only 6.00% .
For the year ending January 31, 2006, the fund gained 19.97%, slightly lagging the Russell Midcap® Value Index, which rose 20.33%, but ahead of the LipperSM Mid Cap Funds Average, which advanced 19.40% . While the fund’s holdings outperformed those reflected in eight of the index’s 10 major market sectors, it stumbled a bit from some unfavorable stock picking in retailing, consumer staples and diversified financials. Meanwhile, most of the fund’s gains versus the index came from opportune security selection in the energy and information technology sectors, as well as from underweighting weak performing media and bank stocks. The fund’s biggest contributions came from surging oil refiners Valero Energy, Tesoro and Sunoco. Positive overall returns were offset somewhat by weak results from electric utility UGI Corp., homebuilder Toll Brothers and apparel retailer American Eagle Outfitters. Several stocks mentioned here were sold from the portfolio.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
13 13 Annual Report
Fidelity Mid Cap Value Fund
Investment Changes
| Top Ten Stocks as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Nucor Corp. | 2.3 | 0.0 | ||
| Edison International | 2.2 | 0.7 | ||
| CIT Group, Inc. | 2.0 | 1.0 | ||
| Safeway, Inc. | 2.0 | 0.0 | ||
| JCPenney Co., Inc. | 1.9 | 0.0 | ||
| Radian Group, Inc. | 1.8 | 1.4 | ||
| Phelps Dodge Corp. | 1.7 | 1.1 | ||
| Pulte Homes, Inc. | 1.7 | 0.0 | ||
| Sunoco, Inc. | 1.7 | 1.3 | ||
| TD Ameritrade Holding Corp. | 1.7 | 0.0 | ||
| 19.0 | ||||
| Top Five Market Sectors as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Financials | 31.6 | 31.0 | ||
| Utilities | 13.1 | 13.3 | ||
| Consumer Discretionary | 11.8 | 13.6 | ||
| Information Technology | 8.4 | 7.6 | ||
| Materials | 7.5 | 7.0 | ||
Annual Report 14
| Fidelity Mid Cap Value Fund | ||||
| Investments January 31, 2006 | ||||
| Showing Percentage of Net Assets | ||||
| Common Stocks 98.6% | ||||
| Shares | Value (Note 1) | |||
| CONSUMER DISCRETIONARY 11.8% | ||||
| Auto Components – 2.0% | ||||
| Goodyear Tire & Rubber Co. (a)(d) | 310,200 | $ 4,851,528 | ||
| Johnson Controls, Inc. | 17,900 | 1,239,396 | ||
| TRW Automotive Holdings Corp. (a) | 43,300 | 1,112,810 | ||
| 7,203,734 | ||||
| Household Durables 4.5% | ||||
| Newell Rubbermaid, Inc. | 199,200 | 4,709,088 | ||
| Pulte Homes, Inc. | 155,000 | 6,184,500 | ||
| Ryland Group, Inc. | 26,800 | 1,939,248 | ||
| Toll Brothers, Inc. (a) | 113,700 | 3,865,800 | ||
| 16,698,636 | ||||
| Multiline Retail – 1.9% | ||||
| JCPenney Co., Inc. | 123,500 | 6,891,300 | ||
| Specialty Retail 0.6% | ||||
| Tiffany & Co., Inc. | 55,400 | 2,088,580 | ||
| Textiles, Apparel & Luxury Goods | 2.8% | |||
| Columbia Sportswear Co. (a)(d) | 75,800 | 3,915,070 | ||
| Liz Claiborne, Inc. | 16,700 | 579,824 | ||
| Polo Ralph Lauren Corp. Class A | 104,100 | 5,896,224 | ||
| 10,391,118 | ||||
| TOTAL CONSUMER DISCRETIONARY | 43,273,368 | |||
| CONSUMER STAPLES 7.1% | ||||
| Beverages 1.1% | ||||
| Coca Cola Enterprises, Inc. | 133,000 | 2,625,420 | ||
| Pepsi Bottling Group, Inc. | 50,000 | 1,450,000 | ||
| 4,075,420 | ||||
| Food & Staples Retailing – 4.7% | ||||
| BJ’s Wholesale Club, Inc. (a) | 188,800 | 6,068,032 | ||
| Safeway, Inc. | 310,400 | 7,275,776 | ||
| SUPERVALU, Inc. | 119,500 | 3,815,635 | ||
| 17,159,443 | ||||
| Personal Products 1.3% | ||||
| Playtex Products, Inc. (a) | 352,300 | 4,727,866 | ||
| TOTAL CONSUMER STAPLES | 25,962,729 | |||
| ENERGY 5.6% | ||||
| Energy Equipment & Services – 0.4% | ||||
| Rowan Companies, Inc. | 28,300 | 1,268,689 | ||
| Oil, Gas & Consumable Fuels 5.2% | ||||
| Devon Energy Corp. | 26,400 | 1,800,744 | ||
| Forest Oil Corp. (a) | 54,100 | 2,786,150 | ||
| Kerr McGee Corp. | 21,600 | 2,384,424 | ||
| Shares | Value (Note 1) | |||||
| Sunoco, Inc. | 64,700 | $ | 6,159,440 | |||
| Tesoro Corp. | 83,100 | 6,022,257 | ||||
| 19,153,015 | ||||||
| TOTAL ENERGY | 20,421,704 | |||||
| FINANCIALS 31.6% | ||||||
| Capital Markets 2.4% | ||||||
| Mellon Financial Corp. | 70,400 | 2,483,008 | ||||
| TD Ameritrade Holding Corp. | 302,600 | 6,124,624 | ||||
| 8,607,632 | ||||||
| Commercial Banks – 3.4% | ||||||
| Colonial Bancgroup, Inc. | 64,700 | 1,611,030 | ||||
| Comerica, Inc. | 46,800 | 2,595,996 | ||||
| M&T Bank Corp. | 14,000 | 1,516,200 | ||||
| Marshall & Ilsley Corp. | 40,200 | 1,685,988 | ||||
| UnionBanCal Corp. | 73,100 | 4,904,279 | ||||
| 12,313,493 | ||||||
| Consumer Finance – 0.9% | ||||||
| Capital One Financial Corp. (d) | 20,200 | 1,682,660 | ||||
| CompuCredit Corp. (a) | 43,500 | 1,746,960 | ||||
| 3,429,620 | ||||||
| Diversified Financial Services – 2.0% | ||||||
| CIT Group, Inc. | 138,200 | 7,371,588 | ||||
| Insurance – 17.4% | ||||||
| ACE Ltd. | 47,600 | 2,606,100 | ||||
| AMBAC Financial Group, Inc. | 14,970 | 1,149,846 | ||||
| American Financial Group, Inc., Ohio | 146,600 | 5,515,092 | ||||
| Assurant, Inc. | 98,500 | 4,523,120 | ||||
| Fidelity National Financial, Inc. | 52,400 | 2,068,228 | ||||
| First American Corp., California | 52,400 | 2,453,368 | ||||
| Genworth Financial, Inc. Class A | ||||||
| (non vtg.) | 95,100 | 3,115,476 | ||||
| HCC Insurance Holdings, Inc. | 124,900 | 3,879,394 | ||||
| LandAmerica Financial Group, Inc. | 27,800 | 1,834,244 | ||||
| Lincoln National Corp. | 66,200 | 3,609,886 | ||||
| MetLife, Inc. | 78,300 | 3,927,528 | ||||
| Old Republic International Corp. | 203,075 | 4,355,959 | ||||
| Philadelphia Consolidated Holdings | ||||||
| Corp. (a) | 55,400 | 5,382,110 | ||||
| SAFECO Corp. | 40,200 | 2,100,450 | ||||
| StanCorp Financial Group, Inc. | 30,800 | 1,532,300 | ||||
| The Chubb Corp. | 56,030 | 5,286,431 | ||||
| United Fire & Casualty Co. | 87,900 | 3,605,658 | ||||
| UnumProvident Corp. | 94,300 | 1,917,119 | ||||
| W.R. Berkley Corp. | 100,300 | 4,954,820 | ||||
| 63,817,129 | ||||||
| Real Estate 2.5% | ||||||
| Trizec Properties, Inc. | 196,500 | 4,576,485 | ||||
| Vornado Realty Trust | 14,700 | 1,298,598 | ||||
| Weingarten Realty Investors (SBI) | 83,600 | 3,388,308 | ||||
| 9,263,391 | ||||||
See accompanying notes which are an integral part of the financial statements.
15 Annual Report
| Fidelity Mid Cap Value Fund | ||||||
| Investments - continued | ||||||
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| FINANCIALS – continued | ||||||
| Thrifts & Mortgage Finance – 3.0% | ||||||
| MGIC Investment Corp. | 59,400 | $ 3,920,994 | ||||
| Radian Group, Inc. | 111,900 | 6,404,037 | ||||
| The PMI Group, Inc. | 12,100 | 523,083 | ||||
| 10,848,114 | ||||||
| TOTAL FINANCIALS | 115,650,967 | |||||
| HEALTH CARE 4.9% | ||||||
| Health Care Providers & Services 3.5% | ||||||
| AmerisourceBergen Corp. | 38,900 | 1,697,596 | ||||
| CIGNA Corp. | 15,700 | 1,909,120 | ||||
| Emdeon Corp. (a) | 202,400 | 1,890,416 | ||||
| Humana, Inc. (a) | 37,700 | 2,102,529 | ||||
| McKesson Corp. | 100,600 | 5,331,800 | ||||
| 12,931,461 | ||||||
| Pharmaceuticals 1.4% | ||||||
| King Pharmaceuticals, Inc. (a) | 190,300 | 3,568,125 | ||||
| Watson Pharmaceuticals, Inc. (a) | 44,700 | 1,479,123 | ||||
| 5,047,248 | ||||||
| TOTAL HEALTH CARE | 17,978,709 | |||||
| INDUSTRIALS – 7.1% | ||||||
| Aerospace & Defense – 1.5% | ||||||
| Alliant Techsystems, Inc. (a) | 23,600 | 1,829,000 | ||||
| Precision Castparts Corp. | 74,400 | 3,716,280 | ||||
| 5,545,280 | ||||||
| Airlines – 0.5% | ||||||
| Southwest Airlines Co. | 115,200 | 1,896,192 | ||||
| Building Products – 0.2% | ||||||
| USG Corp. (a) | 7,250 | 690,200 | ||||
| Commercial Services & Supplies 0.4% | ||||||
| Manpower, Inc. | 29,400 | 1,582,602 | ||||
| Electrical Equipment 0.9% | ||||||
| Rockwell Automation, Inc. | 32,400 | 2,140,668 | ||||
| Thomas & Betts Corp. (a) | 25,600 | 1,143,040 | ||||
| 3,283,708 | ||||||
| Machinery – 1.8% | ||||||
| Cummins, Inc. | 58,000 | 5,643,400 | ||||
| Terex Corp. (a) | 13,300 | 937,650 | ||||
| 6,581,050 | ||||||
| Road & Rail 1.8% | ||||||
| CSX Corp. | 38,800 | 2,076,964 | ||||
| Norfolk Southern Corp. | 89,900 | 4,480,616 | ||||
| 6,557,580 | ||||||
| TOTAL INDUSTRIALS | 26,136,612 | |||||
| Shares | Value (Note 1) | |||||
| INFORMATION TECHNOLOGY 8.4% | ||||||
| Communications Equipment – 1.4% | ||||||
| Harris Corp. | 111,900 | $ | 5,195,517 | |||
| Computers & Peripherals 2.6% | ||||||
| NCR Corp. (a) | 106,500 | 3,956,475 | ||||
| SanDisk Corp. (a)(d) | 46,000 | 3,098,560 | ||||
| Seagate Technology | 50,400 | 1,314,432 | ||||
| Sun Microsystems, Inc. (a) | 219,300 | 986,850 | ||||
| 9,356,317 | ||||||
| Electronic Equipment & Instruments – 1.6% | ||||||
| Arrow Electronics, Inc. (a) | 171,600 | �� | 5,896,176 | |||
| IT Services 1.6% | ||||||
| Affiliated Computer Services, Inc. | ||||||
| Class A (a) | 60,900 | 3,812,340 | ||||
| Ceridian Corp. (a) | 87,100 | 2,149,628 | ||||
| 5,961,968 | ||||||
| Semiconductors & Semiconductor Equipment – 0.4% | ||||||
| LSI Logic Corp. (a) | 146,400 | 1,339,560 | ||||
| Software 0.8% | ||||||
| Cadence Design Systems, Inc. (a) | 79,700 | 1,407,502 | ||||
| Novell, Inc. (a) | 167,100 | 1,627,554 | ||||
| 3,035,056 | ||||||
| TOTAL INFORMATION TECHNOLOGY | 30,784,594 | |||||
| MATERIALS 7.5% | ||||||
| Chemicals 2.3% | ||||||
| Eastman Chemical Co. | 54,200 | 2,612,982 | ||||
| Rohm & Haas Co. | 42,500 | 2,163,250 | ||||
| The Scotts Co. Class A | 74,500 | 3,687,750 | ||||
| 8,463,982 | ||||||
| Metals & Mining – 4.0% | ||||||
| Nucor Corp. | 98,900 | 8,330,346 | ||||
| Phelps Dodge Corp. | 39,610 | 6,357,405 | ||||
| 14,687,751 | ||||||
| Paper & Forest Products 1.2% | ||||||
| Louisiana Pacific Corp. | 144,500 | 4,255,525 | ||||
| TOTAL MATERIALS | 27,407,258 | |||||
| TELECOMMUNICATION SERVICES 1.5% | ||||||
| Diversified Telecommunication Services – 1.5% | ||||||
| CenturyTel, Inc. | 43,400 | 1,445,220 | ||||
| Qwest Communications International, | ||||||
| Inc. (a) | 651,100 | 3,919,622 | ||||
| 5,364,842 | ||||||
| UTILITIES 13.1% | ||||||
| Electric Utilities – 4.6% | ||||||
| Allegheny Energy, Inc. (a) | 99,000 | 3,444,210 | ||||
| Edison International | 184,600 | 8,089,172 | ||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report | 16 |
| Common Stocks continued | ||||
| Shares | Value (Note 1) | |||
| UTILITIES – continued | ||||
| Electric Utilities – continued | ||||
| PPL Corp. | 75,600 | $ 2,277,828 | ||
| Sierra Pacific Resources (a) | 233,300 | 3,079,560 | ||
| 16,890,770 | ||||
| Gas Utilities 3.2% | ||||
| ONEOK, Inc. | 215,400 | 6,087,204 | ||
| UGI Corp. | 255,600 | 5,487,732 | ||
| 11,574,936 | ||||
| Independent Power Producers & Energy Traders 2.2% | ||||
| NRG Energy, Inc. (a) | 51,000 | 2,461,770 | ||
| TXU Corp. | 107,700 | 5,453,928 | ||
| 7,915,698 | ||||
| Multi-Utilities – 3.1% | ||||
| CenterPoint Energy, Inc. | 151,400 | 1,934,892 | ||
| CMS Energy Corp. (a) | 183,800 | 2,659,586 | ||
| PG&E Corp. | 114,700 | 4,279,457 | ||
| Wisconsin Energy Corp. | 59,400 | 2,465,694 | ||
| 11,339,629 | ||||
| TOTAL UTILITIES | 47,721,033 | |||
| TOTAL COMMON STOCKS | ||||
| (Cost $329,058,771) | 360,701,816 | |||
| Investment Companies 0.6% | ||||
| Shares | Value (Note 1) | |||
| iShares Russell Midcap Value Index Fund (d) | ||||
| (Cost $2,292,011) | 18,000 | $ 2,332,800 | ||
| Money Market Funds 4.2% | ||||
| Fidelity Cash Central Fund, | ||||
| 4.46% (b) | 3,933,859 | 3,933,859 | ||
| Fidelity Securities Lending Cash | ||||
| Central Fund, 4.48% (b)(c) | 11,228,725 | 11,228,725 | ||
| TOTAL MONEY MARKET FUNDS | ||||
| (Cost $15,162,584) | 15,162,584 | |||
| TOTAL INVESTMENT PORTFOLIO 103.4% | ||||
| (Cost $346,513,366) | 378,197,200 | |||
| NET OTHER ASSETS (3.4)% | (12,380,041) | |||
| NET ASSETS 100% | $ 365,817,159 | |||
| Legend (a) Non-income producing (b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund’s holdings as of its most recent quarter end is available upon request. (c) Investment made with cash collateral received from securities on loan. (d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds
Information regarding fiscal year to date income received by the fund from the affiliated Central funds is as follows:
| Fund | Income received | |
| Fidelity Cash Central Fund | $ 102,855 | |
| Fidelity Securities Lending Cash Central Fund | 27,589 | |
| Total | $ 130,444 |
See accompanying notes which are an integral part of the financial statements.
17 Annual Report
| Fidelity Mid Cap Value Fund | ||||||||
| Financial Statements | ||||||||
| Statement of Assets and Liabilities | ||||||||
| January 31, 2006 | ||||||||
| Assets | ||||||||
| Investment in securities, at value (in- | ||||||||
| cluding securities loaned of | ||||||||
| $10,016,808) — See accompany- | ||||||||
| ing schedule: | ||||||||
| Unaffiliated issuers (cost | ||||||||
| $331,350,782) | $ | 363,034,616 | ||||||
| Affiliated Central Funds (cost | ||||||||
| $15,162,584) | 15,162,584 | |||||||
| Total Investments (cost | ||||||||
| $346,513,366) | $ | 378,197,200 | ||||||
| Receivable for investments sold | 5,966,377 | |||||||
| Receivable for fund shares sold | 3,691,428 | |||||||
| Dividends receivable | 186,434 | |||||||
| Interest receivable | 21,481 | |||||||
| Prepaid expenses | 907 | |||||||
| Other affiliated receivables | 409 | |||||||
| Other receivables | 53,261 | |||||||
| Total assets | 388,117,497 | |||||||
| Liabilities | ||||||||
| Payable for investments purchased | $ | 9,306,445 | ||||||
| Payable for fund shares redeemed | 1,495,028 | |||||||
| Accrued management fee | 148,224 | |||||||
| Other affiliated payables | 77,280 | |||||||
| Other payables and accrued | ||||||||
| expenses | 44,636 | |||||||
| Collateral on securities loaned, at | ||||||||
| value | 11,228,725 | |||||||
| Total liabilities | 22,300,338 | |||||||
| Net Assets | $ | 365,817,159 | ||||||
| Net Assets consist of: | ||||||||
| Paid in capital | $ | 325,862,599 | ||||||
| Undistributed net investment income | 956,589 | |||||||
| Accumulated undistributed net real- | ||||||||
| ized gain (loss) on investments | 7,314,137 | |||||||
| Net unrealized appreciation (de- | ||||||||
| preciation) on investments | 31,683,834 | |||||||
| Net Assets, for 23,377,674 shares | ||||||||
| outstanding | $ | 365,817,159 | ||||||
| Net Asset Value, offering price and | ||||||||
| redemption price per share | ||||||||
| ($365,817,159 ÷ 23,377,674 | ||||||||
| shares) | $ | 15.65 | ||||||
| Statement of Operations | ||||||
| Year ended January 31, 2006 | ||||||
| Investment Income | ||||||
| Dividends | $ | 3,502,710 | ||||
| Special dividends | 619,920 | |||||
| Interest | 1,587 | |||||
| Income from affiliated Central Funds | 130,444 | |||||
| Total income | 4,254,661 | |||||
| Expenses | ||||||
| Management fee | ||||||
| Basic fee | $ | 1,286,178 | ||||
| Performance adjustment | (169,949) | |||||
| Transfer agent fees | 609,764 | |||||
| Accounting and security lending | ||||||
| fees | 85,395 | |||||
| Independent trustees’ compensation | 915 | |||||
| Custodian fees and expenses | 18,124 | |||||
| Registration fees | 48,391 | |||||
| Audit | 51,630 | |||||
| Legal | 1,105 | |||||
| Interest | 2,376 | |||||
| Miscellaneous | 1,000 | |||||
| Total expenses before reductions | 1,934,929 | |||||
| Expense reductions | (119,600) | 1,815,329 | ||||
| Net investment income (loss) | 2,439,332 | |||||
| Realized and Unrealized Gain | ||||||
| (Loss) | ||||||
| Net realized gain (loss) on: | ||||||
| Investment securities: | ||||||
| Unaffiliated issuers | 24,118,291 | |||||
| Futures contracts | (3,980) | |||||
| Total net realized gain (loss) | 24,114,311 | |||||
| Change in net unrealized appreci- | ||||||
| ation (depreciation) on investment | ||||||
| securities | 16,442,497 | |||||
| Net gain (loss) | 40,556,808 | |||||
| Net increase (decrease) in net as- | ||||||
| sets resulting from operations | $ | 42,996,140 | ||||
| See accompanying notes which are an integral part of the financial statements. | ||
| Annual Report | 18 |
| Statement of Changes in Net Assets | ||||||
| Year ended | Year ended | |||||
| January 31, | January 31, | |||||
| 2006 | 2005 | |||||
| Increase (Decrease) in Net Assets | ||||||
| Operations | ||||||
| Net investment income (loss) | $ 2,439,332 | $ 561,836 | ||||
| Net realized gain (loss) | 24,114,311 | 12,258,887 | ||||
| Change in net unrealized appreciation (depreciation) | 16,442,497 | 3,757,557 | ||||
| Net increase (decrease) in net assets resulting from operations | 42,996,140 | 16,578,280 | ||||
| Distributions to shareholders from net investment income | (1,664,792) | (363,688) | ||||
| Distributions to shareholders from net realized gain | (19,625,292) | (2,909,505) | ||||
| Total distributions | (21,290,084) | (3,273,193) | ||||
| Share transactions | ||||||
| Proceeds from sales of shares | 278,341,109 | 113,733,065 | ||||
| Reinvestment of distributions | 20,604,738 | 3,166,254 | ||||
| Cost of shares redeemed | (108,099,451) | (72,789,352) | ||||
| Net increase (decrease) in net assets resulting from share transactions | 190,846,396 | 44,109,967 | ||||
| Redemption fees | 33,888 | 18,590 | ||||
| Total increase (decrease) in net assets | 212,586,340 | 57,433,644 | ||||
| Net Assets | ||||||
| Beginning of period | 153,230,819 | 95,797,175 | ||||
| End of period (including undistributed net investment income of $956,589 and undistributed net investment income | ||||||
| of $203,771, respectively) | $ 365,817,159 | $ 153,230,819 | ||||
| Other Information | ||||||
| Shares | ||||||
| Sold | 18,454,590 | 8,541,621 | ||||
| Issued in reinvestment of distributions | 1,373,635 | 227,952 | ||||
| Redeemed | (7,290,551) | (5,704,954) | ||||
| Net increase (decrease) | 12,537,674 | 3,064,619 |
| Financial Highlights | ||||||||||
| Years ended January 31, | 2006 | 2005 | 2004 | 2003 | 2002F | |||||
| Selected Per Share Data | ||||||||||
| Net asset value, beginning of period | $ 14.14 | $ 12.32 | $ 8.85 | $ 10.59 | $ 10.00 | |||||
| Income from Investment Operations | ||||||||||
| Net investment income (loss)D | 16E | .08 | .06 | .08 | .01 | |||||
| Net realized and unrealized gain (loss) | 2.59 | 2.10 | 3.45 | (1.74) | .59 | |||||
| Total from investment operations | 2.75 | 2.18 | 3.51 | (1.66) | .60 | |||||
| Distributions from net investment income | (.10) | (.04) | (.04) | (.08) | (.01) | |||||
| Distributions from net realized gain | (1.15) | (.32) | — | — | — | |||||
| Total distributions | (1.24)I | (.36) | (.04) | (.08) | (.01) | |||||
| Redemption fees added to paid in capitalD | —H | —H | —H | —H | — | |||||
| Net asset value, end of period | $ 15.65 | $ 14.14 | $ 12.32 | $ 8.85 | $ 10.59 | |||||
| Total ReturnB,C | 19.97% | 17.75% | 39.69% | (15.71)% | 6.00% | |||||
| Ratios to Average Net AssetsG | ||||||||||
| Expenses before reductions | 86% | .91% | 1.07% | 1.28% | 2.30%A | |||||
| Expenses net of fee waivers, if any | 86% | .91% | 1.07% | 1.20% | 1.20%A | |||||
| Expenses net of all reductions | 81% | .90% | 1.05% | 1.18% | 1.20%A | |||||
| Net investment income (loss) | 1.08%E | .59% | .55% | .79% | .59%A | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ 365,817 | $ 153,231 | $ 95,797 | $ 36,419 | $ 23,773 | |||||
| Portfolio turnover rate | 207% | 196% | 97% | 113% | 68%A |
| A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Investment income per share reflects a special dividend which amounted to $.04 per share. Excluding the special dividend, the ratio of net investment income to average net assets would have been .81%. F For the period November 15, 2001 (commencement of operations) to January 31, 2002. G Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund. H Amount represents less than $.01 per share. I Total distribution of $1.24 per share is comprised of distributions from net investment income of $.095 and distributions from net realized gain of $1.145 per share. |
See accompanying notes which are an integral part of the financial statements.
19 Annual Report
| Fidelity Large Cap Growth Fund Performance: The Bottom Line |
Average annual 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) and assuming a constant rate of performance each year. The $10,000 table and the fund’s returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
| Average Annual Total Returns | ||||
| Periods ended January 31, 2006 | Past 1 | Life of | ||
| year | fundA | |||
| Fidelity Large Cap Growth | 18.66% | 4.56% | ||
| A From November 15, 2001. | ||||
| $10,000 Over Life of Fund | ||||
Let’s say hypothetically that $10,000 was invested in Fidelity Large Cap Growth Fund on November 15, 2001, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Russell 1000® Growth Index performed over the same period.
| Annual Report |
| 20 |
| Fidelity Large Cap Growth Fund |
Management’s Discussion of Fund Performance
Comments from Bahaa Fam, Portfolio Manager of Fidelity® Large Cap Growth Fund
Most major U.S. stock benchmarks had double digit returns for the year ending January 31, 2006. Market performance was driven largely by oil. Height ened demand from the United States and China, among others, plus Hurricane Katrina’s devastation of domestic refining capacity in the Gulf Coast region, propelled oil prices to record highs. The energy component of the Standard & Poor’s 500SM Index soared nearly 46% during the period, while the next closest utilities rose about 17%. The overall return for the S&P 500® was 10.38% . In 2005, the S&P 500 beat the small cap Russell 2000® Index for the first time in six years, but quickly lost that advantage when the Russell benchmark jumped 9% in January, pushing its 12 month return to 18.89% . Mid caps did even better: The 21.45% return of the Russell Midcap® Index doubled the broader market’s performance for the period. The NASDAQ Composite® Index fared well, gaining 12.75%, but the Dow Jones Industrial AverageSM increased only 6.00% .
For the fiscal year ending January 31, 2006, the fund’s 18.66% return outpaced both the Russell 1000® Growth Index and the LipperSM Growth Funds Average, which posted gains of 10.81% and 13.62%, respectively. Good stock picking helped the fund outperform the index in eight of its 10 major market sectors. Security selection in the information technology sector especially within the tech hardware and equipment industry added the most value. A number of strong performers helped results in the consumer durables/apparel and capital goods industries, as well as in the health care sector. In general, I found better opportunities outside of the largest names in the index and at the smaller end of my investment universe. This also contributed, in part, to the good returns for the period. Overall results were dampened somewhat by unfavorable stock picks in the diversified financials group. Among the fund’s best contributors were Apple Computer; Gilead Sciences, which holds a dominant position in the HIV drug market; Joy Global, which makes heavy machinery for mining commodities; and Valero Energy, an independent oil refiner. Big detractors included Tessera Technologies, a maker of semiconductor packaging, which disappointed on slower earnings, and trucking company Yellow Roadway, whose revenues were clipped by higher fuel costs. Some stocks mentioned here were sold from the portfolio.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
21 21 Annual Report
| Fidelity Large Cap Growth Fund Investment Changes |
| Top Ten Stocks as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Apple Computer, Inc. | 3.9 | 2.9 | ||
| Joy Global, Inc. | 3.3 | 0.0 | ||
| Gilead Sciences, Inc. | 3.1 | 1.5 | ||
| Aetna, Inc. | 2.9 | 2.3 | ||
| Building Material Holding Corp. | 2.8 | 0.0 | ||
| Norfolk Southern Corp. | 2.8 | 2.4 | ||
| Ryland Group, Inc. | 2.7 | 2.5 | ||
| Hewlett Packard Co. | 2.7 | 0.0 | ||
| Lennar Corp. Class A | 2.6 | 0.7 | ||
| KB Home | 2.5 | 2.3 | ||
| 29.3 | ||||
| Top Five Market Sectors as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Information Technology | 25.5 | 26.5 | ||
| Health Care | 17.8 | 18.6 | ||
| Consumer Discretionary | 15.3 | 16.0 | ||
| Industrials | 14.3 | 14.4 | ||
| Consumer Staples | 10.8 | 11.6 | ||
Annual Report 22
| Fidelity Large Cap Growth Fund | ||||
| Investments January 31, 2006 | ||||
| Showing Percentage of Net Assets | ||||
| Common Stocks 98.5% | ||||
| Shares | Value (Note 1) | |||
| CONSUMER DISCRETIONARY 15.3% | ||||
| Distributors 2.8% | ||||
| Building Material Holding Corp. | 55,600 | $ 4,401,852 | ||
| Hotels, Restaurants & Leisure 1.9% | ||||
| Penn National Gaming, Inc. (a) | 95,100 | 3,052,710 | ||
| Household Durables 10.2% | ||||
| D.R. Horton, Inc. | 100,600 | 3,754,392 | ||
| KB Home | 52,400 | 3,992,880 | ||
| Lennar Corp. Class A | 65,200 | 4,078,912 | ||
| Ryland Group, Inc. | 59,300 | 4,290,948 | ||
| 16,117,132 | ||||
| Multiline Retail – 0.1% | ||||
| Nordstrom, Inc. | 3,700 | 154,364 | ||
| Specialty Retail 0.3% | ||||
| Lowe’s Companies, Inc. | 7,400 | 470,270 | ||
| TOTAL CONSUMER DISCRETIONARY | 24,196,328 | |||
| CONSUMER STAPLES 10.8% | ||||
| Beverages 1.7% | ||||
| Hansen Natural Corp. (a)(d) | 29,700 | 2,607,660 | ||
| Food & Staples Retailing – 4.4% | ||||
| Costco Wholesale Corp. | 8,900 | 444,021 | ||
| CVS Corp. | 23,200 | 644,032 | ||
| Wal Mart Stores, Inc. | 43,400 | 2,001,174 | ||
| Walgreen Co. | 40,200 | 1,739,856 | ||
| Whole Foods Market, Inc. | 29,100 | 2,149,617 | ||
| 6,978,700 | ||||
| Food Products – 2.4% | ||||
| General Mills, Inc. | 45,400 | 2,206,894 | ||
| Kellogg Co. | 12,100 | 519,090 | ||
| Seaboard Corp. | 749 | 1,101,023 | ||
| 3,827,007 | ||||
| Household Products – 0.5% | ||||
| Procter & Gamble Co. | 11,782 | 697,848 | ||
| Tobacco – 1.8% | ||||
| Altria Group, Inc. | 40,100 | 2,900,834 | ||
| TOTAL CONSUMER STAPLES | 17,012,049 | |||
| ENERGY 4.4% | ||||
| Oil, Gas & Consumable Fuels 4.4% | ||||
| ConocoPhillips | 19,100 | 1,235,770 | ||
| Devon Energy Corp. | 18,000 | 1,227,780 | ||
| Exxon Mobil Corp. | 7,500 | 470,625 | ||
| Frontier Oil Corp. | 12,300 | 582,897 | ||
| Sunoco, Inc. | 27,500 | 2,618,000 | ||
| Valero Energy Corp. | 12,800 | 799,104 | ||
| 6,934,176 | ||||
| Shares | Value (Note 1) | |||||||
| FINANCIALS – 6.9% | ||||||||
| Capital Markets 1.7% | ||||||||
| Greenhill & Co., Inc. | 8,700 | $ | 497,466 | |||||
| TD Ameritrade Holding Corp. | 107,400 | 2,173,776 | ||||||
| 2,671,242 | ||||||||
| Commercial Banks – 0.8% | ||||||||
| Wells Fargo & Co. | 19,500 | 1,216,020 | ||||||
| Insurance – 3.0% | ||||||||
| Fidelity National Financial, Inc. | 72,700 | 2,869,469 | ||||||
| Prudential Financial, Inc. | 14,600 | 1,099,964 | ||||||
| The Chubb Corp. | 8,500 | 801,975 | ||||||
| 4,771,408 | ||||||||
| Thrifts & Mortgage Finance – 1.4% | ||||||||
| Radian Group, Inc. | 38,200 | 2,186,186 | ||||||
| TOTAL FINANCIALS | 10,844,856 | |||||||
| HEALTH CARE 17.8% | ||||||||
| Biotechnology – 8.5% | ||||||||
| Amgen, Inc. (a) | 19,700 | 1,435,933 | ||||||
| Biogen Idec, Inc. (a) | 55,000 | 2,461,250 | ||||||
| Genentech, Inc. (a) | 29,800 | 2,560,416 | ||||||
| Gilead Sciences, Inc. (a) | 79,400 | 4,833,078 | ||||||
| United Therapeutics Corp. (a) | 32,000 | 2,069,440 | ||||||
| 13,360,117 | ||||||||
| Health Care Equipment & Supplies 0.4% | ||||||||
| Stryker Corp. | 13,500 | 673,650 | ||||||
| Health Care Providers & Services 6.4% | ||||||||
| Aetna, Inc. | 48,000 | 4,646,400 | ||||||
| Cerner Corp. (a) | 8,800 | 396,000 | ||||||
| CIGNA Corp. | 6,500 | 790,400 | ||||||
| Community Health Systems, Inc. (a) | 12,600 | 458,514 | ||||||
| UnitedHealth Group, Inc. | 63,600 | 3,779,112 | ||||||
| 10,070,426 | ||||||||
| Pharmaceuticals 2.5% | ||||||||
| Johnson & Johnson | 67,600 | 3,889,704 | ||||||
| TOTAL HEALTH CARE | 27,993,897 | |||||||
| INDUSTRIALS – 14.3% | ||||||||
| Aerospace & Defense – 2.1% | ||||||||
| L 3 Communications Holdings, Inc. | 17,400 | 1,409,748 | ||||||
| Precision Castparts Corp. | 14,200 | 709,290 | ||||||
| The Boeing Co. | 11,500 | 785,565 | ||||||
| United Technologies Corp. | 5,500 | 321,035 | ||||||
| 3,225,638 | ||||||||
| Electrical Equipment 0.2% | ||||||||
| Energy Conversion Devices, Inc. (a) | 7,000 | 352,520 | ||||||
| Industrial Conglomerates 2.1% | ||||||||
| General Electric Co. | 100,000 | 3,275,000 | ||||||
See accompanying notes which are an integral part of the financial statements.
23 Annual Report
| Fidelity Large Cap Growth Fund | ||||||
| Investments - continued | ||||||
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| INDUSTRIALS – continued | ||||||
| Machinery – 5.3% | ||||||
| Deere & Co. | 43,400 | $ | 3,114,384 | |||
| Joy Global, Inc. | 97,450 | 5,266,198 | ||||
| 8,380,582 | ||||||
| Road & Rail 4.6% | ||||||
| Burlington Northern Santa Fe Corp. | 16,100 | 1,289,932 | ||||
| CSX Corp. | 29,800 | 1,595,194 | ||||
| Norfolk Southern Corp. | 87,650 | 4,368,476 | ||||
| 7,253,602 | ||||||
| TOTAL INDUSTRIALS | 22,487,342 | |||||
| INFORMATION TECHNOLOGY 25.5% | ||||||
| Communications Equipment – 1.0% | ||||||
| QUALCOMM, Inc. | 32,100 | 1,539,516 | ||||
| Computers & Peripherals 13.2% | ||||||
| Apple Computer, Inc. (a) | 81,000 | 6,116,309 | ||||
| Hewlett Packard Co. | 136,700 | 4,262,306 | ||||
| Komag, Inc. (a)(d) | 61,300 | 2,884,778 | ||||
| SanDisk Corp. (a) | 54,200 | 3,650,912 | ||||
| Western Digital Corp. (a) | 174,500 | 3,814,570 | ||||
| 20,728,875 | ||||||
| Internet Software & Services 1.0% | ||||||
| Google, Inc. Class A (sub. vtg.) (a) | 2,600 | 1,126,450 | ||||
| Yahoo!, Inc. (a) | 15,600 | 535,704 | ||||
| 1,662,154 | ||||||
| Semiconductors & Semiconductor Equipment – 6.7% | ||||||
| Advanced Micro Devices, Inc. (a) | 60,100 | 2,515,786 | ||||
| Conexant Systems, Inc. (a) | 447,900 | 1,504,944 | ||||
| Cymer, Inc. (a) | 41,100 | 1,855,254 | ||||
| Marvell Technology Group Ltd. (a) | 7,200 | 492,624 | ||||
| NVIDIA Corp. (a) | 4,700 | 211,312 | ||||
| SiRF Technology Holdings, Inc. (a) | 40,400 | 1,361,076 | ||||
| Texas Instruments, Inc. | 90,500 | 2,645,315 | ||||
| 10,586,311 | ||||||
| Software 3.6% | ||||||
| Activision, Inc. (a) | 44,410 | 636,839 | ||||
| Autodesk, Inc. | 70,200 | 2,849,418 | ||||
| Microsoft Corp. | 76,200 | 2,145,030 | ||||
| 5,631,287 | ||||||
| TOTAL INFORMATION TECHNOLOGY | 40,148,143 | |||||
| MATERIALS 2.3% | ||||||
| Metals & Mining – 2.3% | ||||||
| Phelps Dodge Corp. | 16,600 | 2,664,300 | ||||
| Quanex Corp. | 15,300 | 950,283 | ||||
| 3,614,583 | ||||||
| Shares | Value (Note 1) | |||
| TELECOMMUNICATION SERVICES 0.6% | ||||
| Diversified Telecommunication Services – 0.6% | ||||
| Qwest Communications International, | ||||
| Inc. (a) | 175,900 | $ 1,058,918 | ||
| UTILITIES 0.6% | ||||
| Independent Power Producers & Energy Traders 0.6% | ||||
| TXU Corp. | 18,000 | 911,520 | ||
| TOTAL COMMON STOCKS | ||||
| (Cost $137,889,576) | 155,201,812 | |||
| Investment Companies 1.1% | ||||
| iShares Russell 1000 Growth Index Fund | ||||
| (Cost $1,758,319) | 33,500 | 1,731,950 | ||
| U.S. Treasury Obligations 0.8% | ||||
| Principal | ||||
| Amount | ||||
| U.S. Treasury Bills, yield at date of | ||||
| purchase 4.03% 2/2/06 | ||||
| (Cost $1,249,721) | $ 1,250,000 | 1,249,880 | ||
| Money Market Funds 2.6% | ||||
| Shares | ||||
| Fidelity Cash Central Fund, | ||||
| 4.46% (b) | 270,399 | 270,399 | ||
| Fidelity Securities Lending Cash | ||||
| Central Fund, 4.48% (b)(c) | 3,837,600 | 3,837,600 | ||
| TOTAL MONEY MARKET FUNDS | ||||
| (Cost $4,107,999) | 4,107,999 | |||
| TOTAL INVESTMENT PORTFOLIO 103.0% | ||||
| (Cost $145,005,615) | 162,291,641 | |||
| NET OTHER ASSETS (3.0)% | (4,778,173) | |||
| NET ASSETS 100% | $ 157,513,468 | |||
| Legend (a) Non-income producing (b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund’s holdings as of its most recent quarter end is available upon request. (c) Investment made with cash collateral received from securities on loan. (d) Security or a portion of the security is on loan at period end. |
See accompanying notes which are an integral part of the financial statements.
Annual Report 24
Affiliated Central Funds
Information regarding fiscal year to date income received by the fund from the affiliated Central funds is as follows:
| Fund | Income received | |||
| Fidelity Cash Central Fund | $ | 75,561 | ||
| Fidelity Securities Lending Cash Central Fund | 4,270 | |||
| Total | $ | 79,831 | ||
See accompanying notes which are an integral part of the financial statements.
25 Annual Report
| Fidelity Large Cap Growth Fund Financial Statements |
| Statement of Assets and Liabilities | ||||||||
| January 31, 2006 | ||||||||
| Assets | ||||||||
| Investment in securities, at value (in- | ||||||||
| cluding securities loaned of | ||||||||
| $3,758,072) — See accompany- | ||||||||
| ing schedule: | ||||||||
| Unaffiliated issuers (cost | ||||||||
| $140,897,616) | $ | 158,183,642 | ||||||
| Affiliated Central Funds (cost | ||||||||
| $4,107,999) | 4,107,999 | |||||||
| Total Investments (cost | ||||||||
| $145,005,615) | $ | 162,291,641 | ||||||
| Receivable for investments sold | 630,480 | |||||||
| Receivable for fund shares sold | 538,228 | |||||||
| Dividends receivable | 228,247 | |||||||
| Interest receivable | 15,354 | |||||||
| Prepaid expenses | 391 | |||||||
| Receivable from investment adviser | ||||||||
| for expense reductions | 7,407 | |||||||
| Other affiliated receivables | 245 | |||||||
| Other receivables | 20,607 | |||||||
| Total assets | 163,732,600 | |||||||
| Liabilities | ||||||||
| Payable for investments purchased | $ | 1,655,740 | ||||||
| Payable for fund shares redeemed | 558,981 | |||||||
| Accrued management fee | 83,019 | |||||||
| Other affiliated payables | 41,413 | |||||||
| Other payables and accrued | ||||||||
| expenses | 42,379 | |||||||
| Collateral on securities loaned, at | ||||||||
| value | 3,837,600 | |||||||
| Total liabilities | 6,219,132 | |||||||
| Net Assets | $ | 157,513,468 | ||||||
| Net Assets consist of: | ||||||||
| Paid in capital | $ | 137,997,164 | ||||||
| Undistributed net investment income | 141,406 | |||||||
| Accumulated undistributed net real- | ||||||||
| ized gain (loss) on investments | 2,088,872 | |||||||
| Net unrealized appreciation (de- | ||||||||
| preciation) on investments | 17,286,026 | |||||||
| Net Assets, for 13,321,333 shares | ||||||||
| outstanding | $ | 157,513,468 | ||||||
| Net Asset Value, offering price and | ||||||||
| redemption price per share | ||||||||
| ($157,513,468 ÷ 13,321,333 | ||||||||
| shares) | $ | 11.82 | ||||||
| Statement of Operations | ||||||
| Year ended January 31, 2006 | ||||||
| Investment Income | ||||||
| Dividends | $ | 727,662 | ||||
| Special dividends | 210,060 | |||||
| Interest | 3,046 | |||||
| Income from affiliated Central Funds | 79,831 | |||||
| Total income | 1,020,599 | |||||
| Expenses | ||||||
| Management fee | ||||||
| Basic fee | $ | 533,091 | ||||
| Performance adjustment | 70,018 | |||||
| Transfer agent fees | 318,448 | |||||
| Accounting and security lending | ||||||
| fees | 35,112 | |||||
| Independent trustees’ compensation | 367 | |||||
| Custodian fees and expenses | 19,084 | |||||
| Registration fees | 24,854 | |||||
| Audit | 48,443 | |||||
| Legal | 448 | |||||
| Miscellaneous | 607 | |||||
| Total expenses before reductions | 1,050,472 | |||||
| Expense reductions | (171,281) | 879,191 | ||||
| Net investment income (loss) | 141,408 | |||||
| Realized and Unrealized Gain | ||||||
| (Loss) | ||||||
| Net realized gain (loss) on: | ||||||
| Investment securities: | ||||||
| Unaffiliated issuers | 5,254,656 | |||||
| Futures contracts | 104,035 | |||||
| Total net realized gain (loss) | 5,358,691 | |||||
| Change in net unrealized appreci- | ||||||
| ation (depreciation) on investment | ||||||
| securities | 12,042,840 | |||||
| Net gain (loss) | 17,401,531 | |||||
| Net increase (decrease) in net as- | ||||||
| sets resulting from operations | $ | 17,542,939 | ||||
See accompanying notes which are an integral part of the financial statements.
Annual Report 26
| Statement of Changes in Net Assets | ||||||
| Year ended | Year ended | |||||
| January 31, | January 31, | |||||
| 2006 | 2005 | |||||
| Increase (Decrease) in Net Assets | ||||||
| Operations | ||||||
| Net investment income (loss) | $ 141,408 | $ (22,007) | ||||
| Net realized gain (loss) | 5,358,691 | 3,223,363 | ||||
| Change in net unrealized appreciation (depreciation) | 12,042,840 | 1,164,754 | ||||
| Net increase (decrease) in net assets resulting from operations | 17,542,939 | 4,366,110 | ||||
| Distributions to shareholders from net realized gain | (2,688,652) | — | ||||
| Share transactions | ||||||
| Proceeds from sales of shares | 147,129,255 | 33,426,772 | ||||
| Reinvestment of distributions | 2,613,416 | — | ||||
| Cost of shares redeemed | (56,552,222) | (11,423,588) | ||||
| Net increase (decrease) in net assets resulting from share transactions | 93,190,449 | 22,003,184 | ||||
| Redemption fees | 15,640 | 4,378 | ||||
| Total increase (decrease) in net assets | 108,060,376 | 26,373,672 | ||||
| Net Assets | ||||||
| Beginning of period | 49,453,092 | 23,079,420 | ||||
| End of period (including undistributed net investment income of $141,406 and $0, respectively) | $ 157,513,468 | $ 49,453,092 | ||||
| Other Information | ||||||
| Shares | ||||||
| Sold | 13,225,898 | 3,583,804 | ||||
| Issued in reinvestment of distributions | 227,848 | — | ||||
| Redeemed | (4,995,974) | (1,226,025) | ||||
| Net increase (decrease) | 8,457,772 | 2,357,779 | ||||
| Financial Highlights | ||||||||||
| Years ended January 31, | 2006 | 2005 | 2004 | 2003 | 2002G | |||||
| Selected Per Share Data | ||||||||||
| Net asset value, beginning of period | $ 10.17 | $ 9.21 | $ 6.93 | $ 9.83 | $ 10.00 | |||||
| Income from Investment Operations | ||||||||||
| Net investment income (loss)D | 02E | (.01)F | (.01) | (.01) | (.01) | |||||
| Net realized and unrealized gain (loss) | 1.87 | .97 | 2.29 | (2.89) | (.16) | |||||
| Total from investment operations | 1.89 | .96 | 2.28 | (2.90) | (.17) | |||||
| Distributions from net realized gain | (.24) | — | — | — | — | |||||
| Redemption fees added to paid in capitalD | —I | —I | —I | —I | — | |||||
| Net asset value, end of period | $ 11.82 | $ 10.17 | $ 9.21 | $ 6.93 | $ 9.83 | |||||
| Total ReturnB,C | 18.66% | 10.42% | 32.90% | (29.50)% | (1.70)% | |||||
| Ratios to Average Net AssetsH | ||||||||||
| Expenses before reductions | 1.12% | 1.30% | 1.53% | 1.43% | 3.32%A | |||||
| Expenses net of fee waivers, if any | 1.00% | 1.20% | 1.20% | 1.20% | 1.20%A | |||||
| Expenses net of all reductions | 94% | 1.13% | 1.18% | 1.18% | 1.20%A | |||||
| Net investment income (loss) | 15%E | (.07)%F | (.15)% | (.12)% | (.42)%A | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ 157,513 | $ 49,453 | $ 23,079 | $ 18,902 | $ 9,936 | |||||
| Portfolio turnover rate | 268% | 274% | 81% | 245% | 32%A |
| A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Investment income per share reflects a special dividend which amounted to $.02 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.07)%. F Investment income per share reflects a special dividend which amounted to $.02 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.32)%. G For the period November 15, 2001 (commencement of operations) to January 31, 2002. H Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrange ments or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
27 Annual Report
| Fidelity Mid Cap Growth Fund Performance: The Bottom Line |
Average annual 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) and assuming a constant rate of performance each year. The $10,000 table and the fund’s returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
| Average Annual Total Returns | ||||
| Periods ended January 31, 2006 | Past 1 | Life of | ||
| year | fundA | |||
| Fidelity Mid Cap Growth | 27.15% | 10.00% | ||
| A From November 15, 2001. | ||||
| $10,000 Over Life of Fund | ||||
Let’s say hypothetically that $10,000 was invested in Fidelity Mid Cap Growth Fund on November 15, 2001, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Russell Midcap® Growth Index performed over the same period.
| Annual Report |
| 28 |
| Fidelity Mid Cap Growth Fund |
Management’s Discussion of Fund Performance
Comments from Bahaa Fam, Portfolio Manager of Fidelity® Mid Cap Growth Fund
Most major U.S. stock benchmarks had double digit returns for the year ending January 31, 2006. Market performance was driven largely by oil. Height ened demand from the United States and China, among others, plus Hurricane Katrina’s devastation of domestic refining capacity in the Gulf Coast region, propelled oil prices to record highs. The energy component of the Standard & Poor’s 500SM Index soared nearly 46% during the period, while the next closest utilities rose about 17%. The overall return for the S&P 500® was 10.38% . In 2005, the S&P 500 beat the small cap Russell 2000® Index for the first time in six years, but quickly lost that advantage when the Russell benchmark jumped 9% in January, pushing its 12 month return to 18.89% . Mid caps did even better: The 21.45% return of the Russell Midcap® Index doubled the broader market’s performance for the period. The NASDAQ Composite® Index fared well, gaining 12.75%, but the Dow Jones Industrial AverageSM increased only 6.00% .
For the year ending January 31, 2006, the fund rose 27.15%, topping both the Russell Midcap® Growth Index and the LipperSM Mid Cap Funds Average, which posted gains of 22.08% and 19.40%, respectively. Opportune stock picking helped the fund outperform the index in eight of its 10 market sectors. Security selection in the information technology sector especially within the tech hardware and equipment industry added the most value. A number of strong performers in the energy sector also made a considerable contribution, as did some of our picks in the health care equipment/ services, capital goods and consumer durables/apparel industries. Among the best performers were Apple Computer, oil refiners Tesoro and Sunoco, and Gilead Sciences, which has a dominant position in the HIV drug market. Performance was dampened somewhat by unfavorable stock selection in a few areas, including the materials sector and the software and services group. Big detractors included Molina Healthcare, a managed care firm, and Tessera Technologies, a semiconductor packaging company, both of which disappointed on slower earnings growth. Security software maker McAfee also detracted, as investors worried about the anticipated introduction of competitive products by software giant Microsoft. Molina and McAfee were sold from the portfolio.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
29 29 Annual Report
| Fidelity Mid Cap Growth Fund Investment Changes |
| Top Ten Stocks as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Building Material Holding Corp. | 2.4 | 0.0 | ||
| Sunoco, Inc. | 2.4 | 1.7 | ||
| Joy Global, Inc. | 2.4 | 0.0 | ||
| Western Digital Corp. | 2.2 | 1.0 | ||
| Tesoro Corp. | 2.0 | 1.5 | ||
| Penn National Gaming, Inc. | 2.0 | 1.3 | ||
| Gilead Sciences, Inc. | 1.9 | 1.2 | ||
| KB Home | 1.9 | 1.5 | ||
| Autodesk, Inc. | 1.8 | 1.8 | ||
| D.R. Horton, Inc. | 1.8 | 1.8 | ||
| 20.8 | ||||
| Top Five Market Sectors as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Consumer Discretionary | 21.3 | 23.6 | ||
| Information Technology | 19.5 | 21.5 | ||
| Health Care | 15.9 | 15.8 | ||
| Industrials | 13.1 | 11.9 | ||
| Energy | 11.3 | 8.3 | ||
Annual Report 30
| Fidelity Mid Cap Growth Fund | ||||||
| Investments January 31, 2006 | ||||||
| Showing Percentage of Net Assets | ||||||
| Common Stocks 96.6% | ||||||
| Shares | Value (Note 1) | |||||
| CONSUMER DISCRETIONARY 21.3% | ||||||
| Automobiles – 0.4% | ||||||
| Harley Davidson, Inc. | 28,700 | $ 1,536,311 | ||||
| Distributors 2.4% | ||||||
| Building Material Holding Corp. | 105,000 | 8,312,849 | ||||
| Diversified Consumer Services 0.4% | ||||||
| Bright Horizons Family Solutions, Inc. (a) | 20,100 | 785,508 | ||||
| Career Education Corp. (a) | 15,500 | 503,595 | ||||
| 1,289,103 | ||||||
| Hotels, Restaurants & Leisure 5.2% | ||||||
| Isle of Capri Casinos, Inc. (a) | 163,199 | 4,643,012 | ||||
| Monarch Casino & Resort, Inc. (a) | 131,100 | 3,543,633 | ||||
| Penn National Gaming, Inc. (a) | 212,000 | 6,805,200 | ||||
| Station Casinos, Inc. | 48,700 | 3,255,595 | ||||
| 18,247,440 | ||||||
| Household Durables 6.5% | ||||||
| D.R. Horton, Inc. | 170,966 | 6,380,451 | ||||
| KB Home | 88,900 | 6,774,180 | ||||
| Lennar Corp. Class A | 54,700 | 3,422,032 | ||||
| Ryland Group, Inc. | 86,100 | 6,230,196 | ||||
| 22,806,859 | ||||||
| Media 2.4% | ||||||
| EchoStar Communications Corp. | ||||||
| Class A (a) | 112,300 | 3,099,480 | ||||
| Gray Television, Inc. | 115,900 | 1,026,874 | ||||
| Interactive Data Corp. | 57,500 | 1,296,050 | ||||
| Liberty Corp., South Carolina | 3,800 | 179,968 | ||||
| Navarre Corp. (a)(d) | 46,300 | 255,113 | ||||
| R.H. Donnelley Corp. (a) | 26,100 | 1,712,682 | ||||
| The Reader’s Digest Association, Inc. | ||||||
| (non vtg.) | 47,400 | 753,186 | ||||
| Triple Crown Media, Inc. (a) | 8,660 | 66,249 | ||||
| 8,389,602 | ||||||
| Multiline Retail – 1.8% | ||||||
| Federated Department Stores, Inc. | 11,600 | 772,908 | ||||
| Nordstrom, Inc. | 129,900 | 5,419,428 | ||||
| 6,192,336 | ||||||
| Specialty Retail 2.1% | ||||||
| Bed Bath & Beyond, Inc. (a) | 52,900 | 1,978,989 | ||||
| The Men’s Wearhouse, Inc. (a) | 31,600 | 1,079,772 | ||||
| TJX Companies, Inc. | 44,200 | 1,128,426 | ||||
| Urban Outfitters, Inc. (a) | 115,600 | 3,157,036 | ||||
| 7,344,223 | ||||||
| Textiles, Apparel & Luxury Goods 0.1% | ||||||
| Carter’s, Inc. (a) | 500 | 33,995 | ||||
| Timberland Co. Class A (a) | 7,500 | 262,200 | ||||
| 296,195 | ||||||
| TOTAL CONSUMER DISCRETIONARY | 74,414,918 | |||||
| Shares | Value (Note 1) | |||
| CONSUMER STAPLES 2.1% | ||||
| Beverages 0.6% | ||||
| Hansen Natural Corp. (a)(d) | 24,100 | $ 2,115,980 | ||
| Food & Staples Retailing – 0.4% | ||||
| BJ’s Wholesale Club, Inc. (a) | 37,200 | 1,195,608 | ||
| Food Products – 0.4% | ||||
| Seaboard Corp. | 990 | 1,455,290 | ||
| Personal Products 0.7% | ||||
| Playtex Products, Inc. (a) | 186,000 | 2,496,120 | ||
| TOTAL CONSUMER STAPLES | 7,262,998 | |||
| ENERGY 11.3% | ||||
| Oil, Gas & Consumable Fuels 11.3% | ||||
| Anadarko Petroleum Corp | 10,900 | 1,175,238 | ||
| Frontier Oil Corp. | 121,300 | 5,748,407 | ||
| Giant Industries, Inc. (a) | 76,200 | 5,325,618 | ||
| Holly Corp. | 60,400 | 4,445,440 | ||
| Sunoco, Inc. | 86,300 | 8,215,760 | ||
| Tesoro Corp. | 97,800 | 7,087,566 | ||
| Ultra Petroleum Corp. (a) | 45,600 | 3,136,824 | ||
| Valero Energy Corp. | 71,000 | 4,432,530 | ||
| 39,567,383 | ||||
| FINANCIALS – 8.2% | ||||
| Capital Markets 1.9% | ||||
| American Capital Strategies Ltd. | 25,200 | 895,860 | ||
| Greenhill & Co., Inc. | 16,800 | 960,624 | ||
| Legg Mason, Inc. | 8,950 | 1,160,815 | ||
| T. Rowe Price Group, Inc. | 9,400 | 718,442 | ||
| TD Ameritrade Holding Corp. | 134,000 | 2,712,160 | ||
| 6,447,901 | ||||
| Commercial Banks – 0.1% | ||||
| Synovus Financial Corp. | 12,300 | 340,341 | ||
| Consumer Finance – 0.3% | ||||
| CompuCredit Corp. (a) | 29,400 | 1,180,704 | ||
| Diversified Financial Services – 0.5% | ||||
| Chicago Mercantile Exchange Holdings, | ||||
| Inc. Class A | 1,400 | 592,550 | ||
| Moody’s Corp. | 17,100 | 1,082,772 | ||
| 1,675,322 | ||||
| Insurance – 2.3% | ||||
| Fidelity National Financial, Inc. | 126,600 | 4,996,902 | ||
| Philadelphia Consolidated Holdings | ||||
| Corp. (a) | 6,500 | 631,475 | ||
| Universal American Financial Corp. (a) . | 150,191 | 2,473,646 | ||
| 8,102,023 | ||||
| Real Estate 1.6% | ||||
| Consolidated Tomoka Land Co. | 400 | 28,236 | ||
| Host Marriott Corp. | 54,800 | 1,093,260 | ||
See accompanying notes which are an integral part of the financial statements.
31 Annual Report
| Fidelity Mid Cap Growth Fund | ||||||
| Investments - continued | ||||||
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| FINANCIALS – continued | ||||||
| Real Estate continued | ||||||
| Jones Lang LaSalle, Inc. | 31,100 | $ 1,830,857 | ||||
| Vornado Realty Trust | 31,300 | 2,765,042 | ||||
| 5,717,395 | ||||||
| Thrifts & Mortgage Finance – 1.5% | ||||||
| Radian Group, Inc. | 90,400 | 5,173,592 | ||||
| TOTAL FINANCIALS | 28,637,278 | |||||
| HEALTH CARE 15.9% | ||||||
| Biotechnology – 4.7% | ||||||
| Biogen Idec, Inc. (a) | 88,400 | 3,955,900 | ||||
| Gilead Sciences, Inc. (a) | 111,500 | 6,787,005 | ||||
| MedImmune, Inc. (a) | 27,500 | 938,300 | ||||
| United Therapeutics Corp. (a) | 76,100 | 4,921,387 | ||||
| 16,602,592 | ||||||
| Health Care Equipment & Supplies 2.3% | ||||||
| American Medical Systems Holdings, | ||||||
| Inc. (a) | 140,200 | 3,176,932 | ||||
| Dade Behring Holdings, Inc. | 43,300 | 1,694,329 | ||||
| LifeCell Corp. (a) | 81,656 | 1,771,935 | ||||
| ResMed, Inc. (a) | 35,500 | 1,400,120 | ||||
| 8,043,316 | ||||||
| Health Care Providers & Services 7.1% | ||||||
| Aetna, Inc. | 61,800 | 5,982,240 | ||||
| American Healthways, Inc. (a) | 34,420 | 1,537,886 | ||||
| CIGNA Corp. | 51,200 | 6,225,920 | ||||
| Gentiva Health Services, Inc. (a) | 95,200 | 1,807,848 | ||||
| Per Se Technologies, Inc. (a) | 31,600 | 785,892 | ||||
| Pharmaceutical Product Development, | ||||||
| Inc. | 64,900 | 4,489,782 | ||||
| Quest Diagnostics, Inc. | 17,600 | 869,968 | ||||
| Sierra Health Services, Inc. (a) | 52,200 | 2,068,164 | ||||
| UnitedHealth Group, Inc. | 15,700 | 932,894 | ||||
| 24,700,594 | ||||||
| Pharmaceuticals 1.8% | ||||||
| Alpharma, Inc. Class A | 66,400 | 2,221,080 | ||||
| Barr Pharmaceuticals, Inc. (a) | 17,900 | 1,173,882 | ||||
| CNS., Inc. | 41,600 | 909,792 | ||||
| Forest Laboratories, Inc. (a) | 16,700 | 772,876 | ||||
| Impax Laboratories, Inc. (a) | 136,600 | 1,372,830 | ||||
| 6,450,460 | ||||||
| TOTAL HEALTH CARE | 55,796,962 | |||||
| INDUSTRIALS – 13.1% | ||||||
| Air Freight & Logistics – 0.3% | ||||||
| C.H. Robinson Worldwide, Inc. | 21,800 | 882,028 | ||||
| Shares | Value (Note 1) | |||||
| Airlines – 0.5% | ||||||
| Mesa Air Group, Inc. (a) | 155,500 | $ | 1,811,575 | |||
| Building Products – 0.7% | ||||||
| Lennox International, Inc. | 79,200 | 2,530,440 | ||||
| Commercial Services & Supplies 3.0% | ||||||
| Cintas Corp. | 13,000 | 553,800 | ||||
| Clean Harbors, Inc. (a) | 26,000 | 700,960 | ||||
| Copart, Inc. (a) | 24,200 | 609,598 | ||||
| CoStar Group, Inc. (a) | 22,300 | 1,115,000 | ||||
| Dun & Bradstreet Corp. (a) | 65,800 | 4,756,024 | ||||
| Equifax, Inc. | 24,200 | 927,344 | ||||
| Korn/Ferry International (a) | 92,300 | 1,823,848 | ||||
| 10,486,574 | ||||||
| Construction & Engineering – 1.0% | ||||||
| Washington Group International, Inc. | 60,300 | 3,578,805 | ||||
| Electrical Equipment 1.1% | ||||||
| Energy Conversion Devices, Inc. (a) | 15,500 | 780,580 | ||||
| Rockwell Automation, Inc. | 17,400 | 1,149,618 | ||||
| Thomas & Betts Corp. (a) | 46,300 | 2,067,295 | ||||
| 3,997,493 | ||||||
| Industrial Conglomerates 0.3% | ||||||
| Walter Industries, Inc. | 17,600 | 1,113,200 | ||||
| Machinery – 5.1% | ||||||
| Astec Industries, Inc. (a) | 47,400 | 1,822,530 | ||||
| Cummins, Inc. | 10,500 | 1,021,650 | ||||
| Deere & Co. | 32,200 | 2,310,672 | ||||
| Ingersoll Rand Co. Ltd. Class A | 21,000 | 824,670 | ||||
| Joy Global, Inc. | 152,000 | 8,214,080 | ||||
| Timken Co. | 48,700 | 1,761,479 | ||||
| Toro Co. | 39,700 | 1,755,137 | ||||
| 17,710,218 | ||||||
| Road & Rail 1.1% | ||||||
| Norfolk Southern Corp. | 76,800 | 3,827,712 | ||||
| TOTAL INDUSTRIALS | 45,938,045 | |||||
| INFORMATION TECHNOLOGY 19.5% | ||||||
| Communications Equipment – 0.9% | ||||||
| Harris Corp. | 43,000 | 1,996,490 | ||||
| Plantronics, Inc. | 29,100 | 1,018,500 | ||||
| 3,014,990 | ||||||
| Computers & Peripherals 8.1% | ||||||
| Apple Computer, Inc. (a) | 55,100 | 4,160,601 | ||||
| Emulex Corp. (a) | 64,600 | 1,185,410 | ||||
| Komag, Inc. (a)(d) | 123,300 | 5,802,498 | ||||
| NCR Corp. (a) | 36,700 | 1,363,405 | ||||
| Network Appliance, Inc. (a) | 15,600 | 486,720 | ||||
| QLogic Corp. (a) | 55,900 | 2,217,553 | ||||
| SanDisk Corp. (a) | 81,100 | 5,462,896 | ||||
| Western Digital Corp. (a) | 346,100 | 7,565,746 | ||||
| 28,244,829 | ||||||
See accompanying notes which are an integral part of the financial statements.
Annual Report 32
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| INFORMATION TECHNOLOGY – continued | ||||||
| Electronic Equipment & Instruments – 0.2% | ||||||
| Amphenol Corp. Class A | 16,500 | $ | 838,695 | |||
| IT Services 0.8% | ||||||
| Affiliated Computer Services, Inc. | ||||||
| Class A (a) | 32,400 | 2,028,240 | ||||
| Cognizant Technology Solutions Corp. | ||||||
| Class A (a) | 17,600 | 921,712 | ||||
| 2,949,952 | ||||||
| Semiconductors & Semiconductor Equipment – 6.3% | ||||||
| Conexant Systems, Inc. (a) | 1,191,000 | 4,001,760 | ||||
| Cymer, Inc. (a) | 51,700 | 2,333,738 | ||||
| Lam Research Corp. (a) | 55,561 | 2,579,697 | ||||
| Linear Technology Corp. | 18,500 | 688,385 | ||||
| Marvell Technology Group Ltd. (a) | 21,300 | 1,457,346 | ||||
| MEMC Electronic Materials, Inc. (a) | 36,300 | 1,037,454 | ||||
| Microchip Technology, Inc. | 21,100 | 791,461 | ||||
| NVIDIA Corp. (a) | 66,900 | 3,007,824 | ||||
| Silicon Image, Inc. (a) | 87,900 | 1,017,003 | ||||
| SiRF Technology Holdings, Inc. (a) | 125,900 | 4,241,571 | ||||
| Tessera Technologies, Inc. (a) | 27,400 | 884,472 | ||||
| 22,040,711 | ||||||
| Software 3.2% | ||||||
| Activision, Inc. (a) | 140,166 | 2,009,980 | ||||
| Autodesk, Inc. | 157,600 | 6,396,984 | ||||
| Quest Software, Inc. (a) | 92,300 | 1,462,032 | ||||
| THQ, Inc. (a) | 43,800 | 1,149,750 | ||||
| 11,018,746 | ||||||
| TOTAL INFORMATION TECHNOLOGY | 68,107,923 | |||||
| MATERIALS 3.2% | ||||||
| Metals & Mining – 3.2% | ||||||
| Carpenter Technology Corp. | 7,100 | 642,976 | ||||
| Freeport McMoRan Copper & Gold, Inc. | ||||||
| Class B | 9,800 | 629,650 | ||||
| Nucor Corp. | 43,100 | 3,630,313 | ||||
| Phelps Dodge Corp. | 13,400 | 2,150,700 | ||||
| Quanex Corp. | 65,600 | 4,074,416 | ||||
| 11,128,055 | ||||||
| TELECOMMUNICATION SERVICES 1.3% | ||||||
| Wireless Telecommunication Services – 1.3% | ||||||
| American Tower Corp. Class A (a) | 37,605 | 1,163,499 | ||||
| Shares | Value (Note 1) | |||
| Nextel Partners, Inc. Class A (a) | 57,200 | $ 1,601,028 | ||
| NII Holdings, Inc. (a) | 38,300 | 1,894,318 | ||
| 4,658,845 | ||||
| UTILITIES 0.7% | ||||
| Independent Power Producers & Energy Traders 0.7% | ||||
| AES Corp. (a) | 144,900 | 2,469,096 | ||
| TOTAL COMMON STOCKS | ||||
| (Cost $292,331,421) | 337,981,503 | |||
| U.S. Treasury Obligations 0.2% | ||||
| Principal | ||||
| Amount | ||||
| U.S. Treasury Bills, yield at date of | ||||
| purchase 4.03% 2/2/06 | ||||
| (Cost $749,832) | $ 750,000 | 749,928 | ||
| Money Market Funds 3.2% | ||||
| Shares | ||||
| Fidelity Cash Central Fund, 4.46% (b) | 7,090,904 | 7,090,904 | ||
| Fidelity Securities Lending Cash | ||||
| Central Fund, 4.48% (b)(c) | 4,328,725 | 4,328,725 | ||
| TOTAL MONEY MARKET FUNDS | ||||
| (Cost $11,419,629) | 11,419,629 | |||
| TOTAL INVESTMENT PORTFOLIO 100.0% | ||||
| (Cost $304,500,882) | 350,151,060 | |||
| NET OTHER ASSETS 0.0% | (168,706) | |||
| NET ASSETS 100% | $ 349,982,354 | |||
| Legend (a) Non-income producing (b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund’s holdings as of its most recent quarter end is available upon request. (c) Investment made with cash collateral received from securities on loan. (d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds
Information regarding fiscal year to date income received by the fund from the affiliated Central funds is as follows:
| Fund | Income received | |||
| Fidelity Cash Central Fund | $ | 163,824 | ||
| Fidelity Securities Lending Cash Central Fund | 26,281 | |||
| Total | $ | 190,105 | ||
See accompanying notes which are an integral part of the financial statements.
33 Annual Report
| Fidelity Mid Cap Growth Fund | ||||||
| Financial Statements | ||||||
| Statement of Assets and Liabilities | ||||||
| January 31, 2006 | ||||||
| Assets | ||||||
| Investment in securities, at value | ||||||
| (including securities loaned of | ||||||
| $4,232,971) — See accompanying | ||||||
| schedule: | ||||||
| Unaffiliated issuers (cost | ||||||
| $293,081,253) | $ 338,731,431 | |||||
| Affiliated Central Funds (cost | ||||||
| $11,419,629) | 11,419,629 | |||||
| Total Investments (cost $304,500,882) | $ 350,151,060 | |||||
| Receivable for investments sold | 10,223,922 | |||||
| Receivable for fund shares sold | 8,308,047 | |||||
| Dividends receivable | 512,776 | |||||
| Interest receivable | 52,955 | |||||
| Prepaid expenses | 523 | |||||
| Receivable from investment adviser for | ||||||
| expense reductions | 42,353 | |||||
| Other affiliated receivables | 221 | |||||
| Other receivables | 37,515 | |||||
| Total assets | 369,329,372 | |||||
| Liabilities | ||||||
| Payable for investments purchased | $ 14,337,823 | |||||
| Payable for fund shares redeemed | 376,668 | |||||
| Accrued management fee | 149,036 | |||||
| Other affiliated payables | 111,222 | |||||
| Other payables and accrued expenses | . | 43,544 | ||||
| Collateral on securities loaned, at value | 4,328,725 | |||||
| Total liabilities | 19,347,018 | |||||
| Net Assets | $ 349,982,354 | |||||
| Net Assets consist of: | ||||||
| Paid in capital | $ 299,441,958 | |||||
| Undistributed net investment income | 92,185 | |||||
| Accumulated undistributed net realized | ||||||
| gain (loss) on investments | 4,798,033 | |||||
| Net unrealized appreciation (depreci- | ||||||
| ation) on investments | 45,650,178 | |||||
| Net Assets, for 24,335,332 shares | ||||||
| outstanding | $ 349,982,354 | |||||
| Net Asset Value, offering price and | ||||||
| redemption price per share | ||||||
| ($349,982,354 ÷ 24,335,332 | ||||||
| shares) | $ 14.38 | |||||
| Statement of Operations | ||||||
| Year ended January 31, 2006 | ||||||
| Investment Income | ||||||
| Dividends | $ | 923,616 | ||||
| Special dividends | 349,110 | |||||
| Interest | 2,099 | |||||
| Income from affiliated Central | ||||||
| Funds | 190,105 | |||||
| Total income | 1,464,930 | |||||
| Expenses | ||||||
| Management fee | ||||||
| Basic fee | $ | 825,127 | ||||
| Performance adjustment | (10,633) | |||||
| Transfer agent fees | 521,173 | |||||
| Accounting and security lending | ||||||
| fees | 54,568 | |||||
| Independent trustees’ | ||||||
| compensation | 550 | |||||
| Custodian fees and expenses | 17,443 | |||||
| Registration fees | 42,016 | |||||
| Audit | 49,256 | |||||
| Legal | 674 | |||||
| Miscellaneous | 897 | |||||
| Total expenses before reductions | 1,501,071 | |||||
| Expense reductions | (130,506) | 1,370,565 | ||||
| Net investment income (loss) | 94,365 | |||||
| Realized and Unrealized Gain | ||||||
| (Loss) | ||||||
| Net realized gain (loss) on: | ||||||
| Investment securities: | ||||||
| Unaffiliated issuers | 7,361,425 | |||||
| Futures contracts | 68,935 | |||||
| Total net realized gain (loss) | 7,430,360 | |||||
| Change in net unrealized | ||||||
| appreciation (depreciation) on | ||||||
| investment securities | 35,678,856 | |||||
| Net gain (loss) | 43,109,216 | |||||
| Net increase (decrease) in net as- | ||||||
| sets resulting from operations . | $ | 43,203,581 | ||||
See accompanying notes which are an integral part of the financial statements.
Annual Report 34
| Statement of Changes in Net Assets | ||||
| Year ended | Year ended | |||
| January 31, | January 31, | |||
| 2006 | 2005 | |||
| Increase (Decrease) in Net Assets | ||||
| Operations | ||||
| Net investment income (loss) | $ 94,365 | $ (190,811) | ||
| Net realized gain (loss) | 7,430,360 | 4,435,142 | ||
| Change in net unrealized appreciation (depreciation) | 35,678,856 | 2,613,824 | ||
| Net increase (decrease) in net assets resulting from operations | 43,203,581 | 6,858,155 | ||
| Distributions to shareholders from net realized gain | (3,553,675) | (1,079,181) | ||
| Share transactions | ||||
| Proceeds from sales of shares | 291,152,554 | 37,665,081 | ||
| Reinvestment of distributions | 3,468,594 | 1,040,369 | ||
| Cost of shares redeemed | (61,971,708) | (27,492,890) | ||
| Net increase (decrease) in net assets resulting from share transactions | 232,649,440 | 11,212,560 | ||
| Redemption fees | 24,756 | 6,749 | ||
| Total increase (decrease) in net assets | 272,324,102 | 16,998,283 | ||
| Net Assets | ||||
| Beginning of period | 77,658,252 | 60,659,969 | ||
| End of period (including undistributed net investment income of $92,185 and $0, respectively) | $ 349,982,354 | $ 77,658,252 | ||
| Other Information | ||||
| Shares | ||||
| Sold | 22,202,240 | 3,481,582 | ||
| Issued in reinvestment of distributions | 270,044 | 90,703 | ||
| Redeemed | (4,840,769) | (2,576,804) | ||
| Net increase (decrease) | 17,631,515 | 995,481 | ||
| Financial Highlights | ||||||||||
| Years ended January 31, | 2006 | 2005 | 2004 | 2003 | 2002G | |||||
| Selected Per Share Data | ||||||||||
| Net asset value, beginning of period | $ 11.58 | $ 10.63 | $ 7.32 | $ 10.20 | $ 10.00 | |||||
| Income from Investment Operations | ||||||||||
| Net investment income (loss)D | 01E | (.03)F | (.07) | (.07) | (.02) | |||||
| Net realized and unrealized gain (loss) | 3.09 | 1.15 | 3.38 | (2.81) | .22 | |||||
| Total from investment operations | 3.10 | 1.12 | 3.31 | (2.88) | .20 | |||||
| Distributions from net realized gain | (.30) | (.17) | — | — | — | |||||
| Redemption fees added to paid in capitalD | —I | —I | —I | —I | — | |||||
| Net asset value, end of period | $ 14.38 | $ 11.58 | $ 10.63 | $ 7.32 | $ 10.20 | |||||
| Total ReturnB,C | 27.15% | 10.55% | 45.22% | (28.24)% | 2.00% | |||||
| Ratios to Average Net AssetsH | ||||||||||
| Expenses before reductions | 1.04% | 1.02% | 1.25% | 1.78% | 2.40%A | |||||
| Expenses net of fee waivers, if any | 1.00% | 1.02% | 1.20% | 1.20% | 1.20%A | |||||
| Expenses net of all reductions | 95% | .99% | 1.16% | 1.17% | 1.20%A | |||||
| Net investment income (loss) | 07%E | (.31)%F | (.77)% | (.89)% | (.86)%A | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ 349,982 | $ 77,658 | $ 60,660 | $ 16,669 | $ 18,501 | |||||
| Portfolio turnover rate | 173% | 220% | 94% | 181% | 94%A |
| A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E Investment income per share reflects a special dividend which amounted to $.03 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.18)%. F Investment income per share reflects a special dividend which amounted to $.01 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been (.44)%. G For the period November 15, 2001 (commencement of operations) to January 31, 2002. H Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
35 Annual Report
| Notes to Financial Statements For the period ended January 31, 2006 |
| 1. Significant Accounting Policies. |
Fidelity Large Cap Value Fund, Fidelity Mid Cap Value Fund, Fidelity Large Cap Growth Fund and Fidelity Mid Cap Growth Fund (the funds) are funds of Fidelity Devonshire Trust (the trust). On July 21, 2005 the Board of Trustees approved a change in the names of Fidelity Structured Large Cap Value Fund, Fidelity Structured Mid Cap Value Fund, Fidelity Structured Large Cap Growth Fund and Fidelity Structured Mid Cap Growth Fund to Fidelity Large Cap Value Fund, Fidelity Mid Cap Value Fund, Fidelity Large Cap Growth Fund and Fidelity Mid Cap Growth Fund effective July 31, 2005. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open end management investment company organized as a Massachusetts business trust. Each fund is authorized to issue an unlimited number of shares. Certain funds may invest in affiliated money market central funds (Money Market Central Funds) which are open end investment companies available to investment companies and other accounts managed by affiliates of Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, 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 funds:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, each fund uses independent pricing services approved by the Board of Trustees to value their investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open end mutual funds, are valued at their closing net asset value each business day. Short term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because each fund’s utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex dividend date, except for certain dividends from foreign securities where the ex dividend date may have passed, which are recorded as soon as the funds are 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The funds estimate the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non recurring dividends recognized by the funds are presented separately on the Statement of Operations as “Special Dividends” and the impact of these dividends is presented in the Financial Highlights. Interest income is accrued as earned. Interest income includes coupon interest and amortiza tion of premium and accretion of discount on debt securities.
Expenses. Most expenses of each trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each fund in the trust.
Income Tax Information and Distributions to Shareholders. Each year, each fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.
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. In addition, certain funds will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book tax differences will reverse in a subsequent period.
Book tax differences are primarily due to short term capital gains, futures transactions and losses deferred due to wash sales.
| Annual Report |
| 36 |
| 1. Significant Accounting Policies continued | ||
Income Tax Information and Distributions to Shareholders continued | ||
The tax basis components of distributable earnings and the federal tax cost as of period end were as follows for each fund:
| Cost for Federal | Net Unrealized | |||||||||||||||
| Income Tax | Unrealized | Unrealized | Appreciation/ | |||||||||||||
| Purposes | Appreciation | Depreciation | (Depreciation) | |||||||||||||
| Fidelity Large Cap Value Fund | $ | 537,952,211 | $ | 51,585,230 | $ | (8,016,154) | $ | 43,569,076 | ||||||||
| Fidelity Mid Cap Value Fund | 346,708,850 | 38,522,616 | (7,034,266) | 31,488,350 | ||||||||||||
| Fidelity Large Cap Growth Fund | 145,583,287 | 19,839,096 | (3,130,742) | 16,708,354 | ||||||||||||
| Fidelity Mid Cap Growth Fund | 305,061,492 | 50,443,935 | (5,354,367) | 45,089,568 | ||||||||||||
| Undistributed | ||||||||||||||||
| Undistributed | Long-term | |||||||||||||||
| Ordinary Income | Capital Gain | |||||||||||||||
| Fidelity Large Cap Value Fund | $ | 6,450,266 | $ | 3,090,455 | ||||||||||||
| Fidelity Mid Cap Value Fund | 4,222,385 | 1,465,511 | ||||||||||||||
| Fidelity Large Cap Growth Fund | 1,894,600 | 686,309 | ||||||||||||||
| Fidelity Mid Cap Growth Fund | 2,304,041 | 2,517,248 | ||||||||||||||
| The tax character of distributions paid was as follows: | ||||||||||||||||
| January 31, 2006 | ||||||||||||||||
| Ordinary | Long-term | |||||||||||||||
| Income | Capital Gains | Total | ||||||||||||||
| Fidelity Large Cap Value Fund | $ | 12,434,627 | $ | 2,429,190 | $ | 14,863,817 | ||||||||||
| Fidelity Mid Cap Value Fund | 11,400,939 | 9,889,145 | 21,290,084 | |||||||||||||
| Fidelity Large Cap Growth Fund | 1,568,381 | 1,120,271 | 2,688,652 | |||||||||||||
| Fidelity Mid Cap Growth Fund | 1,412,879 | 2,140,796 | 3,553,675 | |||||||||||||
| January 31, 2005 | ||||||||||||||||
| Ordinary | Long-term | |||||||||||||||
| Income | Capital Gains | Total | ||||||||||||||
| Fidelity Large Cap Value Fund | $ | 446,024 | $ | 981,252 | $ | 1,427,276 | ||||||||||
| Fidelity Mid Cap Value Fund | 363,688 | 2,909,505 | 3,273,193 | |||||||||||||
| Fidelity Mid Cap Growth Fund | — | 1,079,181 | 1,079,181 | |||||||||||||
Short Term Trading (Redemption) Fees. Shares held in the funds less than 30 days are subject to a redemption fee equal to 0.75% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the funds and accounted for as an addition to paid in capital.
| 2. Operating Policies. |
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non government securities. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Futures Contracts. Certain funds may use futures contracts to manage their exposure to the stock market and to fluctuations in interest rates and currency values. Buying futures tends to increase a fund’s exposure to the underlying instrument, while selling futures tends to decrease a fund’s exposure to the underlying instrument or hedge other fund investments. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contracts’ terms. Gains (losses) are realized upon the expiration or closing of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.
37 Annual Report
| Notes to Financial Statements continued | ||||
| 3. Purchases and Sales of Investments. | ||||
| Purchases and sales of securities, other than short term securities and U.S. government securities, are noted in the table below. | ||||
| Purchases ($) | Sales ($) | |||
| Fidelity Large Cap Value Fund | 918,289,336 | 582,732,296 | ||
| Fidelity Mid Cap Value Fund | 641,259,081 | 469,829,694 | ||
| Fidelity Large Cap Growth Fund | 337,791,982 | 246,493,524 | ||
| Fidelity Mid Cap Growth Fund | 472,014,787 | 252,809,046 | ||
| 4. Fees and Other Transactions with Affiliates. | ||||
Management Fee. FMR and its affiliates provide the funds with investment management related services for which the funds pay a monthly manage ment fee. The management fee is the sum of an individual fund fee rate and a group fee rate. The individual fund fee rate is applied to each fund’s average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee for the funds is subject to a performance adjustment (up to a maximum .20% of each applicable fund’s average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on each fund’s relative investment performance as compared to an appropriate benchmark index. For the period, each fund’s annual management fee rate expressed as a percentage of each fund’s average net assets, including the performance adjustment, if applicable was as follows:
| Individual Rate | Group Rate | Total | ||||
| Fidelity Large Cap Value Fund | 30% | .27% | .57% | |||
| Fidelity Mid Cap Value Fund | 30% | .27% | .50% | |||
| Fidelity Large Cap Growth Fund | 30% | .27% | .65% | |||
| Fidelity Mid Cap Growth Fund | 30% | .27% | .56% |
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the funds’ 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 shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Fidelity Large Cap Value Fund | 24% | |
| Fidelity Mid Cap Value Fund | 27% | |
| Fidelity Large Cap Growth Fund | 34% | |
| Fidelity Mid Cap Growth Fund | 33% |
Accounting and Security Lending Fees. FSC maintains each fund’s accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. Certain funds may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
| The Money Market Central Funds do not pay a management fee. |
Brokerage Commissions. Certain funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were as follows:
| Amount | ||
| Fidelity Large Cap Value Fund | $ 13,487 | |
| Fidelity Mid Cap Value Fund | 20,306 | |
| Fidelity Large Cap Growth Fund | 8,578 | |
| Fidelity Mid Cap Growth Fund | 12,615 |
| Annual Report |
| 38 |
4. Fees and Other Transactions with Affiliates continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the funds, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund’s activity in this program during the period for which loans were outstanding was as follows:
| Weighted | ||||||||
| Borrower or | Average Daily | Average Interest | Interest | |||||
| Lender | Loan Balance | Rate | Expense | |||||
| Fidelity Large Cap Value Fund | Borrower | $ 6,617,500 | 3.13% | $ 1,152 | ||||
| 5. Committed Line of Credit. | ||||||||
Certain funds participate with other funds managed by FMR in a $4.2 billion credit facility (the “line of credit”) to be utilized for temporary or emer gency purposes to fund shareholder redemptions or for other short term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
| 6. Security Lending. |
Certain funds lend portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, each applicable 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 funds and any additional required collateral is delivered to the funds on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable fund’s Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented on each applicable fund’s Statement of Operations as a component of income from affiliated central funds. Net income from lending portfolio securities during the period amounted to:
| Fidelity Large Cap Value Fund | $ 13,002 | |
| Fidelity Mid Cap Value Fund | $ 27,589 | |
| Fidelity Large Cap Growth Fund | $ 4,270 | |
| Fidelity Mid Cap Growth Fund | $ 26,281 | |
| 7. Bank Borrowings. | ||
Each fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. Each 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. At period end, there were no bank borrowings outstanding. Each applicable fund’s activity in this program during the period for which loans were outstanding was as follows:
| Average Daily | Weighted Average | |||
| Loan Balance | Interest Rate | |||
| Fidelity Mid Cap Value Fund | $ 13,159,000 | 3.25% | ||
| 8. Expense Reductions. | ||||
FMR voluntarily agreed to reimburse funds to the extent annual operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
| The following funds were in reimbursement during the period: | ||||||
| Expense | Reimbursement | |||||
| Limitations | from adviser | |||||
| Fidelity Large Cap Growth Fund | 1.00% | $ | 118,762 | |||
| Fidelity Mid Cap Growth Fund | 1.00% | $ | 64,133 | |||
39 Annual Report
| Notes to Financial Statements continued |
8. Expense Reductions - continued |
Many of the brokers with whom FMR places trades on behalf of certain funds provided services to these funds in addition to trade execution. These services included payments of expenses on behalf of each applicable fund. In addition, through arrangements with each applicable fund’s custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce each applicable fund’s expenses. All of the applicable expense reductions are noted in the table below.
| Transfer | ||||||||||
| Custody | Agent | |||||||||
| Brokerage Service | expense | expense | ||||||||
| Arrangements | reduction | reduction | ||||||||
| Fidelity Large Cap Value Fund | $ 153,266 | $ | 693 | $ | 4,343 | |||||
| Fidelity Mid Cap Value Fund | 116,920 | — | 2,680 | |||||||
| Fidelity Large Cap Growth Fund | 50,117 | 583 | 1,819 | |||||||
| Fidelity Mid Cap Growth Fund | 62,797 | 695 | 2,881 | |||||||
| 9. Other. | ||||||||||
The funds’ organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the funds. In the normal course of business, the funds may also enter into contracts that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the funds. The risk of material loss from such claims is considered remote.
| Annual Report |
| 40 |
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Devonshire Trust and the Shareholders of Fidelity Large Cap Value Fund (formerly Fidelity Structured Large Cap Value Fund), Fidelity Mid Cap Value Fund (formerly Fidelity Structured Mid Cap Value Fund), Fidelity Large Cap Growth Fund (formerly Fidelity Structured Large Cap Growth Fund) and Fidelity Mid Cap Growth Fund (formerly Fidelity Structured Mid Cap Growth Fund):
In our opinion, the accompanying statements of assets and liabilities, including the schedules 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 Large Cap Value Fund (formerly Fidelity Structured Large Cap Value Fund), Fidelity Mid Cap Value Fund (formerly Fidelity Structured Mid Cap Value Fund), Fidelity Large Cap Growth Fund (formerly Fidelity Structured Large Cap Growth Fund) and Fidelity Mid Cap Growth Fund (formerly Fidelity Structured Mid Cap Growth Fund) (funds of Fidelity Devonshire Trust) at January 31, 2006, and the results of their operations, the changes in their net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fidelity Devonshire Trust’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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit in cludes 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, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
| /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts March 14, 2006 |
41 Annual Report
| Trustees and Officers |
The Trustees, Members of the Advisory Board, and executive officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund’s activities, review contractual arrangements with companies that provide services to each fund, and review each fund’s performance. Except for William O. McCoy and Albert R. Gamper, Jr., each of the Trustees oversees 326 funds advised by FMR or an affiliate. Mr. McCoy oversees 328 funds advised by FMR or an affiliate. Mr. Gamper oversees 251 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapac itated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The funds’ Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
| Interested Trustees*: |
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
| Name, Age; Principal Occupation Edward C. Johnson 3d (75) |
Year of Election or Appointment: 1985
Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Research & Analysis Company; Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001 present) and a Director (2000 present) of FMR Co., Inc.
| Stephen P. Jonas (53) |
Year of Election or Appointment: 2005
Mr. Jonas is Senior Vice President of Large Cap Growth (2005 present), Large Cap Value (2005 present), Mid Cap Growth (2005 present), and Mid Cap Value (2005 present). He also serves as Senior Vice President of other Fidelity funds (2005 present). Mr. Jonas is Executive Director of FMR (2005 present). Previously, Mr. Jonas served as President of Fidelity Enterprise Operations and Risk Services (2004 2005), Chief Administrative Officer (2002 2004), and Chief Financial Officer of FMR Co. (1998 2000). Mr. Jonas has been with Fidelity Investments since 1987 and has held various financial and management positions including Chief Financial Officer of FMR. In addition, he serves on the Boards of Boston Ballet (2003 present) and Simmons College (2003 present).
| Robert L. Reynolds (53) |
Year of Election or Appointment: 2003
Mr. Reynolds is a Director (2003 present) and Chief Operating Officer (2002 present) of FMR Corp. He also serves on the Board at Fidelity Investments Canada, Ltd. (2000 present). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996 2000).
* Trustees have been determined to be “Interested Trustees” by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
| Annual Report |
| 42 |
| Independent Trustees: |
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
| Name, Age; Principal Occupation Dennis J. Dirks (57) |
Year of Election or Appointment: 2005
Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999 2003). He also served as President, Chief Operating Officer, and Board member of The De pository Trust Company (DTC) (1999 2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999 2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001 2003) and Chief Executive Officer and Board member of the Mortgage Backed Securities Clearing Corporation (2001 2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005 present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006 present).
| Albert R. Gamper, Jr. (63) |
Year of Election or Appointment: 2006
Mr. Gamper also serves as a Trustee (2006 present) or Member of the Advisory Board (2005 present) of other investment compa nies advised by FMR. Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, includ ing Chairman (1987 1989; 1999 2001; 2002 2004), Chief Executive Officer (1987 2004), and President (1989 2002). He cur rently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001 present), Chairman of the Board of Governors, Rutgers University (2004 present), and Chairman of the Board of Saint Barnabas Health Care System.
| Robert M. Gates (62) |
Year of Election or Appointment: 1997
Dr. Gates is Chairman of the Independent Trustees (2006 present). Dr. Gates is President of Texas A&M University (2002 present). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001 present), and Brinker International (restaurant management, 2003 present). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999 2001).
| George H. Heilmeier (69) |
Year of Election or Appointment: 2004
Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corpo ration (systems engineering and information technology support for the government), and HRL Laboratories (private research and development, 2004 present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992 2002), Compaq (1994 2002), Automatic Data Processing, Inc. (ADP) (technology based business outsourcing, 1995 2002), INET Technologies Inc. (telecommunications network surveillance, 2001 2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display.
| Marie L. Knowles (59) |
Year of Election or Appointment: 2001
Prior to Ms. Knowles’ retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Rich field Company (ARCO) (diversified energy, 1996 2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002 present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
43 Annual Report
| Trustees and Officers - continued |
| Name, Age; Principal Occupation Ned C. Lautenbach (61) |
Year of Election or Appointment: 2000
Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004 present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005 present), as well as a member of the Council on Foreign Relations.
| William O. McCoy (72) |
Year of Election or Appointment: 1997
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunica tions) and President of BellSouth Enterprises. He is currently a Director of Duke Realty Corporation (real estate), and Progress Energy, Inc. (electric utility). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999 2000) and a member of the Board of Visitors for the University of North Carolina at Chapel Hill and currently serves as Chairman of the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16 school system).
| Cornelia M. Small (61) |
Year of Election or Appointment: 2005
Ms. Small is a member (2000 present) and Chairperson (2002 present) of the Investment Committee, and a member (2002 present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999 2000), Director of Global Equity Investments (1996 1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990 1997) and Scudder Kemper Investments (1997 1999). In addition, Ms. Small served as Co Chair (2000 2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
| William S. Stavropoulos (66) |
Year of Election or Appointment: 2001
Mr. Stavropoulos is Chairman of the Board (2000 present) and a Member of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993 2000; 2002 2003), CEO (1995 2000; 2002 2004), and Chairman of the Executive Committee (2000 2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002 present), and Metalmark Capi tal (private equity investment firm, 2005 present). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science.
| Kenneth L. Wolfe (66) |
Year of Election or Appointment: 2005
Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993 2001). He currently serves as a member of the boards of Adelphia Communications Corporation (2003 present), Bausch & Lomb, Inc., and Revlon Inc. (2004 present).
| Advisory Board Members and Executive Officers: |
Correspondence intended for Mr. Keyes may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
| Name, Age; Principal Occupation James H. Keyes (65) |
Year of Election or Appointment: 2006
Member of the Advisory Board of Fidelity Devonshire Trust. Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993 2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies, 1984 present), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002 present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions, 1998 present).
| Annual Report |
| 44 |
| Name, Age; Principal Occupation Peter S. Lynch (62) |
Year of Election or Appointment: 2003
Member of the Advisory Board of Fidelity Devonshire Trust. Vice Chairman and a Director of FMR, and Vice Chairman (2001 present) and a Director (2000 present) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990 2003). In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
| Dwight D. Churchill (52) |
Year of Election or Appointment: 2005
Vice President of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Churchill also serves as Vice President of certain Equity Funds (2005 present) and certain High Income Funds (2005 present). He is Executive Vice President of FMR (2005 present) and FMR Co., Inc. (2005 present), and Senior Vice President of Fidelity Investments Money Management, Inc. (2005 present). Previously, Mr. Churchill served as Head of Fidelity’s Fixed Income Division (2000 2005), Vice President of Fidelity’s Money Market Funds (2000 2005), Vice President of Fidelity’s Bond Funds, and Senior Vice President of FIMM (2000) and FMR.
| Bahaa Fam (48) |
Year of Election or Appointment: 2004
Vice President of Large Cap Growth and Mid Cap Growth. Prior to assuming his current responsibilities, Mr. Fam worked as a senior quantitative analyst and manager. Mr. Fam also serves as Vice President of FMR (2000) and FMR Co., Inc. (2001).
| Eric D. Roiter (57) |
Year of Election or Appointment: 2001
Secretary of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001 present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001 present), Fidelity Research & Analysis Company (2001 present), and Fidelity Investments Money Management, Inc. (2001 present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003 present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998 2005).
| Stuart Fross (46) |
Year of Election or Appointment: 2003
Assistant Secretary of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003 present), Vice President and Secretary of FDC (2005 present), and is an employee of FMR.
| Christine Reynolds (47) |
Year of Election or Appointment: 2004
President and Treasurer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Ms. Reynolds also serves as President and Treasurer of other Fidelity funds (2004 present) and is a Vice President (2003 present) and an employee (2002 present) of FMR. Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980 2002), where she was most recently an audit partner with PwC’s investment management practice.
| R. Stephen Ganis (39) |
Year of Election or Appointment: 2006
Anti Money Laundering (AML) officer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Ganis also serves as AML officer of other Fidelity funds (2006 present) and FMR Corp. (2003 present). Before joining Fidelity Invest ments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000 2002).
| Paul M. Murphy (58) |
Year of Election or Appointment: 2005
Chief Financial Officer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Murphy also serves as Chief Financial Officer of other Fidelity funds (2005 present). He also serves as Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS).
45 Annual Report
| Trustees and Officers - continued |
| Name, Age; Principal Occupation Kenneth A. Rathgeber (58) |
Year of Election or Appointment: 2004
Chief Compliance Officer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004 present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002 present). He is Chief Compliance Officer of FMR (2005 present), FMR Co., Inc. (2005 present), Fidelity Management & Research (U.K.) Inc. (2005 present), Fidelity Research & Analysis Company (2005 present), Fidelity Investment Money Management, Inc. (2005 present), and Strategic Advisers (2005 present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998 2002).
| Bryan A. Mehrmann (44) |
Year of Election or Appointment: 2005
Deputy Treasurer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998 2004).
| Kimberley H. Monasterio (42) |
Year of Election or Appointment: 2004
Deputy Treasurer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Ms. Monasterio also serves as Deputy Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000 2004) and Chief Financial Officer (2002 2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000 2004).
| Kenneth B. Robins (36) |
Year of Election or Appointment: 2005
Deputy Treasurer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2004 present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG’s department of professional practice (2002 2004) and a Senior Manager (1999 2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000 2002).
| Robert G. Byrnes (39) |
Year of Election or Appointment: 2005
Assistant Treasurer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003 2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000 2003).
| John H. Costello (59) |
Year of Election or Appointment: 2001
Assistant Treasurer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
| Peter L. Lydecker (52) |
Year of Election or Appointment: 2004
Assistant Treasurer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR.
| Mark Osterheld (50) |
Year of Election or Appointment: 2002
Assistant Treasurer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
| Gary W. Ryan (47) |
Year of Election or Appointment: 2005
Assistant Treasurer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999 2005).
| Annual Report |
| 46 |
| Name, Age; Principal Occupation Salvatore Schiavone (40) |
Year of Election or Appointment: 2005
Assistant Treasurer of Large Cap Growth, Large Cap Value, Mid Cap Growth, and Mid Cap Value. Mr. Schiavone also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Before joining Fidelity Invest ments, Mr. Schiavone worked at Deutsche Asset Management, where he most recently served as Assistant Treasurer (2003 2005) of the Scudder Funds and Vice President and Head of Fund Reporting (1996 2003).
47 Annual Report
| Distributions |
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Fund | Pay Date | Record Date | Dividends | Capital Gains | ||||
| Fidelity Large Cap Value Fund | 03/06/06 | 03/03/06 | $.02 | $.20 | ||||
| Fidelity Mid Cap Value Fund | 03/06/06 | 03/03/06 | $.03 | $.21 | ||||
| Fidelity Large Cap Growth Fund | 03/06/06 | 03/03/06 | $.01 | $.18 | ||||
| Fidelity Mid Cap Growth Fund | 03/06/06 | 03/03/06 | $— | $.18 |
The funds hereby designate as capital gain dividends the amounts noted below for the taxable year indicated or for dividends for the taxable year ended 2006, if subsequently determined to be different, the net capital gain of such year.
| Fund | January 31, 2006 | |
| Fidelity Large Cap Value Fund | $5,374,865 | |
| Fidelity Mid Cap Value Fund | $9,225,513 | |
| Fidelity Large Cap Growth Fund | $1,806,580 | |
| Fidelity Mid Cap Growth Fund | $4,136,259 |
A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends received deduction for corporate shareholders:
| March 2005 | December 2005 | |||
| Fidelity Large Cap Value Fund | 70% | 51% | ||
| Fidelity Mid Cap Value Fund | 66% | 28% | ||
| Fidelity Large Cap Growth Fund | —% | 38% | ||
| Fidelity Mid Cap Growth Fund | 40% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| March 2005 | December 2005 | |||
| Fidelity Large Cap Value Fund | 71% | 51% | ||
| Fidelity Mid Cap Value Fund | 70% | 26% | ||
| Fidelity Large Cap Growth Fund | —% | 36% | ||
| Fidelity Mid Cap Growth Fund | 56% | 86% |
The funds will notify shareholders in January 2006 of amounts for use in preparing 2005 income tax returns.
| Annual Report |
| 48 |
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Large Cap Growth Fund (formerly Fidelity Structured Large Cap Growth Fund) Fidelity Large Cap Value Fund (formerly Fidelity Structured Large Cap Value Fund) Fidelity Mid Cap Growth Fund (formerly Fidelity Structured Mid Cap Growth Fund) Fidelity Mid Cap Value Fund (formerly Fidelity Structured Mid Cap Value Fund)
On January 19, 2006, the Board of Trustees, including the Independent Trustees (together, the Board), voted to approve a general research services agreement (the Agreement) between FMR, FMR Co., Inc. (FMRC), Fidelity Investments Money Management, Inc. (FIMM), and Fidelity Research & Analysis Company (FRAC) (together, the Investment Advisers) for each fund, effective January 20, 2006, pursuant to which FRAC may provide general research and investment advisory support services to FMRC and FIMM. The Board considered that it has approved previously various sub advisory agreements for each fund with affiliates of FMR that allow FMR to obtain research, non discretionary advice, or discretionary portfolio management at no additional expense to each fund. The Board, assisted by the advice of fund counsel and independent Trustees’ counsel, considered a broad range of information and determined that it would be beneficial for each fund to access the research and investment advisory support services supplied by FRAC at no additional expense to each fund.
The Board reached this determination in part because the new arrangement will involve no changes in (i) the contractual terms of and fees payable under each fund’s management contract or sub advisory agreements; (ii) the investment process or strategies employed in the management of each fund’s assets; (iii) the nature or level of services provided under each fund’s management contract or sub advisory agreements; (iv) the day to day management of each fund or the persons primarily responsible for such management; or (v) the ultimate control or beneficial ownership of FMR, FMRC, or FIMM. The Board also considered that the establishment of each Agreement would not necessitate prior shareholder approval of the Agree ment or result in an assignment and termination of each fund’s management contract or sub advisory agreements under the Investment Company Act of 1940.
Because the Board was approving an arrangement with FRAC under which each fund will not bear any additional management fees or expenses and under which each fund’s portfolio manager would not change, it did not consider each fund’s investment performance, competitiveness of management fee and total expenses, costs of services and profitability, or economies of scale to be significant factors in its decision.
In connection with its future renewal of each fund’s management contract and sub advisory agreements, the Board will consider: (i) the nature, extent, and quality of services provided to each fund, including shareholder and administrative services and investment performance; (ii) the competitiveness of each fund’s management fee and total expenses; (iii) the costs of the services and profitability, including the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering, and servicing each fund and its shareholders; and (iv) whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including each fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that each fund’s Agreement is fair and reasonable, and that each fund’s Agreement should be approved.
49 Annual Report
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.
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.
* 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, reinvest ment of dividends and capital gains, and the effects of any sales charges.
Annual Report 50
To Write Fidelity
We’ll give your correspondence immediate attention and send you written confirmation upon completion of your request.
| (such as changing name, address, bank, etc.) Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0002 |
| Buying shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 Overnight Express Fidelity Investments Attn: Distribution Services 100 Crosby Parkway KC1H Covington, KY 41015 Selling shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0035 Overnight Express Fidelity Investments Attn: Distribution Services 100 Crosby Parkway KC1H Covington, KY 41015 General Correspondence Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 |
| Buying shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 Selling shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0035 Overnight Express Fidelity Investments Attn: Distribution Services 100 Crosby Parkway KC1H Covington, KY 41015 General Correspondence Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 |
51 51 Annual Report
| Investment Adviser Fidelity Management & Research Company Boston, MA Investment Sub Adviser FMR Co., Inc. Fidelity Management & Research (U.K.) Inc. Fidelity Research & Analysis Company (formerly Fidelity Management & Research (Far East) Inc.) Fidelity Investments Japan Limited Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited General Distributor Fidelity Distributors Corporation Boston, MA Transfer and Service Agent Fidelity Service Company, Inc. Boston, MA Custodian Citibank, N.A. New York, NY |
| 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®) (automated phone logo) | 1-800-544-5555 | |
| (automated phone logo) Automated line for quickest service | ||
| LMC UANN 0306 1.789259.102 |
| Fidelity® Tax Free Bond Fund (Formerly Spartan® Tax-Free Bond Fund) |
| Annual Report January 31, 2006 |
| Contents | ||||
| Chairman’s Message | 3 | Ned Johnson’s message to shareholders. | ||
| Performance | 4 | How the fund has done over time. | ||
| Management’s | 5 | The managers’ review of fund | ||
| Discussion | performance, strategy and outlook. | |||
| Shareholder Expense | 6 | An example of shareholder expenses. | ||
| Example | ||||
| Investment Changes | 8 | A summary of major shifts in the fund’s | ||
| investments over the past six months. | ||||
| Investments | 9 | A complete list of the fund’s investments | ||
| with their market values. | ||||
| Financial Statements | 27 | Statements of assets and liabilities, | ||
| operations, and changes in net assets, | ||||
| as well as financial highlights. | ||||
| Notes | 31 | Notes to the financial statements. | ||
| Report of Independent | 36 | |||
| Registered Public | ||||
| Accounting Firm | ||||
| Trustees and Officers | 37 | |||
| Distributions | 48 | |||
| Board Approval of | 49 | |||
| Investment Advisory | ||||
| Contracts and | ||||
| Management Fees | ||||
| To view a fund’s proxy voting guidelines and proxy voting record for the 12 month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commis sion’s (SEC) web site at www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines. 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 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. A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N Q. Forms N Q are available on the SEC’s website at http://www.sec.gov. A fund’s Forms N Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund’s port folio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity’s web site at http://www.fidelity.com/holdings. NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE Neither the fund nor Fidelity Distributors Corporation is a bank. |
Annual Report 2
Chairman’s Message
(photograph of Edward C. Johnson 3d)
Dear Shareholder:
During the past year or so, much has been reported about the mutual fund industry, and much of it has been more critical than I believe is warranted. Allegations that some companies have been less than forthright with their shareholders have cast a shadow on the entire industry. I continue to find these reports disturbing, and assert that they do not create an accurate picture of the industry overall. Therefore, I would like to remind every one where Fidelity stands on these issues. I will say two things specifically regarding allegations that some mutual fund companies were in violation of the Securities and Exchange Commission’s forward pricing rules or were involved in so called “market timing” activities.
First, Fidelity has no agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not a new policy. This is not to say that some one could not deceive the company through fraudulent acts. However, we are extremely diligent in preventing fraud from occurring in this manner and in every other. But I underscore again that Fidelity has no so called “agreements” that sanction illegal practices.
Second, Fidelity continues to stand on record, as we have for years, in opposition to predatory short term trading that adversely affects shareholders in a mutual fund. Back in the 1980s, we initiated a fee which is returned to the fund and, therefore, to investors to discourage this activity. Further, we took the lead several years ago in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. I am confident we will find other ways to make it more difficult for predatory traders to operate. However, this will only be achieved through close cooperation among regulators, legislators and the industry.
Yes, there have been unfortunate instances of unethical and illegal activity within the mutual fund industry from time to time. That is true of any industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. But we are still concerned about the risk of over regulation and the quick application of simplistic solutions to intricate problems. Every system can be improved, and we support and applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors’ holdings.
For nearly 60 years, Fidelity has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/ Edward C. Johnson 3d
Edward C. Johnson 3d
3 Annual Report
Performance: The Bottom Line
Average annual 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) and assuming a constant rate of perfor mance each year. The $10,000 table and the fund’s returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
| Average Annual Total Returns | ||||
| Periods ended January 31, 2006 | Past 1 | Life of | ||
| year | fundA | |||
| Tax Free Bond Fund | 2.83% | 6.16% | ||
A From April 10, 2001. | ||||
| $10,000 Life of Fund | ||||
Let’s say hypothetically that $10,000 was invested in Fidelity® Tax Free Bond Fund on April 10, 2001, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the LB 3 Plus Year Non AMT Municipal Bond Index performed over the same period.
Annual Report 4
Management’s Discussion of Fund Performance
Comments from Christine Thompson, Portfolio Manager of Fidelity® Tax Free Bond Fund
2005 marked the third consecutive year that municipal bonds outperformed the investment grade taxable bond market, a trend that continued through the first month of 2006. While both markets were pressured by the steadily rising federal funds rate and fears of inflation, short term Treasury yields rose and long term yields fell to a greater extent than in municipal bonds, and many investors were attracted to the yield differential between longer dated municipals and taxable investment grade debt. As rates fell in the long end of the municipal market, many issuers looked to refinance existing debt costs or finance new projects at better relative rates. This demand contributed to record high issuance for calendar year 2005. For the year ending January 31, 2006, the Lehman Brothers® Municipal Bond Index a performance measure of approximately 34,000 investment grade, fixed rate, tax exempt bonds rose 2.83% . In comparison, the taxable bond market, as measured by the Lehman Brothers Aggregate Bond Index, gained a more modest 1.80% .
The fund returned 2.83% during the past year, while the LipperSM General Municipal Debt Funds Average was up 2.35% and the Lehman Brothers 3 Plus Year Non AMT Municipal Bond Index gained 2.95% . I suspect that the fund’s outperformance of its peer group average was driven by its comparatively large stake in bonds that were prerefunded during the period. This process involves issuers refinancing outstanding debt by issuing new debt and using the proceeds to purchase U.S. government securities to back the refinanced bonds to a date prior to their maturity, typically the bonds’ first call date. As a result of that government backing, the bonds generally enjoyed price increases. We also had generally favorable sector selection, particularly the fund’s emphasis on lower rated hospital bonds. Security selection within that sector benefited returns as well. Detracting from perfor mance was the fund’s underweighting relative to the index and likely its competitors in tobacco bonds, which were far and away the muni market’s best performing sector during the period. Also hurting performance was what I believe to be an underweighting relative to competitors in lower quality securities, which outpaced the high quality bonds I emphasized.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
| 5 Annual Report 5 |
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (August 1, 2005 to January 31, 2006).
| Actual Expenses |
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the share holder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annual Report |
| 6 |
| Expenses Paid | ||||||||||||
| Beginning | Ending | During Period* | ||||||||||
| Account Value | Account Value | August 1, 2005 | ||||||||||
| August 1, 2005 | January 31, 2006 | to January 31, 2006 | ||||||||||
| Actual | $ | 1,000.00 | $ | 1,015.20 | $ | 1.27 | ||||||
| Hypothetical (5% return per year | ||||||||||||
| before expenses) | $ | 1,000.00 | $ | 1,023.95 | $ | 1.28 | ||||||
* Expenses are equal to the Fund’s annualized expense ratio of .25%; multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one half year period).
7 Annual Report
| Investment Changes | ||||
| Top Five States as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Texas | 18.0 | 19.4 | ||
| Illinois | 12.2 | 14.4 | ||
| California | 11.8 | 11.0 | ||
| New York | 6.5 | 5.3 | ||
| Indiana | 5.0 | 4.8 | ||
| Top Five Sectors as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| General Obligations | 42.7 | 43.6 | ||
| Escrowed/Pre Refunded | 12.7 | 9.8 | ||
| Electric Utilities | 9.7 | 11.4 | ||
| Health Care | 8.2 | 9.0 | ||
| Special Tax | 8.0 | 9.2 | ||
| Average Years to Maturity as of January 31, 2006 | ||||
| 6 months ago | ||||
| Years | 13.6 | 13.5 | ||
Average years to maturity is based on the average time remaining to the stated maturity date of each bond, weighted by the market value of each bond.
| Duration as of January 31, 2006 | ||||||
| 6 months ago | ||||||
| Years | 6.8 | 7.0 | ||||
Duration shows how much a bond fund’s price fluctuates with changes in comparable interest rates. If rates rise 1%, for example, a fund with a five year duration is likely to lose about 5% of its value. Other factors also can influence a bond fund’s performance and share price. Accordingly, a bond fund’s actual performance may differ from this example.
We have used ratings from Moody’s® Investors Services, Inc. Where Moody’s ratings are not available, we have used S&P® ratings.
*ShortTerm Investments and Net Other Assets are not included in the pie chart.
Annual Report 8
| Investments January 31, 2006 | ||||||
| Showing Percentage of Net Assets | ||||||
| Municipal Bonds 96.8% | ||||||
| Principal | Value | |||||
| Amount | (Note 1) | |||||
| Alabama – 0.4% | ||||||
| Birmingham Wtrwks. & Swr. Board Wtr. & Swr. Rev. | ||||||
| Series B, 5% 1/1/43 (MBIA Insured) | $ 1,280,000 | $ 1,307,686 | ||||
| Jefferson County Swr. Rev. Series D, 5.65% 2/1/17 | ||||||
| (Pre-Refunded to 2/1/07 @ 101) (e) | 105,000 | 108,494 | ||||
| 1,416,180 | ||||||
| Arizona – 1.7% | ||||||
| Arizona Ctfs. of Prtn. Series B, 5.5% 9/1/10 (FSA | ||||||
| Insured) | 2,000,000 | 2,159,880 | ||||
| Glendale Indl. Dev. Auth. Hosp. Rev. (John C. Lincoln | ||||||
| Health Network Proj.) 5% 12/1/35 | 750,000 | 746,490 | ||||
| Phoenix Civic Impt. Corp. Excise Tax Rev. (Civic Plaza | ||||||
| Expansion Proj.) Series A, 5% 7/1/41 (FGIC Insured) | 1,000,000 | 1,031,780 | ||||
| Phoenix Civic Impt. Corp. Wtr. Sys. Rev. 5% 7/1/29 | ||||||
| (MBIA Insured) | 1,000,000 | 1,046,570 | ||||
| Univ. of Arizona Univ. Revs. Series 2005 A, 5% 6/1/28 | ||||||
| (AMBAC Insured) | 1,285,000 | 1,345,395 | ||||
| 6,330,115 | ||||||
| Arkansas – 0.3% | ||||||
| Arkansas Gen. Oblig. (College Savings Prog.) Series | ||||||
| 2001 A, 0% 6/1/12 | 1,415,000 | 1,099,285 | ||||
| California – 11.8% | ||||||
| California Dept. of Wtr. Resources Pwr. Supply Rev.: | ||||||
| Series 2002 A, 5.125% 5/1/18 (Pre-Refunded to | ||||||
| 5/1/12 @ 101) (e) | 1,000,000 | 1,097,850 | ||||
| Series A: | ||||||
| 5.25% 5/1/11 (FSA Insured) | 2,000,000 | 2,163,280 | ||||
| 5.5% 5/1/15 (AMBAC Insured) | 600,000 | 664,110 | ||||
| 5.875% 5/1/16 (Pre-Refunded to 5/1/12 @ | ||||||
| 101) (e) | 1,000,000 | 1,136,560 | ||||
| 6% 5/1/14 (MBIA Insured) | 1,500,000 | 1,705,320 | ||||
| California Econ. Recovery Series A, 5.25% 7/1/13 | ||||||
| (MBIA Insured) | 1,000,000 | 1,101,680 | ||||
| California Gen. Oblig.: | ||||||
| 5% 2/1/11 | 1,000,000 | 1,062,070 | ||||
| 5% 12/1/11 (MBIA Insured) | 2,000,000 | 2,156,820 | ||||
| 5.25% 2/1/14 | 1,000,000 | 1,087,000 | ||||
| 5.25% 2/1/15 | 1,240,000 | 1,346,206 | ||||
| 5.25% 2/1/16 | 500,000 | 542,485 | ||||
| 5.25% 2/1/28 | 500,000 | 529,830 | ||||
| 5.25% 12/1/33 | 2,000,000 | 2,120,200 | ||||
| 5.25% 4/1/34 | 1,300,000 | 1,376,830 | ||||
See accompanying notes which are an integral part of the financial statements.
9 Annual Report
| Investments continued | ||||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| California – continued | ||||||||
| California Gen. Oblig.: – continued | ||||||||
| 5.5% 3/1/11 (XL Cap. Assurance, Inc. Insured) | $ 500,000 | $ 545,410 | ||||||
| 5.5% 9/1/24 (Pre-Refunded to 9/1/09 @ 101) (e) | 100,000 | 108,289 | ||||||
| 5.5% 4/1/30 | 2,100,000 | 2,302,062 | ||||||
| 5.5% 11/1/33 | 1,300,000 | 1,416,935 | ||||||
| 5.625% 5/1/20 | 160,000 | 173,486 | ||||||
| 5.625% 5/1/20 (Pre-Refunded to 5/1/10 @ 101) (e) | 140,000 | 153,537 | ||||||
| 6.6% 2/1/09 | 150,000 | 163,022 | ||||||
| 6.6% 2/1/10 | 2,190,000 | 2,432,411 | ||||||
| 6.75% 8/1/10 | 500,000 | 563,715 | ||||||
| California Infrastructure & Econ. Dev. Bank Rev. (Clean | ||||||||
| Wtr. State Revolving Fund Proj.) 5% 10/1/15 | 2,160,000 | 2,313,792 | ||||||
| California Pub. Works Board Lease Rev.: | ||||||||
| Series 2005 A, 5.25% 6/1/30 | 1,200,000 | 1,259,472 | ||||||
| Series 2005 H, 5% 6/1/18 | 1,000,000 | 1,057,990 | ||||||
| Series 2005 K, 5% 11/1/16 | 1,300,000 | 1,395,290 | ||||||
| Series B, 5.25% 11/1/24 (XL Cap. Assurance, Inc. | ||||||||
| Insured) | 1,000,000 | 1,084,030 | ||||||
| California Statewide Cmntys. Dev. Auth. Rev.: | ||||||||
| (Kaiser Fund Hosp./Health Place, Inc. Proj.) Series | ||||||||
| 2002 C, 3.85%, tender 6/1/12 (b) | 300,000 | 296,997 | ||||||
| (Kaiser Permanente Health Sys. Proj.) Series 2004 G, | ||||||||
| 2.3%, tender 5/1/07 (b) | 1,000,000 | 987,040 | ||||||
| Foothill/Eastern Trans. Corridor Agcy. Toll Road Rev.: | ||||||||
| Series A, 5% 1/1/35 (MBIA Insured) | 200,000 | 203,686 | ||||||
| 5% 1/15/16 (MBIA Insured) | 200,000 | 211,578 | ||||||
| 5.75% 1/15/40 | 300,000 | 305,745 | ||||||
| Golden State Tobacco Securitization Corp. Series A: | ||||||||
| 5% 6/1/35 (FGIC Insured) | 1,600,000 | 1,652,896 | ||||||
| 5% 6/1/45 | 3,200,000 | 3,231,456 | ||||||
| 5% 6/1/45 (FGIC Insured) | 1,000,000 | 1,023,900 | ||||||
| Los Angeles Dept. of Wtr. & Pwr. Wtrwks. Rev. Series A, | ||||||||
| 5.125% 7/1/41 (MBIA Insured) | 500,000 | 516,540 | ||||||
| Marina Gen. Oblig. 5.25% 8/1/35 (AMBAC Insured) | 1,170,000 | 1,287,936 | ||||||
| North City West School Facilities Fing. Auth. Spl. Tax | ||||||||
| Series C, 5% 9/1/09 (AMBAC Insured) (a) | 1,000,000 | 1,041,730 | ||||||
| San Diego Unified School District (Election of 1998 Proj.) | ||||||||
| Series E2, 5.5% 7/1/26 (FSA Insured) | 1,000,000 | 1,170,920 | ||||||
| 44,990,106 | ||||||||
| Colorado – 2.2% | ||||||||
| Broomfield Coliseum City & County Ctfs. of Prtn. 6% | ||||||||
| 12/1/29 (AMBAC Insured) | 1,750,000 | 1,901,445 | ||||||
See accompanying notes which are an integral part of the financial statements. | ||||||||
| Annual Report | 10 | |||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| Colorado – continued | ||||||||
| Colorado Health Facilities Auth. Retirement Hsg. Rev. | ||||||||
| (Liberty Heights Proj.) 0% 7/15/22 (Escrowed to | ||||||||
| Maturity) (e) | $ | 1,000,000 | $ | 468,970 | ||||
| Colorado Wtr. Resources and Pwr. Dev. Auth. Wtr. | ||||||||
| Resources Rev. (Parker Wtr. and Sanitation District | ||||||||
| Proj.) Series D, 5.25% 9/1/43 (MBIA Insured) | 1,800,000 | 1,904,310 | ||||||
| Dawson Ridge Metropolitan District # 1 Series 1992 A, | ||||||||
| 0% 10/1/22 (Escrowed to Maturity) (e) | 1,000,000 | 464,440 | ||||||
| E 470 Pub. Hwy. Auth. Rev.: | ||||||||
| Series 2000 A, 5.75% 9/1/29 (MBIA Insured) | 1,000,000 | 1,099,360 | ||||||
| Series B, 0% 9/1/13 (MBIA Insured) | 1,415,000 | 1,037,294 | ||||||
| El Paso County School District #49, Falcon 5.5% | ||||||||
| 12/1/21 (FGIC Insured) | 1,500,000 | 1,615,035 | ||||||
| 8,490,854 | ||||||||
| Connecticut – 0.1% | ||||||||
| Connecticut Health & Edl. Facilities Auth. Rev. | ||||||||
| (Greenwich Hosp. Proj.) Series A, 5.8% 7/1/26 | ||||||||
| (MBIA Insured) | 205,000 | 210,990 | ||||||
| District Of Columbia – 0.7% | ||||||||
| District of Columbia Ctfs. of Prtn. (District’s Pub. Safety | ||||||||
| and Emergency Preparedness Communications Ctr. | ||||||||
| and Related Technology Proj.) 5.5% 1/1/19 (AMBAC | ||||||||
| Insured) | 1,565,000 | 1,720,577 | ||||||
| District of Columbia Gen. Oblig. Series B, 0% 6/1/12 | ||||||||
| (MBIA Insured) | 1,000,000 | 772,550 | ||||||
| District of Columbia Rev. (George Washington Univ. | ||||||||
| Proj.) Series A, 5.75% 9/15/20 (MBIA Insured) | 200,000 | 216,422 | ||||||
| 2,709,549 | ||||||||
| Florida – 3.0% | ||||||||
| Florida Gen. Oblig. (Dept. of Trans. Right of Way Proj.) | ||||||||
| Series B, 6.375% 7/1/08 | 2,305,000 | 2,461,809 | ||||||
| Highlands County Health Facilities Auth. Rev. (Adventist | ||||||||
| Health Sys./Sunbelt Obligated Group Proj.): | ||||||||
| Series A, 5% 11/15/16 | 800,000 | 838,424 | ||||||
| 3.95%, tender 9/1/12 (b) | 1,000,000 | 993,110 | ||||||
| 5%, tender 11/16/09 (b) | 1,000,000 | 1,040,460 | ||||||
| Hillsborough County Indl. Dev. Auth. Poll. Cont. Rev. | ||||||||
| (Tampa Elec. Co. Proj.) 4%, tender 8/1/07 (b) | 3,000,000 | 3,000,000 | ||||||
| JEA Elec. Sys. Rev. Series 3A, 5% 10/1/41 (FSA | ||||||||
| Insured) | 1,700,000 | 1,743,877 | ||||||
See accompanying notes which are an integral part of the financial statements.
11 Annual Report
| Investments continued | ||||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| Florida – continued | ||||||||
| Seminole County School Board Ctfs. of Prtn. Series A, | ||||||||
| 5% 7/1/16 (MBIA Insured) | $ 200,000 | $ 217,020 | ||||||
| Volusia County School Board Ctfs. of Prtn. (School Board | ||||||||
| of Volusia County Master Lease Prog.) 5% 8/1/08 | ||||||||
| (FSA Insured) | 1,000,000 | 1,036,740 | ||||||
| 11,331,440 | ||||||||
| Georgia – 1.5% | ||||||||
| Atlanta Wtr. & Wastewtr. Rev.: | ||||||||
| 5% 11/1/37 (FSA Insured) | 1,900,000 | 1,954,074 | ||||||
| 5% 11/1/43 (FSA Insured) | 1,500,000 | 1,538,340 | ||||||
| Augusta Wtr. & Swr. Rev. 5.25% 10/1/39 (FSA Insured) | 1,500,000 | 1,598,700 | ||||||
| Colquitt County Dev. Auth. Rev. Series A, 0% 12/1/21 | ||||||||
| (Escrowed to Maturity) (e) | 1,000,000 | 484,080 | ||||||
| 5,575,194 | ||||||||
| Illinois – 12.2% | ||||||||
| Bolingbrook Gen. Oblig. Series A, 5.375% 1/1/38 | ||||||||
| (FGIC Insured) | 3,000,000 | 3,157,050 | ||||||
| Chicago Board of Ed. (Westinghouse High School Proj.) | ||||||||
| Series C, 5.25% 12/1/19 (MBIA Insured) | 1,000,000 | 1,092,200 | ||||||
| Chicago Gen. Oblig.: | ||||||||
| (City Colleges Proj.) 0% 1/1/30 (FGIC Insured) | 1,000,000 | 324,710 | ||||||
| (Neighborhoods Alive 21 Prog.) 5% 1/1/43 (AMBAC | ||||||||
| Insured) | 1,040,000 | 1,061,746 | ||||||
| Series 2004 A, 5.25% 1/1/29 (FSA Insured) | 1,000,000 | 1,061,720 | ||||||
| Series A: | ||||||||
| 5% 1/1/41 (Pre-Refunded to 1/1/15 @ 100) (e) | 1,000,000 | 1,061,440 | ||||||
| 5.25% 1/1/33 (MBIA Insured) | 500,000 | 521,625 | ||||||
| Chicago Motor Fuel Tax Rev. 6.125% 1/1/09 (AMBAC | ||||||||
| Insured) | 1,000,000 | 1,073,740 | ||||||
| Chicago Pub. Bldg. Commission Bldg. Rev. (Chicago | ||||||||
| Transit Auth. Proj.) 5.25% 3/1/16 (AMBAC Insured) . | 3,000,000 | 3,259,890 | ||||||
| Chicago Transit Auth. Cap. Grant Receipts Rev. (Douglas | ||||||||
| Branch Proj.) Series 2003 B, 4.25% 6/1/08 (AMBAC | ||||||||
| Insured) | 600,000 | 600,456 | ||||||
| Coles, Cumberland, Moultrie & Shelby Counties Cmnty. | ||||||||
| Unit School District #2, Mattoon 5.35% 2/1/19 (Pre- | ||||||||
| Refunded to 2/1/11 @ 100) (e) | 1,495,000 | 1,619,309 | ||||||
| Cook County Gen. Oblig. Series C, 5% 11/15/25 | ||||||||
| (AMBAC Insured) | 500,000 | 518,880 | ||||||
| DuPage County Cmnty. High School District #108, Lake | ||||||||
| Park 5.6% 1/1/20 (FSA Insured) | 3,175,000 | 3,501,136 | ||||||
| See accompanying notes which are an integral part of the financial statements. | ||||||||
| Annual Report | 12 | |||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| Illinois – continued | ||||||||
| Illinois Dev. Fin. Auth. Rev. (Adventist Health Sys. Proj.) | ||||||||
| Series 1997 A, 5.5% 11/15/13 (MBIA Insured) | $ | 1,000,000 | $ | 1,106,460 | ||||
| Illinois Edl. Facilities Auth. Revs.: | ||||||||
| (DePaul Univ. Proj.) 5.65% 10/1/13 (Pre-Refunded to | ||||||||
| 10/1/07 @ 102) (e) | 100,000 | 105,792 | ||||||
| (Northwestern Univ. Proj.) 5% 12/1/38 | 1,100,000 | 1,130,041 | ||||||
| Illinois Gen. Oblig.: | ||||||||
| First Series, 5.375% 7/1/11 (MBIA Insured) | 1,500,000 | 1,630,560 | ||||||
| Series 2006, 5.5% 1/1/31 | 1,000,000 | 1,162,070 | ||||||
| 5.5% 4/1/17 (MBIA Insured) | 400,000 | 427,352 | ||||||
| 5.5% 4/1/25 (MBIA Insured) | 1,000,000 | 1,056,920 | ||||||
| 5.6% 4/1/21 (MBIA Insured) | 400,000 | 426,972 | ||||||
| Illinois Health Facilities Auth. Rev. (Lake Forest Hosp. | ||||||||
| Proj.) Series A, 6% 7/1/17 | 2,700,000 | 2,959,443 | ||||||
| Illinois Sales Tax Rev.: | ||||||||
| First Series, 5.5% 6/15/15 | 1,200,000 | 1,296,924 | ||||||
| 5% 6/15/30 (FSA Insured) | 3,000,000 | 3,108,810 | ||||||
| 6% 6/15/20 | 300,000 | 327,699 | ||||||
| Jersey & Greene Counties Cmnty. Unit School District | ||||||||
| #100 0% 12/1/18 (FSA Insured) | 1,100,000 | 629,398 | ||||||
| Joliet School District #86 Gen. Oblig. Cap. Appreciation | ||||||||
| 0% 11/1/19 (FSA Insured) | 2,260,000 | 1,240,876 | ||||||
| Kane & DuPage Counties Cmnty. Unit School District | ||||||||
| #303, Saint Charles Series A, 5.5% 1/1/17 (Pre-Re- | ||||||||
| funded to 1/1/12 @ 100) (e) | 1,000,000 | 1,099,760 | ||||||
| Kane County School District #129, Aurora West Side | ||||||||
| Series A, 5.75% 2/1/21 (Pre-Refunded to 2/1/12 @ | ||||||||
| 100) (e) | 1,445,000 | 1,610,351 | ||||||
| Lake County Warren Township High School District | ||||||||
| #121, Gurnee Series C, 5.5% 3/1/23 (AMBAC | ||||||||
| Insured) | 1,000,000 | 1,107,710 | ||||||
| Metropolitan Pier & Exposition Auth. Dedicated State Tax | ||||||||
| Rev. (McCormick Place Expansion Proj.): | ||||||||
| Series 2002 A, 5.75% 6/15/41 (MBIA Insured) | 1,400,000 | 1,538,208 | ||||||
| Series A: | ||||||||
| 0% 6/15/15 (FGIC Insured) | 5,250,000 | 3,563,490 | ||||||
| 0% 6/15/16 (FGIC Insured) | 1,000,000 | 644,670 | ||||||
| 0% 12/15/16 (MBIA Insured) | 1,935,000 | 1,218,702 | ||||||
| 46,246,110 | ||||||||
| Indiana – 5.0% | ||||||||
| Anderson School Bldg. Corp. 5.5% 1/15/28 (FSA | ||||||||
| Insured) | 560,000 | 610,904 | ||||||
See accompanying notes which are an integral part of the financial statements.
13 Annual Report
| Investments continued | ||||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| Indiana – continued | ||||||||
| Beech Grove School Bldg. Corp. 5.625% 7/5/24 (MBIA | ||||||||
| Insured) | $ 1,875,000 | $ 2,144,213 | ||||||
| Clark Pleasant Cmnty. School Bldg. Corp. 5.5% | ||||||||
| 7/15/16 (Pre-Refunded to 1/15/12 @ 100) (e) | 685,000 | 753,753 | ||||||
| Crown Point Multi-School Bldg. Corp. 5% 7/15/19 | ||||||||
| (FGIC Insured) | 1,225,000 | 1,309,635 | ||||||
| Hamilton Southeastern Consolidated School Bldg. Corp. | ||||||||
| 5.5% 1/15/19 (Pre-Refunded to 7/15/11 @ 100) (e) | 1,075,000 | 1,177,469 | ||||||
| Hammond School Bldg. Corp. 5% 7/15/18 (MBIA | ||||||||
| Insured) | 1,000,000 | 1,069,930 | ||||||
| Indiana Health Facilities Fing. Auth. Hosp. Rev. 5.5% | ||||||||
| 2/15/30 (Pre-Refunded to 8/15/10 @ 101.5) (e) | 1,000,000 | 1,097,740 | ||||||
| Indiana Trans. Fin. Auth. Hwy. Series A, 0% 6/1/17 | ||||||||
| (AMBAC Insured) | 1,000,000 | 616,220 | ||||||
| Indianapolis Local Pub. Impt. Bond Bank (Wtrwks. Proj.) | ||||||||
| Series A, 5% 1/1/09 (MBIA Insured) | 2,000,000 | 2,084,540 | ||||||
| Muncie School Bldg. Corp. 5.25% 1/10/13 (MBIA | ||||||||
| Insured) | 1,630,000 | 1,779,112 | ||||||
| Petersburg Poll. Cont. Rev. 5.75% 8/1/21 | 3,000,000 | 3,136,290 | ||||||
| Portage Township Multi-School Bldg. Corp. 5.25% | ||||||||
| 7/15/26 (MBIA Insured) | 1,000,000 | 1,072,310 | ||||||
| Rockport Poll. Cont. Rev. 4.9%, tender 6/1/07 (b) | 1,000,000 | 1,010,700 | ||||||
| South Harrison School Bldg. Corp. Series A, 5.25% | ||||||||
| 1/15/25 (FSA Insured) | 1,000,000 | 1,076,870 | ||||||
| 18,939,686 | ||||||||
| Iowa 0.8% | ||||||||
| Tobacco Settlement Auth. Tobacco Settlement Rev. 5.3% | ||||||||
| 6/1/25 (Pre-Refunded to 6/1/11 @ 101) (e) | 2,800,000 | 3,006,108 | ||||||
| Kansas 0.5% | ||||||||
| Burlington Envir. Impt. Rev. (Kansas City Pwr. & Lt. Co. | ||||||||
| Proj.) Series A, 4.75%, tender 10/1/07 (b) | 1,000,000 | 1,011,240 | ||||||
| Kansas Dev. Fin. Auth. Health Facilities Rev. (Hays Med. | ||||||||
| Ctr. Proj.) Series 2005 L, 5.25% 11/15/14 | 650,000 | 697,190 | ||||||
| Kansas Dev. Fin. Auth. Rev. (Sisters of Charity of | ||||||||
| Leavenworth Health Svcs. Corp. Proj.) 5.25% | ||||||||
| 12/1/09 (MBIA Insured) | 225,000 | 235,742 | ||||||
| 1,944,172 | ||||||||
| See accompanying notes which are an integral part of the financial statements. | ||||||||
| Annual Report | 14 | |||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| Kentucky 0.3% | ||||||||
| Kentucky Property & Bldgs. Commission Revs. (#71 Proj.) | ||||||||
| 5.5% 8/1/09 | $ | 750,000 | $ | 799,950 | ||||
| Louisville & Jefferson County Metropolitan Swr. District | ||||||||
| Swr. & Drain Sys. Rev. Series A, 5.25% 5/15/37 | ||||||||
| (FGIC Insured) | 500,000 | 535,565 | ||||||
| 1,335,515 | ||||||||
| Maine – 1.4% | ||||||||
| Maine Tpk. Auth. Tpk. Rev.: | ||||||||
| Series 2000, 5.75% 7/1/28 (Pre-Refunded to 7/1/10 | ||||||||
| @ 101) (e) | 4,025,000 | 4,438,768 | ||||||
| 5.25% 7/1/30 (FSA Insured) | 1,000,000 | 1,063,520 | ||||||
| 5,502,288 | ||||||||
| Maryland 0.6% | ||||||||
| Baltimore Convention Ctr. Hotel Rev. Series A, 5.25% | ||||||||
| 9/1/39 (XL Cap. Assurance, Inc. Insured) (a) | 2,000,000 | 2,135,500 | ||||||
| Massachusetts 4.9% | ||||||||
| Massachusetts Bay Trans. Auth. Series A: | ||||||||
| 5% 7/1/31 | 1,000,000 | 1,045,790 | ||||||
| 7% 3/1/09 | 1,000,000 | 1,100,630 | ||||||
| Massachusetts Fed. Hwy.: | ||||||||
| Series 1998 A, 5.25% 6/15/12 (Pre-Refunded to | ||||||||
| 12/15/08 @ 101) (e) | 2,610,000 | 2,758,535 | ||||||
| Series 2000 A, 5.75% 6/15/13 | 1,000,000 | 1,088,160 | ||||||
| Massachusetts Gen. Oblig.: | ||||||||
| Series 2005 A, 5% 3/1/23 (FSA Insured) | 1,500,000 | 1,587,420 | ||||||
| Series 2005 C, 5.25% 9/1/23 | 1,400,000 | 1,518,342 | ||||||
| Series D, 5.25% 10/1/20 (Pre-Refunded to 10/1/13 | ||||||||
| @ 100) (e) | 1,100,000 | 1,199,748 | ||||||
| Massachusetts Muni. Wholesale Elec. Co. Pwr. Supply | ||||||||
| Sys. Rev. Series A, 5.1% 7/1/07 (Escrowed to | ||||||||
| Maturity) (e) | 200,000 | 205,140 | ||||||
| Massachusetts School Bldg. Auth. Dedicated Sales Tax | ||||||||
| Rev. Series A: | ||||||||
| 5% 8/15/23 (FSA Insured) | 3,000,000 | 3,172,410 | ||||||
| 5% 8/15/30 (FSA Insured) | 2,500,000 | 2,613,750 | ||||||
| Springfield Gen. Oblig. 5% 8/1/21 (MBIA Insured) | 2,040,000 | 2,161,788 | ||||||
| 18,451,713 | ||||||||
| Michigan – 2.0% | ||||||||
| Ann Arbor Bldg. Auth. Series 2000, 5.75% 3/1/15 | ||||||||
| (Pre-Refunded to 3/1/10 @ 100) (e) | 20,000 | 21,751 | ||||||
See accompanying notes which are an integral part of the financial statements.
15 Annual Report
| Investments continued | ||||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| Michigan – continued | ||||||||
| Detroit City School District 5.375% 5/1/15 (Pre-Re- | ||||||||
| funded to 5/1/09 @ 101) (e) | $ 375,000 | $ 400,793 | ||||||
| Detroit Swr. Disp. Rev. Series A, 5.875% 7/1/22 (Pre- | ||||||||
| Refunded to 1/1/10 @ 101) (e) | 150,000 | 163,760 | ||||||
| Detroit Wtr. Supply Sys. Rev. Series 2001 A, 5.25% | ||||||||
| 7/1/33 (FGIC Insured) | 50,000 | 52,442 | ||||||
| Ferris State Univ. Rev. 5% 10/1/18 (MBIA Insured) | 1,395,000 | 1,481,504 | ||||||
| Fowlerville Cmnty. School District 5.25% 5/1/16 (FGIC | ||||||||
| Insured) | 1,100,000 | 1,199,726 | ||||||
| Livonia Pub. School District Series II, 0% 5/1/21 (FGIC | ||||||||
| Insured) (Pre-Refunded to 5/1/07 @ 39.31) | 1,200,000 | 451,344 | ||||||
| Michigan Muni. Bond Auth. Rev. (Detroit School District | ||||||||
| Proj.) Series B, 5% 6/1/12 (FSA Insured) | 1,000,000 | 1,072,110 | ||||||
| South Redford School District 5% 5/1/22 (MBIA Insured) | 1,575,000 | 1,660,727 | ||||||
| Sterling Heights Bldg. Auth. 5.75% 10/1/15 (Pre-Re- | ||||||||
| funded to 10/1/08 @ 100.5) (e) | 160,000 | 170,675 | ||||||
| Willow Run Cmnty. Schools County of Washtenaw 5% | ||||||||
| 5/1/19 (FSA Insured) | 1,000,000 | 1,063,070 | ||||||
| 7,737,902 | ||||||||
| Minnesota 0.5% | ||||||||
| Minneapolis & Saint Paul Metropolitan Arpts. | ||||||||
| Commission Arpt. Rev. Series 2001 C, 5.25% 1/1/32 | ||||||||
| (FGIC Insured) | 1,000,000 | 1,045,220 | ||||||
| Saint Paul Port Auth. Lease Rev. (HealthEast Midway | ||||||||
| Campus Proj.) Series 2003 A, 5.75% 5/1/25 | 700,000 | 714,805 | ||||||
| 1,760,025 | ||||||||
| Missouri – 0.6% | ||||||||
| Missouri Envir. Impt. & Energy Resources Auth. Wtr. Poll. | ||||||||
| Cont. & Drinking Wtr. Rev. (State Revolving Fund | ||||||||
| Prog.) Series 2003 A, 5.125% 1/1/21 | 1,000,000 | 1,064,820 | ||||||
| Missouri Highways & Trans. Commission State Road Rev. | ||||||||
| Series 2001 A, 5.625% 2/1/13 | 500,000 | 546,860 | ||||||
| Saint Louis Muni. Fin. Corp. Leasehold Rev. (Civil Courts | ||||||||
| Bldg. Proj.) Series A, 5% 8/1/11 (FSA Insured) | 765,000 | 817,563 | ||||||
| 2,429,243 | ||||||||
| See accompanying notes which are an integral part of the financial statements. | ||||||||
| Annual Report | 16 | |||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| Montana 0.4% | ||||||||
| Forsyth Poll. Cont. Rev. (Portland Gen. Elec. Co. Projs.) | ||||||||
| Series A, 5.2%, tender 5/1/09 (b) | $ | 400,000 | $ | 414,420 | ||||
| Montana Board of Regents Higher Ed. Rev. (Montana | ||||||||
| State Univ. Proj.) 5% 11/15/34 (AMBAC Insured) | 1,000,000 | 1,038,820 | ||||||
| 1,453,240 | ||||||||
| Nebraska – 0.1% | ||||||||
| Omaha Gen. Oblig. 5.75% 12/1/14 | 380,000 | 418,733 | ||||||
| Nevada 0.9% | ||||||||
| Clark County Gen. Oblig. Series 2000, 5.5% 7/1/30 | ||||||||
| (MBIA Insured) | 500,000 | 530,035 | ||||||
| Clark County Hwy. Impt. Rev. (Motor Vehicle Fuel Tax) | ||||||||
| 5% 7/1/11 (AMBAC Insured) | 1,000,000 | 1,067,740 | ||||||
| Clark County School District Series 2000 A, 5.75% | ||||||||
| 6/15/17 (Pre-Refunded to 6/15/10 @ 100) (e) | 200,000 | 218,660 | ||||||
| Las Vegas Valley Wtr. District Series B, 5.25% 6/1/17 | ||||||||
| (MBIA Insured) | 500,000 | 538,850 | ||||||
| Washoe County School District Gen. Oblig. Series D, 5% | ||||||||
| 6/1/10 (MBIA Insured) | 1,000,000 | 1,060,950 | ||||||
| 3,416,235 | ||||||||
| New Hampshire – 0.3% | ||||||||
| New Hampshire Health & Ed. Facilities Auth. Rev. (Dart- | ||||||||
| mouth-Hitchcock Proj.) 5.5% 8/1/27 (FSA Insured) | 1,000,000 | 1,085,580 | ||||||
| New Jersey – 1.9% | ||||||||
| New Jersey Econ. Dev. Auth. Rev.: | ||||||||
| Series 2005 K, 5.5% 12/15/19 (AMBAC Insured) | 1,000,000 | 1,150,340 | ||||||
| Series 2005 O, 5.25% 3/1/23 | 1,000,000 | 1,069,190 | ||||||
| Series O, 5.25% 3/1/21 (MBIA Insured) | 1,000,000 | 1,086,400 | ||||||
| New Jersey Tpk. Auth. Tpk. Rev. Series A, 5% 1/1/25 | ||||||||
| (FSA Insured) | 500,000 | 526,800 | ||||||
| New Jersey Trans. Trust Fund Auth. Series B: | ||||||||
| 5.25% 12/15/10 (FGIC Insured) | 1,000,000 | 1,074,400 | ||||||
| 5.25% 12/15/22 (AMBAC Insured) | 1,000,000 | 1,119,480 | ||||||
| Tobacco Settlement Fing. Corp.: | ||||||||
| 4.375% 6/1/19 | 175,000 | 174,872 | ||||||
| 6.125% 6/1/24 | 400,000 | 434,720 | ||||||
| 6.125% 6/1/42 | 700,000 | 733,600 | ||||||
| 7,369,802 | ||||||||
See accompanying notes which are an integral part of the financial statements.
17 Annual Report
| Investments continued | ||||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| New York – 6.5% | ||||||||
| Erie County Indl. Dev. Agcy. School Facility Rev. (Buffalo | ||||||||
| City School District Proj.): | ||||||||
| Series 2003: | ||||||||
| 5.75% 5/1/16 (FSA Insured) | $ | 600,000 | $ | 668,622 | ||||
| 5.75% 5/1/21 (FSA Insured) | 500,000 | 549,050 | ||||||
| Series 2004, 5.75% 5/1/24 (FSA Insured) | 2,225,000 | 2,511,002 | ||||||
| Metropolitan Trans. Auth. Commuter Facilities Rev.: | ||||||||
| Series 1992 B, 6.1% 7/1/09 (Escrowed to | ||||||||
| Maturity) (e) | 25,000 | 27,232 | ||||||
| Series 1997 E, 5% 7/1/16 (Pre-Refunded to 7/1/13 | ||||||||
| @ 100) (e) | 10,000 | 10,876 | ||||||
| Metropolitan Trans. Auth. Rev.: | ||||||||
| Series 2002 A, 5.75% 11/15/32 | 1,700,000 | 1,886,830 | ||||||
| Series F, 5.25% 11/15/27 (MBIA Insured) | 200,000 | 213,976 | ||||||
| Metropolitan Trans. Auth. Svc. Contract Rev. Series 7, | ||||||||
| 4.75% 7/1/19 (Pre-Refunded to 1/1/18 @ 100) (e) . | 35,000 | 37,708 | ||||||
| Nassau County Gen. Oblig. Series Z, 5% 9/1/11 | ||||||||
| (FGIC Insured) | 200,000 | 211,752 | ||||||
| New York City Gen. Oblig.: | ||||||||
| Series 2003 I, 5.75% 3/1/16 | 400,000 | 442,764 | ||||||
| Series 2005 C, 5% 8/1/11 | 1,000,000 | 1,061,550 | ||||||
| Series 2005 G: | ||||||||
| 5% 8/1/15 | 2,800,000 | 3,001,096 | ||||||
| 5.625% 8/1/13 (MBIA Insured) | 2,000,000 | 2,211,960 | ||||||
| Series 2005 J, 5% 3/1/20 | 1,000,000 | 1,050,580 | ||||||
| Series C: | ||||||||
| 5.75% 3/15/27 (FSA Insured) | 150,000 | 164,367 | ||||||
| 5.75% 3/15/27 (Pre-Refunded to 3/15/12 @ | ||||||||
| 100) (e) | 350,000 | 391,783 | ||||||
| Subseries 2005 F1, 5.25% 9/1/14 | 700,000 | 762,454 | ||||||
| New York City Muni. Wtr. Fin. Auth. Wtr. & Swr. Sys. Rev.: | ||||||||
| Series 2002 A, 5.125% 6/15/34 (FSA Insured) | 200,000 | 209,548 | ||||||
| Series A, 6% 6/15/28 (Pre-Refunded to 6/15/12 @ | ||||||||
| 100) (e) | 1,000,000 | 1,128,750 | ||||||
| New York City Transitional Fin. Auth. Rev. Series A, | ||||||||
| 5.75% 2/15/16 | 5,000 | 5,440 | ||||||
| New York State Dorm. Auth. Revs. (City Univ. Sys. | ||||||||
| Consolidation Proj.) Series A, 5.75% 7/1/13 | 1,000,000 | 1,095,280 | ||||||
| New York State Thruway Auth. Gen. Rev. Series 2005 G, | ||||||||
| 5.25% 1/1/27 (FSA Insured) | 1,000,000 | 1,084,130 | ||||||
| New York State Thruway Auth. Svc. Contract Rev. 5.5% | ||||||||
| 4/1/16 | 305,000 | 333,402 | ||||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 18 |
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| New York – continued | ||||||||
| New York Transitional Fin. Auth. Rev. Series 2004 C, 5% | ||||||||
| 2/1/33 (FGIC Insured) | $ | 1,000,000 | $ | 1,038,700 | ||||
| Sales Tax Asset Receivables Corp. Series A, 5.25% | ||||||||
| 10/15/27 (AMBAC Insured) | 1,000,000 | 1,077,310 | ||||||
| Tobacco Settlement Fing. Corp.: | ||||||||
| Series A1: | ||||||||
| 5.5% 6/1/14 | 600,000 | 635,418 | ||||||
| 5.5% 6/1/16 | 1,800,000 | 1,925,406 | ||||||
| Series C1: | ||||||||
| 5.5% 6/1/15 | 200,000 | 214,182 | ||||||
| 5.5% 6/1/17 | 700,000 | 757,218 | ||||||
| 24,708,386 | ||||||||
| North Carolina – 2.2% | ||||||||
| Catawba County Ctfs. of Prtn. (Pub. School and Cmnty. | ||||||||
| College Proj.) 5.25% 6/1/19 (MBIA Insured) | 1,800,000 | 1,955,268 | ||||||
| Dare County Ctfs. of Prtn. 5.25% 6/1/21 (AMBAC | ||||||||
| Insured) | 1,110,000 | 1,197,601 | ||||||
| North Carolina Cap. Facilities Fin. Agcy. Rev. (Duke | ||||||||
| Univ. Proj.) Series A: | ||||||||
| 5.125% 10/1/41 | 1,000,000 | 1,032,380 | ||||||
| 5.125% 7/1/42 | 1,600,000 | 1,659,696 | ||||||
| 5.25% 7/1/42 | 500,000 | 525,160 | ||||||
| North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev.: | ||||||||
| Series A, 5.5% 1/1/11 | 600,000 | 642,786 | ||||||
| Series B, 6.125% 1/1/09 | 100,000 | 106,176 | ||||||
| Series D, 5.375% 1/1/10 | 550,000 | 580,778 | ||||||
| North Carolina Muni. Pwr. Agcy. #1 Catawba Elec. Rev. | ||||||||
| Series B, 6.25% 1/1/07 | 750,000 | 766,275 | ||||||
| 8,466,120 | ||||||||
| Ohio – 0.4% | ||||||||
| Olentangy Local School District 5.5% 12/1/17 (FSA | ||||||||
| Insured) | 1,295,000 | 1,423,827 | ||||||
| Oklahoma – 0.3% | ||||||||
| Oklahoma City Pub. Property Auth. Hotel Tax Rev. 5.5% | ||||||||
| 10/1/21 (FGIC Insured) | 1,000,000 | 1,109,010 | ||||||
See accompanying notes which are an integral part of the financial statements.
19 Annual Report
| Investments continued | ||||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| Oregon – 0.7% | ||||||||
| Morrow County School District #1 5.625% 6/15/14 | ||||||||
| (Pre-Refunded to 6/15/11 @ 100) (e) | $ 1,500,000 | $ 1,653,120 | ||||||
| Yamhill County School District #029J Newberg 5.5% | ||||||||
| 6/15/18 (FGIC Insured) | 1,000,000 | 1,142,010 | ||||||
| 2,795,130 | ||||||||
| Pennsylvania – 3.0% | ||||||||
| Annville-Cleona School District 5.5% 3/1/21 (FSA | ||||||||
| Insured) | 1,200,000 | 1,339,728 | ||||||
| Canon McMillan School District: | ||||||||
| Series 2001 B, 5.75% 12/1/33 (FGIC Insured) | 1,000,000 | 1,087,970 | ||||||
| Series 2002 B, 5.75% 12/1/35 (FGIC Insured) | 1,000,000 | 1,099,830 | ||||||
| Pennsylvania Higher Edl. Facilities Auth. Rev. (UPMC | ||||||||
| Health Sys. Proj.) Series 2001 A, 6% 1/15/22 | 1,000,000 | 1,095,320 | ||||||
| Pennsylvania Tpk. Commission Registration Fee Rev. | ||||||||
| Series 2001, 5.5% 7/15/33 (Pre-Refunded to | ||||||||
| 7/15/11 @ 101) (e) | 1,000,000 | 1,103,570 | ||||||
| Philadelphia Gas Works Rev. (1975 Gen. Ordinance | ||||||||
| Proj.) 17th Series, 5% 7/1/08 (FSA Insured) | 1,000,000 | 1,035,540 | ||||||
| Philadelphia School District Series B, 5% 4/1/11 | ||||||||
| (AMBAC Insured) | 1,000,000 | 1,067,300 | ||||||
| Philadelphia Wtr. & Wastewtr. Rev. Series A, 5.25% | ||||||||
| 8/1/09 (AMBAC Insured) | 450,000 | 471,398 | ||||||
| Tredyffrin-Easttown School District 5.5% 2/15/17 (Pre- | ||||||||
| Refunded to 8/15/10 @ 100) (e) | 1,520,000 | 1,649,048 | ||||||
| Westmoreland County Muni. Auth. Muni. Svc. Rev. | ||||||||
| Series A, 0% 8/15/20 (FGIC Insured) | 2,500,000 | 1,313,100 | ||||||
| 11,262,804 | ||||||||
| Puerto Rico 0.4% | ||||||||
| Puerto Rico Commonwealth Infrastructure Fing. Auth.: | ||||||||
| Series 2000 A, 5.5% 10/1/32 (Escrowed to | ||||||||
| Maturity) (e) | 380,000 | 411,745 | ||||||
| Series C, 5.5% 7/1/20 (FGIC Insured) | 1,000,000 | 1,151,170 | ||||||
| 1,562,915 | ||||||||
| Rhode Island – 0.4% | ||||||||
| Rhode Island Health & Edl. Bldg. Corp. Rev. Series A, | ||||||||
| 5.25% 9/15/19 (AMBAC Insured) | 1,410,000 | 1,519,219 | ||||||
| South Carolina – 1.0% | ||||||||
| Anderson County Joint Muni. Wtr. Sys. Wtrwks. Sys. | ||||||||
| Rev. 5.5% 7/15/17 (FSA Insured) | 1,790,000 | 1,969,036 | ||||||
| See accompanying notes which are an integral part of the financial statements. | ||||||||
| Annual Report | 20 | |||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| South Carolina – continued | ||||||||
| Spartanburg County Health Svcs. District, Inc. Hosp. Rev. | ||||||||
| 5.5% 4/15/18 (FSA Insured) | $ | 1,115,000 | $ | 1,211,704 | ||||
| Tobacco Settlement Rev. Mgmt. Auth. Series 2001 B, | ||||||||
| 6.375% 5/15/28 | 455,000 | 486,627 | ||||||
| 3,667,367 | ||||||||
| Tennessee – 1.6% | ||||||||
| Elizabethton Health & Edl. Facilities Board Rev. Series | ||||||||
| 2000 B: | ||||||||
| 6% 7/1/12 (MBIA Insured) | 2,125,000 | 2,387,416 | ||||||
| 6.25% 7/1/13 (MBIA Insured) | 2,255,000 | 2,586,891 | ||||||
| Metropolitan Govt. Nashville & Davidson County Health | ||||||||
| & Edl. Facilities Board Rev. (Ascension Health Cr. | ||||||||
| Group Proj.) Series A, 6% 11/15/30 (AMBAC | ||||||||
| Insured) (Pre-Refunded to 11/15/09 @ 101) (e) | 100,000 | 109,882 | ||||||
| Shelby County Health Edl. & Hsg. Facility Board Hosp. | ||||||||
| Rev. (Methodist Hosp. Proj.) 6.5% 9/1/26 (Pre-Re- | ||||||||
| funded to 9/1/12 @ 100) (e) | 1,000,000 | 1,162,120 | ||||||
| 6,246,309 | ||||||||
| Texas 18.0% | ||||||||
| Abilene Independent School District 5% 2/15/13 | 2,145,000 | 2,308,020 | ||||||
| Austin Elec. Util. Sys. Rev. 7.25% 11/15/10 (FSA | ||||||||
| Insured) | 1,000,000 | 1,158,050 | ||||||
| Austin Independent School District 5.25% 8/1/14 (a) | 1,000,000 | 1,087,040 | ||||||
| Bexar Metropolitan Wtr. District Wtrwks. Sys. Rev. | ||||||||
| 5.375% 5/1/19 (FSA Insured) | 1,640,000 | 1,770,938 | ||||||
| Boerne Independent School District 5.25% 2/1/35 | 1,200,000 | 1,260,840 | ||||||
| Comal Independent School District 0% 2/1/16 | 2,235,000 | 1,466,607 | ||||||
| Corpus Christi Util. Sys. Rev. 5.25% 7/15/20 (FSA | ||||||||
| Insured) | 1,100,000 | 1,203,059 | ||||||
| Denton County Lewisville Independent School District | ||||||||
| 5.25% 8/15/27 | 1,000,000 | 1,052,610 | ||||||
| East Central Independent School District 5.625% | ||||||||
| 8/15/17 (f) | 1,035,000 | 1,146,511 | ||||||
| Garland Independent School District 5.5% 2/15/19 | 515,000 | 548,042 | ||||||
| Grand Praire Independent School District 3.05%, tender | ||||||||
| 7/31/07 (Liquidity Facility Dexia Cr. Local de | ||||||||
| France) (b) | 4,000,000 | 3,994,160 | ||||||
| Harris County Gen. Oblig.: | ||||||||
| Series A, 5.25% 8/15/35 (FSA Insured) | 1,200,000 | 1,254,024 | ||||||
| 0% 10/1/13 (MBIA Insured) | 2,000,000 | 1,472,140 | ||||||
See accompanying notes which are an integral part of the financial statements.
21 Annual Report
| Investments continued | ||||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| Texas continued | ||||||||
| Harris County Health Facilities Dev. Corp. Rev. (Saint | ||||||||
| Luke’s Episcopal Hosp. Proj.): | ||||||||
| Series 2001 A, 5.5% 2/15/12 (Pre-Refunded to | ||||||||
| 8/15/11 @ 100) (e) | $ | 1,375,000 | $ | 1,504,278 | ||||
| 5.75% 2/15/20 (Pre-Refunded to 8/15/12 @ | ||||||||
| 100) (e) | 1,235,000 | 1,380,730 | ||||||
| Hidalgo County Gen. Oblig. 5.75% 8/15/17 (Pre-Re- | ||||||||
| funded to 8/15/11 @ 100) (e) | 1,535,000 | 1,698,401 | ||||||
| Houston Arpt. Sys. Rev. Series B: | ||||||||
| 5.5% 7/1/19 (FSA Insured) | 1,500,000 | 1,615,230 | ||||||
| 5.5% 7/1/30 (FSA Insured) | 600,000 | 639,036 | ||||||
| La Joya Independent School District 5.75% 2/15/19 | ||||||||
| (Pre-Refunded to 2/15/10 @ 100) (e) | 600,000 | 652,008 | ||||||
| Lewisville Independent School District 0% 8/15/18 | 1,025,000 | 594,777 | ||||||
| Lubbock Gen. Oblig. (Wtrwks. Sys. Surplus Proj.) 5% | ||||||||
| 2/15/16 (FSA Insured) | 1,260,000 | 1,353,731 | ||||||
| Lubbock Health Facilities Dev. Corp. Rev. (Carillon, Inc. | ||||||||
| Proj.) Series A, 6.5% 7/1/29 (Pre-Refunded to | ||||||||
| 7/1/09 @ 102) (e) | 1,000,000 | 1,118,220 | ||||||
| Magnolia Independent School District 5.25% 8/15/29 | ||||||||
| (FGIC Insured) | 1,300,000 | 1,386,307 | ||||||
| Mansfield Independent School District 5.5% 2/15/17 | 1,650,000 | 1,799,952 | ||||||
| McAllen Independent School District: | ||||||||
| 5% 2/15/15 | 2,000,000 | 2,162,960 | ||||||
| 5% 2/15/16 | 2,610,000 | 2,808,256 | ||||||
| McLennan County Jr. College District 5% 8/15/15 (FSA | ||||||||
| Insured) | 1,120,000 | 1,207,002 | ||||||
| Mercedes Independent School District Series 2000, | ||||||||
| 5.625% 8/15/15 (Pre-Refunded to 8/15/10 @ | ||||||||
| 100) (e) | 275,000 | 299,778 | ||||||
| Mesquite Independent School District 3.65%, tender | ||||||||
| 12/1/08 (Liquidity Facility JPMorgan Chase Bank) (b) | 500,000 | 500,000 | ||||||
| New Braunfels Independent School District 6% 2/1/09 . | 725,000 | 778,019 | ||||||
| North East Texas Independent School District 5% 8/1/33 | 600,000 | 618,846 | ||||||
| Odessa Wtr. & Swr. Rev. 5.5% 4/1/11 (FSA Insured) | 750,000 | 818,010 | ||||||
| Red River Ed. Fin. Corp. Ed. Rev. (Hockaday School | ||||||||
| Proj.) 5.75% 5/15/19 (Pre-Refunded to 5/15/10 @ | ||||||||
| 100) (e) | 200,000 | 218,326 | ||||||
| Sabine River Auth. Poll. Cont. Rev. (Texas Utils. Elec. Co. | ||||||||
| Proj.) Series A, 5.5%, tender 11/1/11 (b) | 3,000,000 | 3,158,190 | ||||||
| San Antonio Elec. & Gas Systems Rev.: | ||||||||
| 3.55%, tender 12/1/07 (b) | 1,000,000 | 1,001,190 | ||||||
| 5.375% 2/1/20 (Pre-Refunded to 2/1/12 @ 100) (e) | 3,000,000 | 3,266,250 | ||||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 22 |
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| Texas continued | ||||||||
| San Antonio Independent School District 5.5% 8/15/24 | ||||||||
| (Pre-Refunded to 8/15/09 @ 100) (e) | $ | 1,000,000 | $ | 1,069,690 | ||||
| San Marcos Consolidated Independent School District | ||||||||
| 5% 8/1/13 | 1,090,000 | 1,173,876 | ||||||
| Socorro Independent School District 5.375% 8/15/18 | 1,000,000 | 1,077,920 | ||||||
| Tarrant County Health Facilities Dev. Corp. Hosp. Rev. | ||||||||
| 5.375% 11/15/20 | 500,000 | 515,970 | ||||||
| Texas Muni. Pwr. Agcy. Rev.: | ||||||||
| 0% 9/1/15 (MBIA Insured) | 2,340,000 | 1,574,492 | ||||||
| 0% 9/1/16 (Escrowed to Maturity) (e) | 15,000 | 9,564 | ||||||
| 0% 9/1/16 (MBIA Insured) | 2,390,000 | 1,533,400 | ||||||
| Texas Pub. Fin. Auth. Rev. (Texas Parks & Wildlife Dept. | ||||||||
| Projs.) 5.5% 2/1/12 (Pre-Refunded to 2/1/10 @ | ||||||||
| 100) (e) | 150,000 | 161,499 | ||||||
| Texas State Univ. Sys. Fing. Rev. 5% 3/15/12 (FSA | ||||||||
| Insured) | 2,000,000 | 2,145,600 | ||||||
| Texas Tpk. Auth. Central Tpk. Sys. Rev.: | ||||||||
| 5.5% 8/15/39 (AMBAC Insured) | 1,875,000 | 2,005,256 | ||||||
| 5.75% 8/15/38 (AMBAC Insured) | 1,225,000 | 1,344,952 | ||||||
| Texas Wtr. Dev. Board Rev. Series B, 5.375% 7/15/16 . | 1,000,000 | 1,064,790 | ||||||
| Tyler Health Facilities Dev. Corp. Hosp. Rev. (Mother | ||||||||
| Frances Hosp. Reg’l. Health Care Ctr. Proj.) 6% | ||||||||
| 7/1/27 | 1,000,000 | 1,045,860 | ||||||
| Univ. of Texas Univ. Revs. (Fing. Sys. Proj.) Series A, | ||||||||
| 5.5% 8/15/09 | 100,000 | 106,797 | ||||||
| Waller Consolidated Independent School District 6% | ||||||||
| 2/15/12 (Pre-Refunded to 2/15/11 @ 100) (e) | 175,000 | 194,857 | ||||||
| Weatherford Independent School District 0% 2/15/23 | ||||||||
| (Pre-Refunded to 2/15/10 @ 42.135) (e) | 1,500,000 | 544,515 | ||||||
| White Settlement Independent School District 5.75% | ||||||||
| 8/15/34 | 1,150,000 | 1,262,608 | ||||||
| Williamson County Gen. Oblig. 5.5% 2/15/18 (FSA | ||||||||
| Insured) | 5,000 | 5,381 | ||||||
| Willis Independent School District 5% 2/15/13 | 1,040,000 | 1,119,040 | ||||||
| 68,257,605 | ||||||||
| Utah 1.2% | ||||||||
| Salt Lake City School District Series B, 5% 3/1/13 | 1,135,000 | 1,226,106 | ||||||
| Salt Lake County Hosp. Rev. (IHC Health Svcs., Inc. Proj.) | ||||||||
| 5.5% 5/15/12 (AMBAC Insured) | 3,100,000 | 3,376,892 | ||||||
| 4,602,998 | ||||||||
See accompanying notes which are an integral part of the financial statements.
23 Annual Report
| Investments continued | ||||||||
| Municipal Bonds continued | ||||||||
| Principal | Value | |||||||
| Amount | (Note 1) | |||||||
| Vermont – 0.5% | ||||||||
| Univ. of Vermont and State Agricultural College 5.5% | ||||||||
| 10/1/19 (AMBAC Insured) | $ 1,200,000 | $ 1,321,956 | ||||||
| Vermont Edl. & Health Bldgs. Fing. Agcy. Rev. (Fletcher | ||||||||
| Allen Health Care, Inc. Proj.): | ||||||||
| Series 2000 A, 6.125% 12/1/27 (AMBAC Insured) | 300,000 | 332,145 | ||||||
| Series A, 5.75% 12/1/18 (AMBAC Insured) | 200,000 | 218,710 | ||||||
| 1,872,811 | ||||||||
| Washington 4.4% | ||||||||
| Chelan County Pub. Util. District #1 Columbia River-Rock | ||||||||
| Island Hydro-Elec. Sys. Rev. Series A: | ||||||||
| 0% 6/1/28 (MBIA Insured) | 1,200,000 | 410,724 | ||||||
| 0% 6/1/29 (MBIA Insured) | 1,000,000 | 324,740 | ||||||
| Clark County Pub. Util. District #1 Elec. Rev. Series A, | ||||||||
| 5.5% 1/1/17 (FSA Insured) | 1,570,000 | 1,714,016 | ||||||
| Energy Northwest Elec. Rev. (#1 Proj.) Series B, 6% | ||||||||
| 7/1/17 (MBIA Insured) | 2,000,000 | 2,242,160 | ||||||
| Grant County Pub. Util. District #2 Wanapum Hydro | ||||||||
| Elec. Rev. Series A, 5% 1/1/18 (FGIC Insured) | 1,095,000 | 1,161,193 | ||||||
| King County School District #414, Lake Washington | ||||||||
| 5.25% 12/1/15 (Pre-Refunded to 12/1/10 @ | ||||||||
| 100) (e) | 1,000,000 | 1,078,910 | ||||||
| Tacoma Elec. Sys. Rev. Series 2001 A, 5.75% 1/1/20 | ||||||||
| (Pre-Refunded to 1/1/11 @ 101) (e) | 1,000,000 | 1,108,160 | ||||||
| Washington Gen. Oblig.: | ||||||||
| Series 2001 C, 5.25% 1/1/16 | 1,000,000 | 1,072,240 | ||||||
| Series C, 5.25% 1/1/26 (FSA Insured) | 500,000 | 529,655 | ||||||
| Washington Health Care Facilities Auth. Rev. (Providence | ||||||||
| Health Systems Proj.) Series 2001 A, 5.5% 10/1/13 | ||||||||
| (MBIA Insured) | 1,750,000 | 1,889,055 | ||||||
| Washington Pub. Pwr. Supply Sys. Nuclear Proj. #2 Rev.: | ||||||||
| Series A, 5% 7/1/12 (FSA Insured) | 3,000,000 | 3,156,840 | ||||||
| 5.4% 7/1/12 (FSA Insured) | 1,000,000 | 1,092,620 | ||||||
| Yakima County Gen. Oblig. 5.25% 12/1/15 (AMBAC | ||||||||
| Insured) | 1,000,000 | 1,077,700 | ||||||
| 16,858,013 | ||||||||
| Wisconsin – 1.6% | ||||||||
| Douglas County Gen. Oblig. 5.5% 2/1/18 (FGIC | ||||||||
| Insured) | 605,000 | 656,213 | ||||||
| Evansville Cmnty. School District 5% 4/1/16 (FSA | ||||||||
| Insured) | 1,000,000 | 1,084,510 | ||||||
| Wisconsin Gen. Oblig. Series 1, 5% 5/1/10 (MBIA | ||||||||
| Insured) | 500,000 | 529,315 | ||||||
See accompanying notes which are an integral part of the financial statements. | ||||||||
| Annual Report | 24 | |||||||
| Municipal Bonds continued | ||||||
| Principal | Value | |||||
| Amount | (Note 1) | |||||
| Wisconsin – continued | ||||||
| Wisconsin Health & Edl. Facilities Auth. Rev.: | ||||||
| (Marshfield Clinic Proj.) Series B, 6% 2/15/25 | $ 1,000,000 | $ 1,067,050 | ||||
| (Wheaton Franciscan Svcs., Inc. Proj.): | ||||||
| 5.75% 8/15/30 | 1,000,000 | 1,059,790 | ||||
| 6.25% 8/15/22 | 500,000 | 546,825 | ||||
| Series A, 5.375% 2/15/34 | 1,000,000 | 1,027,690 | ||||
| 5,971,393 | ||||||
| Wyoming – 0.5% | ||||||
| Gillette Spl. Purp. Wtr. & Swr. Utils. Sys. Rev. 7.7% | ||||||
| 12/1/10 (Escrowed to Maturity) (e) | 1,800,000 | 2,084,436 | ||||
| TOTAL MUNICIPAL BONDS | ||||||
| (Cost $361,302,955) | 367,793,908 | |||||
| Money Market Funds 1.3% | ||||||
| Shares | ||||||
| Fidelity Tax-Free Cash Central Fund, 3.07% (c)(d) | ||||||
| (Cost $5,000,000) | 5,000,000 | 5,000,000 | ||||
| TOTAL INVESTMENT PORTFOLIO 98.1% | ||||||
| (Cost $366,302,955) | 372,793,908 | |||||
| NET OTHER ASSETS – 1.9% | 7,124,408 | |||||
| NET ASSETS 100% | $ 379,918,316 | |||||
| Legend (a) Security or a portion of the security purchased on a delayed delivery or when-issued basis. (b) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
| (c) Information in this report regarding holdings by state and security types does not reflect the holdings of the Fidelity Tax-Free Cash Central Fund. |
See accompanying notes which are an integral part of the financial statements.
25 Annual Report
| (d) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund’s holdings as of its most recent quarter end is available upon request. (e) Security collateralized by an amount sufficient to pay interest and principal. (f) Restricted securities – Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $1,146,511 or 0.3% of net assets. |
Additional information on each holding is as follows:
| Acquisition | Acquisition | |||
| Security | Date | Cost | ||
| East Central | ||||
| Independent | ||||
| School District | ||||
| 5.625% 8/15/17 | 8/16/02 | $ 1,140,280 |
Affiliated Central Funds
Information regarding fiscal year to date income received by the fund from the affiliated Central funds is as follows:
| Fund | Income received | |||
| Fidelity Tax Free Cash Central Fund | $ | 39,211 | ||
Other Information
The distribution of municipal securities by revenue source, as a percentage of total net assets, is as follows:
| General Obligations | 42.7% | |
| Escrowed/Pre Refunded | 12.7% | |
| Electric Utilities | 9.7% | |
| Health Care | 8.2% | |
| Special Tax | 8.0% | |
| Water & Sewer | 6.0% | |
| Others* (individually less than 5%) | 12.7% | |
| 100.0% |
*Includes cash equivalents and net other assets.
See accompanying notes which are an integral part of the financial statements.
Annual Report 26
| Financial Statements | ||||||||
| Statement of Assets and Liabilities | ||||||||
| January 31, 2006 | ||||||||
| Assets | ||||||||
| Investment in securities, at value See accompanying | ||||||||
| schedule: | ||||||||
| Unaffiliated issuers (cost $361,302,955) | $ | 367,793,908 | ||||||
| Affiliated Central Funds (cost $5,000,000) | 5,000,000 | |||||||
| Total Investments (cost $366,302,955) | $ | 372,793,908 | ||||||
| Cash | 7,173,826 | |||||||
| Receivable for investments sold | 553,364 | |||||||
| Receivable for fund shares sold | 979,262 | |||||||
| Interest receivable | 4,398,101 | |||||||
| Prepaid expenses | 1,430 | |||||||
| Receivable from investment adviser for expense | ||||||||
| reductions | 68,157 | |||||||
| Other receivables | 29,043 | |||||||
| Total assets | 385,997,091 | |||||||
| Liabilities | ||||||||
| Payable for investments purchased | ||||||||
| Regular delivery | $ | 1,127,793 | ||||||
| Delayed delivery | 4,244,820 | |||||||
| Payable for fund shares redeemed | 234,160 | |||||||
| Distributions payable | 295,460 | |||||||
| Accrued management fee | 115,541 | |||||||
| Other affiliated payables | 28,075 | |||||||
| Other payables and accrued expenses | 32,926 | |||||||
| Total liabilities | 6,078,775 | |||||||
| Net Assets | $ | 379,918,316 | ||||||
| Net Assets consist of: | ||||||||
| Paid in capital | $ | 372,656,821 | ||||||
| Undistributed net investment income | 18,436 | |||||||
| Accumulated undistributed net realized gain (loss) on | ||||||||
| investments | 752,106 | |||||||
| Net unrealized appreciation (depreciation) on | ||||||||
| investments | 6,490,953 | |||||||
| Net Assets, for 35,406,043 shares outstanding | $ | 379,918,316 | ||||||
| Net Asset Value, offering price and redemption price per | ||||||||
| share ($379,918,316 ÷ 35,406,043 shares) | $ | 10.73 | ||||||
See accompanying notes which are an integral part of the financial statements.
27 Annual Report
| Financial Statements continued | ||||||
| Statement of Operations | ||||||
| Year ended January 31, 2006 | ||||||
| Investment Income | ||||||
| Interest | $ | 13,216,929 | ||||
| Income from affiliated Central Funds | 39,211 | |||||
| Total income | 13,256,140 | |||||
| Expenses | ||||||
| Management fee | $ | 1,205,655 | ||||
| Transfer agent fees | 220,227 | |||||
| Accounting fees and expenses | 80,788 | |||||
| Independent trustees’ compensation | 1,385 | |||||
| Custodian fees and expenses | 5,942 | |||||
| Registration fees | 47,216 | |||||
| Audit | 40,744 | |||||
| Legal | 947 | |||||
| Miscellaneous | 2,223 | |||||
| Total expenses before reductions | 1,605,127 | |||||
| Expense reductions | (1,065,786) | 539,341 | ||||
| Net investment income | 12,716,799 | |||||
| Realized and Unrealized Gain (Loss) | ||||||
| Net realized gain (loss) on: | ||||||
| Investment securities: | ||||||
| Unaffiliated issuers | 1,685,914 | |||||
| Futures contracts | 90,298 | |||||
| Total net realized gain (loss) | 1,776,212 | |||||
| Change in net unrealized appreciation (depreciation) on | ||||||
| investment securities | (5,611,724) | |||||
| Net gain (loss) | (3,835,512) | |||||
| Net increase (decrease) in net assets resulting from | ||||||
| operations | $ | 8,881,287 | ||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 28 |
| Statement of Changes in Net Assets | ||||||||
| Year ended | Year ended | |||||||
| January 31, | January 31, | |||||||
| 2006 | 2005 | |||||||
| Increase (Decrease) in Net Assets | ||||||||
| Operations | ||||||||
| Net investment income | $ | 12,716,799 | $ | 9,387,105 | ||||
| Net realized gain (loss) | 1,776,212 | 796,665 | ||||||
| Change in net unrealized appreciation (depreciation) . | (5,611,724) | 1,296,096 | ||||||
| Net increase (decrease) in net assets resulting | ||||||||
| from operations | 8,881,287 | 11,479,866 | ||||||
| Distributions to shareholders from net investment income . | (12,705,673) | (9,387,439) | ||||||
| Distributions to shareholders from net realized gain | (1,184,465) | (671,476) | ||||||
| Total distributions | (13,890,138) | (10,058,915) | ||||||
| Share transactions | ||||||||
| Proceeds from sales of shares | 209,278,182 | 130,975,319 | ||||||
| Reinvestment of distributions | 10,662,310 | 7,622,337 | ||||||
| Cost of shares redeemed | (99,375,303) | (100,109,492) | ||||||
| Net increase (decrease) in net assets resulting from | ||||||||
| share transactions | 120,565,189 | 38,488,164 | ||||||
| Redemption fees | 5,146 | 8,943 | ||||||
| Total increase (decrease) in net assets | 115,561,484 | 39,918,058 | ||||||
| Net Assets | ||||||||
| Beginning of period | 264,356,832 | 224,438,774 | ||||||
| End of period (including undistributed net investment | ||||||||
| income of $18,436 and undistributed net investment | ||||||||
| income of $7,310, respectively) | $ | 379,918,316 | $ | 264,356,832 | ||||
| Other Information | ||||||||
| Shares | ||||||||
| Sold | 19,370,303 | 12,187,563 | ||||||
| Issued in reinvestment of distributions | 989,341 | 711,019 | ||||||
| Redeemed | (9,231,007) | (9,385,473) | ||||||
| Net increase (decrease) | 11,128,637 | 3,513,109 | ||||||
See accompanying notes which are an integral part of the financial statements.
29 Annual Report
| Financial Highlights | ||||||||||
| Years ended January 31, | 2006 | 2005 | 2004 | 2003 | 2002E | |||||
| Selected Per Share Data | ||||||||||
| Net asset value, beginning of period | $ 10.89 | $ 10.81 | $ 10.60 | $ 10.24 | $ 10.00 | |||||
| Income from Investment Operations | ||||||||||
| Net investment incomeD | 423 | .435 | .444 | .432 | .352 | |||||
| Net realized and unrealized gain | ||||||||||
| (loss) | (.122) | .111 | .329 | .384 | .245 | |||||
| Total from investment operations | .301 | .546 | .773 | .816 | .597 | |||||
| Distributions from net investment | ||||||||||
| income | (.424) | (.436) | (.444) | (.434) | (.350) | |||||
| Distributions from net realized gain | (.037) | (.030) | (.120) | (.023) | (.008) | |||||
| Total distributions | (.461) | (.466) | (.564) | (.457) | (.358) | |||||
| Redemption fees added to paid in | ||||||||||
| capitalD | —G | —G | .001 | .001 | .001 | |||||
| Net asset value, end of period | $ 10.73 | $ 10.89 | $ 10.81 | $ 10.60 | $ 10.24 | |||||
| Total ReturnB,C | 2.83% | 5.21% | 7.47% | 8.13% | 6.05% | |||||
| Ratios to Average Net AssetsF | ||||||||||
| Expenses before reductions | 50% | .51% | .54% | .52% | .66%A | |||||
| Expenses net of fee waivers, if | ||||||||||
| any | 25% | .25% | .25% | .18% | .10%A | |||||
| Expenses net of all reductions | 17% | .22% | .23% | .14% | .06%A | |||||
| Net investment income | 3.93% | 4.06% | 4.14% | 4.13% | 4.30%A | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period | ||||||||||
| (000 omitted) | $379,918 | $264,357 | $224,439 | $253,431 | $159,357 | |||||
| Portfolio turnover rate | 15% | 20% | 17% | 28% | 28%A | |||||
| A Annualized B Total returns for periods of less than one year are not annualized. C Total returns would have been lower had certain expenses not been reduced during the periods shown. D Calculated based on average shares outstanding during the period. E For the period April 10, 2001 (commencement of operations) to January 31, 2002. F Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund. G Amount represents less than $.001 per share. |
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 30 |
Notes to Financial Statements
| For the period ended January 31, 2006 |
1. Significant Accounting Policies.
Fidelity Tax Free Bond Fund (the fund) is a fund of Fidelity Devonshire Trust (the trust) and is authorized to issue an unlimited number of shares. On July 21, 2005, the Board of Trustees approved a change in the name of Spartan Tax Free Bond Fund to Fidelity Tax Free Bond Fund effective August 15, 2005. The trust is registered under the Invest ment Company Act of 1940, as amended (the 1940 Act), as an open end management investment company organized as a Massachusetts business trust. The fund may invest in affiliated money market central funds (Money Market Central Funds), which are open end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, 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. Investments are valued and net asset value per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Wherever possible, the fund uses independent pricing services approved by the Board of Trustees to value its investments. Debt securities, including restricted securities, for which quotes are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. The frequency of when fair value pricing is used is unpredictable. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities. Investments in open end mutual funds are valued at their closing net asset value each business day. Short term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each fund in the trust.
31 Annual Report
| Notes to Financial Statements continued |
1. Significant Accounting Policies continued |
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.
Dividends are declared daily and paid monthly from net investment income. Distribu tions from realized gains, if any, 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. In addition, the fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book tax differences will reverse in a subsequent period.
Book tax differences are primarily due to futures transactions, market discount, and losses deferred due to wash sales.
The fund purchases municipal securities whose interest, in the opinion of the issuer, is free from federal income tax. There is no assurance that the Internal Revenue Service (IRS) will agree with this opinion. In the event the IRS determines that the issuer does not comply with relevant tax requirements, interest payments from a security could become federally taxable, possibly retroactively to the date the security was issued.
The tax basis components of distributable earnings and the federal tax cost as of period end were as follows:
| Unrealized appreciation | $ | 8,001,400 | ||||||
| Unrealized depreciation | (1,541,486) | |||||||
| Net unrealized appreciation (depreciation) | 6,459,914 | |||||||
| Undistributed ordinary income | 37,630 | |||||||
| Undistributed long term capital gain | 593,529 | |||||||
| Cost for federal income tax purposes | $ | 366,333,994 | ||||||
| The tax character of distributions paid was as follows: | ||||||||
| January 31, 2006 | January 31, 2005 | |||||||
| Tax exempt Income | $ | 12,705,673 | $ | 9,387,439 | ||||
| Long term Capital Gains | 1,184,465 | 671,476 | ||||||
| Total | $ | 13,890,138 | $ | 10,058,915 | ||||
Short Term Trading (Redemption) Fees. Shares held in the fund less than 30 days are subject to a redemption fee equal to .50% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the fund and accounted for as an addition to paid in capital.
| Annual Report |
| 32 |
| 2. Operating Policies. |
Delayed Delivery Transactions and When Issued Securities. The fund may purchase or sell securities on a delayed delivery or when issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. During the time a delayed delivery sell is outstanding, the contract is marked to market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when issued basis are identified as such in the fund’s Schedule of Investments. The fund may receive compensation for interest forgone in the purchase of a delayed delivery or when issued security. With respect to purchase commitments, the fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underly ing securities or if the counterparty does not perform under the contract’s terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Futures Contracts. The fund may use futures contracts to manage its exposure to the bond market and to fluctuations in interest rates. Buying futures tends to increase a fund’s exposure to the underlying instrument, while selling futures tends to decrease a fund’s exposure to the underlying instrument or hedge other fund investments. Losses may arise from changes in the value of the underlying instruments or if the counterpar ties do not perform under the contracts’ terms. Gains (losses) are realized upon the expiration or closings of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.
Restricted Securities. The fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transac tions 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. Information regarding restricted securities is included at the end of the fund’s Schedule of Investments.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short term securities and U.S. government securities, aggregated $163,378,682 and $45,726,168, respectively.
33 Annual Report
| Notes to Financial Statements continued |
4. Fees and Other Transactions with Affiliates. |
Management Fee. FMR and its affiliates provide the fund with investment manage ment related services for which the fund pays a monthly management fee. The manage ment fee is the sum of an individual fund fee rate that is based on an annual rate of .25% of the fund’s average net assets and a group fee rate that averaged .12% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annual man agement fee rate was ..37% of the fund’s average net assets.
Transfer Agent and Accounting Fees. Citibank, N.A. (Citibank) is the custodian, transfer agent and shareholder servicing agent for the fund. Citibank has entered into a sub arrangement with Fidelity Service Company, Inc. (FSC), an affiliate of FMR, under which FSC performs the activities associated with the fund’s transfer and shareholder servicing agent and accounting functions. The fund pays account fees and asset based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. The accounting fee is based on the level of average net assets for the month. For the period, the transfer agent fees were equivalent to an annual rate of .07% of average net assets.
Affiliated Central Funds. The fund may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Invest ments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds do not pay a management fee.
| 5. Committed Line of Credit. |
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the “line of credit”) to be utilized for temporary or emergency purposes to fund share holder redemptions or for other short term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
| 6. Expense Reductions. |
FMR voluntarily agreed to reimburse the fund to the extent annual operating expenses exceeded .25% of average net assets. Some expenses, for example interest expense, are excluded from this reimbursement. During the period, this reimbursement reduced the fund’s expenses by $795,793.
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 the fund’s expenses. During the period, these credits reduced the fund’s custody, transfer agent and account ing expenses by $5,928, $199,852 and $64,213, respectively.
| Annual Report |
| 34 |
| 7. Other. |
The fund’s organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the fund. In the normal course of business, the fund may also enter into contracts that provide general indemnifications. The fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the fund. The risk of material loss from such claims is considered remote.
35 Annual Report
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Devonshire Trust and Shareholders of Fidelity Tax Free Bond Fund (formerly Spartan Tax Free Bond Fund):
We have audited the accompanying statement of assets and liabilities of Fidelity Tax Free Bond Fund (formerly Spartan Tax Free Bond Fund) (the Fund), a fund of Fidelity Devonshire Trust, including the schedule of investments as of January 31, 2006, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods presented. These financial statements and financial highlights are the respon sibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall financial statement presentation. Our procedures in cluded confirmation of securities owned as of January 31, 2006, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Tax Free Bond Fund as of January 31, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for the periods presented in conformity with accounting principles generally accepted in the United States of America.
| /s/ Deloitte & Touche LLP DELOITTE & TOUCHE LLP Boston, Massachusetts March 14, 2006 |
Annual Report 36
Trustees and Officers
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund’s activities, review contractual arrangements with companies that provide services to the fund, and review the fund’s performance. Except for William O. McCoy and Albert R. Gamper, Jr., each of the Trustees oversees 326 funds advised by FMR or an affiliate. Mr. McCoy oversees 328 funds advised by FMR or an affiliate. Mr. Gamper oversees 251 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instru ment signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
| Interested Trustees*: |
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
| Name, Age; Principal Occupation Edward C. Johnson 3d (75) |
Year of Election or Appointment: 1985
Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Research & Analysis Company; Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001 present) and a Director (2000 present) of FMR Co., Inc.
37 Annual Report
Trustees and Officers - continued
| Name, Age; Principal Occupation Stephen P. Jonas (53) |
Year of Election or Appointment: 2005
Mr. Jonas is Senior Vice President of Tax Free Bond (2005 present). He also serves as Senior Vice President of other Fidelity funds (2005 present). Mr. Jonas is Executive Director of FMR (2005 present). Previously, Mr. Jonas served as President of Fidelity Enterprise Opera tions and Risk Services (2004 2005), Chief Administrative Officer (2002 2004), and Chief Financial Officer of FMR Co. (1998 2000). Mr. Jonas has been with Fidelity Investments since 1987 and has held various financial and management positions including Chief Financial Officer of FMR. In addition, he serves on the Boards of Boston Ballet (2003 present) and Simmons College (2003 present).
| Robert L. Reynolds (53) |
Year of Election or Appointment: 2003
Mr. Reynolds is a Director (2003 present) and Chief Operating Officer (2002 present) of FMR Corp. He also serves on the Board at Fidelity Investments Canada, Ltd. (2000 present). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996 2000).
* Trustees have been determined to be “Interested Trustees” by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
| Annual Report |
| 38 |
| Independent Trustees: |
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
| Name, Age; Principal Occupation Dennis J. Dirks (57) |
Year of Election or Appointment: 2005
Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999 2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999 2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999 2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001 2003) and Chief Executive Officer and Board member of the Mortgage Backed Securities Clearing Corporation (2001 2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005 present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006 present).
| Albert R. Gamper, Jr. (63) |
Year of Election or Appointment: 2006
Mr. Gamper also serves as a Trustee (2006 present) or Member of the Advisory Board (2005 present) of other investment companies advised by FMR. Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987 1989; 1999 2001; 2002 2004), Chief Executive Officer (1987 2004), and President (1989 2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001 present), Chairman of the Board of Governors, Rutgers University (2004 present), and Chairman of the Board of Saint Barnabas Health Care System.
39 Annual Report
Trustees and Officers - continued
| Name, Age; Principal Occupation Robert M. Gates (62) |
Year of Election or Appointment: 1997
Dr. Gates is Chairman of the Independent Trustees (2006 present). Dr. Gates is President of Texas A&M University (2002 present). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001 present), and Brinker International (restaurant management, 2003 present). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999 2001).
| George H. Heilmeier (69) |
Year of Election or Appointment: 2004
Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (commu nication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engi neering and information technology support for the government), and HRL Laboratories (private research and development, 2004 present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992 2002), Compaq (1994 2002), Automatic Data Processing, Inc. (ADP) (technology based business outsourcing, 1995 2002), INET Technologies Inc. (telecommu nications network surveillance, 2001 2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display.
| Annual Report |
| 40 |
| Name, Age; Principal Occupation Marie L. Knowles (59) |
Year of Election or Appointment: 2001
Prior to Ms. Knowles’ retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996 2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002 present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
| Ned C. Lautenbach (61) |
Year of Election or Appointment: 2000
Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004 present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005 present), as well as a member of the Council on Foreign Relations.
| William O. McCoy (72) |
Year of Election or Appointment: 1997
Prior to his retirement in December 1994, Mr. McCoy was Vice Chair man of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Duke Realty Corporation (real estate), and Progress Energy, Inc. (electric utility). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999 2000) and a member of the Board of Visitors for the University of North Carolina at Chapel Hill and currently serves as Chairman of Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16 school system).
41 Annual Report
Trustees and Officers - continued
| Name, Age; Principal Occupation Cornelia M. Small (61) |
Year of Election or Appointment: 2005
Ms. Small is a member (2000 present) and Chairperson (2002 present) of the Investment Committee, and a member (2002 present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999 2000), Director of Global Equity Investments (1996 1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990 1997) and Scudder Kemper Investments (1997 1999). In addition, Ms. Small served as Co Chair (2000 2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
| William S. Stavropoulos (66) |
Year of Election or Appointment: 2002
Mr. Stavropoulos is Chairman of the Board (2000 present) and a Member of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993 2000; 2002 2003), CEO (1995 2000; 2002 2004), and Chair man of the Executive Committee (2000 2004). Currently, he is a Direc tor of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corpo ration, Maersk Inc. (industrial conglomerate, 2002 present), and Metalmark Capital (private equity investment firm, 2005 present). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science.
| Kenneth L. Wolfe (66) |
Year of Election or Appointment: 2005
Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993 2001). He currently serves as a member of the boards of Adelphia Communications Corporation (2003 present), Bausch & Lomb, Inc., and Revlon Inc. (2004 present).
| Annual Report |
| 42 |
Advisory Board Member and Executive Officers:
Correspondence intended for Mr. Keyes may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02202-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
| Name, Age; Principal Occupation James H. Keyes (65) |
Year of Election or Appointment: 2006
Member of the Advisory Board of Fidelity Devonshire Trust. Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993 2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies, 1984 present), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002 present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions, 1998 present).
| Peter S. Lynch (62) |
Year of Election or Appointment: 2003
Member of the Advisory Board of Fidelity Devonshire Street Trust. Vice Chairman and a Director of FMR, and Vice Chairman (2001 present) and a Director (2000 present) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990 2003). In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
| Walter C. Donovan (43) |
Year of Election or Appointment: 2005
Vice President of Tax Free Bond. Mr. Donovan also serves as Vice President of Fidelity’s High Income Funds (2005 present), Fidelity’s Fixed Income Funds (2005 present), certain Asset Allocation Funds (2005 present), and certain Balanced Funds (2005 present). Mr. Donovan also serves as Executive Vice President of FMR (2005 present) and FMRC (2005 present). Previously, Mr. Donovan served as Vice President and Director of Fidelity’s International Equity Trading group (1998 2005).
43 Annual Report
Trustees and Officers - continued
| Name, Age; Principal Occupation David L. Murphy (58) |
Year of Election or Appointment: 2005
Vice President of Tax Free Bond. Mr. Murphy also serves as Vice President of Fidelity’s Money Market Funds (2002 present), certain Asset Allocation Funds (2003 present), Fidelity’s Investment Grade Bond Funds (2005 present), and Fidelity’s Balanced Funds (2005 present). He serves as Senior Vice President (2000 present) and Head (2004 present) of the Fidelity Investments Fixed Income Division. Mr. Murphy is also a Senior Vice President of Fidelity Investments Money Management, Inc. (2003 present) and an Executive Vice President of FMR (2005 present). Previously, Mr. Murphy served as Money Market Group Leader (2002 2004), Bond Group Leader (2000 2002), and Vice President of Fidelity’s Taxable Bond Funds (2000 2002) and Fidelity’s Municipal Bond Funds (2001 2002).
| Thomas J. Silvia (44) |
Year of Election or Appointment: 2005
Vice President of Tax Free Bond. Mr. Silvia also serves as Vice President of Fidelity’s Bond Funds (2005 present), certain Balanced Funds (2005 present), certain Asset Allocation Funds (2005 present), and Senior Vice President and Bond Group Leader of the Fidelity Investments Fixed Income Division (2005 present). Previously, Mr. Silvia served as Director of Fidelity’s Taxable Bond portfolio managers (2002 2004) and a portfolio manager in the Bond Group (1997 2004).
| Christine J. Thompson (47) |
Year of Election or Appointment: 2001
Vice President and Manager of Tax Free Bond. Ms. Thompson also serves as Vice President of other funds advised by FMR. Prior to assuming her current responsibilities, Ms. Thompson has worked as an analyst and manager.
| Eric D. Roiter (57) |
Year of Election or Appointment: 1998
Secretary of Tax Free Bond. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001 present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001 present), Fidelity Research & Analysis Company (2001 present), and Fidelity Investments Money Management, Inc. (2001 present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003 present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998 2005).
| Annual Report |
| 44 |
| Name, Age; Principal Occupation |
| Stuart Fross (46) |
Year of Election or Appointment: 2003
Assistant Secretary of Tax Free Bond. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003 present), Vice President and Secretary of FDC (2005 present), and is an employee of FMR.
| Christine Reynolds (47) |
Year of Election or Appointment: 2004
President and Treasurer of Tax Free Bond. Ms. Reynolds also serves as President and Treasurer of other Fidelity funds (2004) and is a Vice President (2003 present) and an employee (2002 present) of FMR. Before joining Fidelity Investments, Ms. Reynolds worked at Pricewater houseCoopers LLP (PwC) (1980 2002), where she was most recently an audit partner with PwC’s investment management practice.
| R. Stephen Ganis (39) |
Year of Election or Appointment: 2006
Anti Money Laundering (AML) officer of Tax Free Bond. Mr. Ganis also serves as AML officer of other Fidelity funds 2006 present and FMR Corp. (2003 present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Procter, LLP (2000 2002).
| Paul Murphy (58) |
Year of Election or Appointment: 2005
Chief Financial Officer of Tax Free Bond. Mr. Murphy also serves as Chief Financial Officer of other Fidelity funds (2005 present). He also serves as Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS).
| Kenneth A. Rathgeber (58) |
Year of Election or Appointment: 2004
Chief Compliance Officer of Tax Free Bond. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004 present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002 present). He is Chief Compliance Officer of FMR (2005 present), FMR Co., Inc. (2005 present), Fidelity Management & Research (U.K.) Inc. (2005 present), Fidelity Research & Analysis Company (2005 present), Fidelity Investments Money Management, Inc. (2005 present), and Strategic Advisers, Inc. (2005 present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998 2002).
45 Annual Report
Trustees and Officers - continued
| Name, Age; Principal Occupation Bryan A. Mehrmann (44) |
Year of Election or Appointment: 2005
Deputy Treasurer of Tax Free Bond. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998 2004).
| Kimberley H. Monasterio (42) |
Year of Election or Appointment: 2004
Deputy Treasurer of Tax Free Bond. Ms. Monasterio also serves as Deputy Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000 2004) and Chief Financial Officer (2002 2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000 2004).
| Kenneth B. Robins (36) |
Year of Election or Appointment: 2005
Deputy Treasurer of Tax Free Bond. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2004 present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG’s department of professional practice (2002 2004) and a Senior Manager (1999 2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000 2002).
| Robert G. Byrnes (39) |
Year of Election or Appointment: 2005
Assistant Treasurer of Tax Free Bond. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003 2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000 2003).
| Annual Report |
| 46 |
| Name, Age; Principal Occupation John H. Costello (59) |
Year of Election or Appointment: 1986
Assistant Treasurer of Tax Free Bond. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
| Peter L. Lydecker (52) |
Year of Election or Appointment: 2004
Assistant Treasurer of Tax Free Bond. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR.
| Mark Osterheld (50) |
Year of Election or Appointment: 2002
Assistant Treasurer of Tax Free Bond. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
| Gary W. Ryan (47) |
Year of Election or Appointment: 2005
Assistant Treasurer of Tax Free Bond. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999 2005).
| Salvatore Schiavone (40) |
Year of Election or Appointment: 2005
Assistant Treasurer of Tax Free Bond. Mr. Schiavone also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Before joining Fidelity Investments, Mr. Schiavone worked at Deutsche Asset Management, where he most recently served as Assistant Treasurer (2003 2005) of the Scudder Funds and Vice President and Head of Fund Reporting (1996 2003).
47 Annual Report
| Distributions |
The Board of Trustees of Fidelity Tax Free Bond Fund voted to pay on March 6, 2006, to shareholders of record at the opening of business on March 3, 2006, a distribution of $.02 per share derived from capital gains realized from sales of portfolio securities.
The fund hereby designates as capital gain dividends: For dividends with respect to the taxable year ended January 31, 2006, $1,626,919, or, if subsequently determined to be different, the net capital gain of such year, or, if subsequently determined to be different, the excess of: (a) the net capital gain of such year, over (b) amounts previously designated as capital gain dividends with respect to such year.
During fiscal year ended January 31, 2006, 100% of the fund’s income dividends was free from federal income tax, and 0% of the fund’s income dividends was subject to the federal alternative minimum tax.
The fund will notify shareholders in January 2007 of amounts for use in preparing 2006 income tax returns.
| Annual Report |
| 48 |
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Tax Free Bond Fund (formerly Spartan Tax Free Bond Fund)
On January 19, 2006, the Board of Trustees, including the Independent Trustees (together, the Board), voted to approve a general research services agreement (the Agreement) between FMR, FMR Co., Inc. (FMRC), Fidelity Investments Money Manage ment, Inc. (FIMM), and Fidelity Research & Analysis Company (FRAC) (together, the Investment Advisers) for the fund, effective January 20, 2006, pursuant to which FRAC may provide general research and investment advisory support services to FMRC and FIMM. The Board considered that it has approved previously various sub advisory agreements for the fund with affiliates of FMR that allow FMR to obtain research, non discretionary advice, or discretionary portfolio management at no additional expense to the fund. The Board, assisted by the advice of fund counsel and independent Trustees’ counsel, considered a broad range of information and determined that it would be beneficial for the fund to access the research and investment advisory support services supplied by FRAC at no additional expense to the fund.
The Board reached this determination in part because the new arrangement will involve no changes in (i) the contractual terms of and fees payable under the fund’s manage ment contract or sub advisory agreements; (ii) the investment process or strategies employed in the management of the fund’s assets; (iii) the nature or level of services provided under the fund’s management contract or sub advisory agreements; (iv) the day to day management of the fund or the persons primarily responsible for such man agement; or (v) the ultimate control or beneficial ownership of FMR, FMRC, or FIMM. The Board also considered that the establishment of the Agreement would not necessi tate prior shareholder approval of the Agreement or result in an assignment and termination of the fund’s management contract or sub advisory agreements under the Investment Company Act of 1940.
Because the Board was approving an arrangement with FRAC under which the fund will not bear any additional management fees or expenses and under which the fund’s portfolio manager would not change, it did not consider the fund’s investment perfor mance, competitiveness of management fee and total expenses, costs of services and profitability, or economies of scale to be significant factors in its decision.
In connection with its future renewal of the fund’s management contract and sub advisory agreements, the Board will consider: (i) the nature, extent, and quality of services provided to the fund, including shareholder and administrative services and investment performance; (ii) the competitiveness of the fund’s management fee and total expenses; (iii) the costs of the services and profitability, including the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering, and servicing the fund and its shareholders; and (iv) whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have
49 Annual Report
Board Approval of Investment Advisory Contracts and Management Fees continued
appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the fund’s Agreement is fair and reasonable, and that the fund’s Agreement should be approved.
| Annual Report |
| 50 |
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.
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.
* 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 guar anteed 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.
51 Annual Report
To Visit Fidelity
| For directions and hours, please call 1-800-544-9797. Arizona 7001 West Ray Road Chandler, AZ 7373 N. Scottsdale Road Scottsdale, AZ California 815 East Birch Street Brea, CA 1411 Chapin Avenue Burlingame, CA 851 East Hamilton Avenue Campbell, CA 19200 Von Karman Avenue Irvine, CA 601 Larkspur Landing Circle Larkspur, CA 10100 Santa Monica Blvd. Los Angeles, CA 27101 Puerta Real Mission Viejo, CA 73 575 El Paseo Palm Desert, CA 251 University Avenue Palo Alto, CA 123 South Lake Avenue Pasadena, CA 16995 Bernardo Ctr. Drive Rancho Bernardo, CA 1740 Arden Way Sacramento, CA 7676 Hazard Center Drive San Diego, CA 8 Montgomery Street San Francisco, CA 3793 State Street Santa Barbara, CA 21701 Hawthorne Boulevard Torrance, CA 2001 North Main Street Walnut Creek, CA 6300 Canoga Avenue Woodland Hills, CA |
| Colorado 1625 Broadway Denver, CO 9185 East Westview Road Littleton, 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 121 Alhambra Plaza Coral Gables, FL 2948 N. Federal Highway Ft. Lauderdale, FL 1907 West State Road 434 Longwood, FL 8880 Tamiami Trail, North Naples, FL 3550 Tamiami Trail, South Sarasota, FL 1502 N. Westshore Blvd. Tampa, FL 2465 State Road 7 Wellington, FL 3501 PGA Boulevard West Palm Beach, FL Georgia 3445 Peachtree Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA Illinois One North LaSalle Street Chicago, IL 875 North Michigan Ave. 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 Kansas 5400 College Boulevard Overland Park, KS Maine Three Canal Plaza Portland, ME Maryland 7315 Wisconsin Avenue Bethesda, MD One W. Pennsylvania Ave. Towson, MD Massachusetts 801 Boylston Street Boston, MA 155 Congress Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 405 Cochituate Road Framingham, MA 416 Belmont Street Worcester, MA Michigan 500 E. Eisenhower Pkwy. Ann Arbor, MI 280 Old N. Woodward Ave. Birmingham, MI 43420 Grand River Avenue Novi, MI 29155 Northwestern Hwy. Southfield, MI Minnesota 7600 France Avenue South Edina, MN Missouri 8885 Ladue Road Ladue, MO |
Annual Report 52
| Nevada 2225 Village Walk Drive Henderson, NV New Jersey 150 Essex Street Millburn, NJ 56 South Street Morristown, NJ 396 Route 17, North Paramus, NJ 3518 Route 1 North Princeton, NJ 530 Highway 35 Shrewsbury, NJ New York 1055 Franklin Avenue Garden City, NY 37 West Jericho Turnpike Huntington Station, NY 1271 Avenue of the Americas New York, NY 61 Broadway New York, NY 350 Park Avenue New York, NY 200 Fifth Avenue New York, NY 733 Third Avenue New York, NY 11 Penn Plaza New York, NY 2070 Broadway New York, NY 1075 Northern Blvd. Roslyn, NY North Carolina 4611 Sharon Road Charlotte, NC Ohio 3805 Edwards Road Cincinnati, OH 1324 Polaris Parkway Columbus, OH 28699 Chagrin Boulevard Woodmere Village, OH Oregon 16850 SW 72nd Avenue Tigard, OR |
| Pennsylvania 600 West DeKalb Pike King of Prussia, PA 1735 Market Street Philadelphia, PA 12001 Perry Highway Wexford, PA Rhode Island 47 Providence Place Providence, RI Tennessee 6150 Poplar Avenue Memphis, TN Texas 10000 Research Boulevard Austin, TX 4001 Northwest Parkway Dallas, TX 12532 Memorial Drive Houston, TX 2701 Drexel Drive Houston, TX 6500 N. MacArthur Blvd. Irving, TX 6005 West Park Boulevard Plano, TX 14100 San Pedro San Antonio, TX 1576 East Southlake Blvd. Southlake, TX 19740 IH 45 North Spring, TX Utah 215 South State Street Salt Lake City, UT Virginia 1861 International Drive McLean, VA Washington 411 108th Avenue, N.E. Bellevue, WA 1518 6th Avenue Seattle, WA Washington, DC 1900 K Street, N.W. Washington, DC Wisconsin 595 North Barker Road Brookfield, WI |
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
53 Annual Report
53
| Investment Adviser Fidelity Management & Research Company Boston, MA Investment Sub Advisers Fidelity Investments Money Management, Inc. Fidelity Research & Analysis Company (formerly Fidelity Management & Research (Far East) Inc.) Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited General Distributor Fidelity Distributors Corporation Boston, MA Transfer and Service Agents Citibank, N.A. New York, NY Fidelity Service Company, Inc. Boston, MA Custodian Citibank, N.A. New York, NY |
| 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®) (automated phone logo) | 1-800-544-5555 | |
| (automated phone logo) Automated line for quickest service | ||
| SFB-UANN-0306 1.789257.103 |
| Fidelity® Utilities Fund |
| Annual Report January 31, 2006 |
| Contents | ||||
| Chairman’s Message | 4 | Ned Johnson’s message to shareholders. | ||
| Performance | 5 | How the fund has done over time. | ||
| Management’s Discussion | 6 | The manager’s review of fund | ||
| performance, strategy and outlook. | ||||
| Shareholder Expense | 7 | An example of shareholder expenses. | ||
| Example | ||||
| Investment Changes | 8 | A summary of major shifts in the fund’s | ||
| investments over the past six months. | ||||
| Investments | 9 | A complete list of the fund’s investments | ||
| with their market values. | ||||
| Financial Statements | 12 | Statements of assets and liabilities, | ||
| operations, and changes in net assets, | ||||
| as well as financial highlights. | ||||
| Notes | 16 | Notes to the financial statements. | ||
| Report of Independent | 22 | |||
| Registered Public | ||||
| Accounting Firm | ||||
| Trustees and Officers | 23 | |||
| Distributions | 32 | |||
| Board Approval of | 33 | |||
| Investment Advisory | ||||
| Contracts and | ||||
| Management Fees | ||||
| To view a fund’s proxy voting guidelines and proxy voting record for the 12 month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission’s (SEC) web site at www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines. 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. |
Annual Report 2
| 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. A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N Q. Forms N Q are available on the SEC’s web site at http://www.sec.gov. A fund’s Forms N Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund’s portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity’s web site at http://www.fidelity.com/holdings. NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE Neither the fund nor Fidelity Distributors Corporation is a bank. |
3 Annual Report
Chairman’s Message
(photograph of Edward C. Johnson 3d)
Dear Shareholder:
During the past year or so, much has been reported about the mutual fund industry, and much of it has been more critical than I believe is warranted. Allegations that some companies have been less than forthright with their shareholders have cast a shadow on the entire industry. I continue to find these reports disturbing, and assert that they do not create an accurate picture of the industry overall. Therefore, I would like to remind every one where Fidelity stands on these issues. I will say two things specifically regarding allegations that some mutual fund companies were in violation of the Securities and Exchange Commission’s forward pricing rules or were involved in so called “market timing” activities.
First, Fidelity has no agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not a new policy. This is not to say that some one could not deceive the company through fraudulent acts. However, we are extremely diligent in preventing fraud from occurring in this manner and in every other. But I underscore again that Fidelity has no so called “agreements” that sanction illegal practices.
Second, Fidelity continues to stand on record, as we have for years, in opposition to predatory short term trading that adversely affects shareholders in a mutual fund. Back in the 1980s, we initiated a fee which is returned to the fund and, therefore, to investors to discourage this activity. Further, we took the lead several years ago in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. I am confident we will find other ways to make it more difficult for predatory traders to operate. However, this will only be achieved through close cooperation among regulators, legislators and the industry.
Yes, there have been unfortunate instances of unethical and illegal activity within the mutual fund industry from time to time. That is true of any industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. But we are still concerned about the risk of over regulation and the quick application of simplistic solutions to intricate problems. Every system can be improved, and we support and applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors’ holdings.
For nearly 60 years, Fidelity has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/ Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report 4
Performance: The Bottom Line
Average annual 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) and assuming a constant rate of perfor mance each year. The $10,000 table and the fund’s returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
| Average Annual Total Returns | ||||||
| Periods ended January 31, 2006 | Past 1 | Past 5 | Past 10 | |||
| year | years | years | ||||
| Fidelity® Utilities Fund | 18.37% | 0.31% | 7.03% | |||
| $10,000 Over 10 Years | ||||||
Let’s say hypothetically that $10,000 was invested in Fidelity® Utilities Fund on January 31, 1996. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor’s 500SM Index performed over the same period.
5 Annual Report
5
Management’s Discussion of Fund Performance
Comments from Douglas Simmons, who became Portfolio Manager of Fidelity® Utilities Fund on September 30, 2005
Most major U.S. stock benchmarks had double digit returns for the year ending January 31, 2006. Market performance was driven largely by oil. Heightened demand from the United States and China, among others, plus Hurricane Katrina’s devastation of domestic refining capacity in the Gulf Coast region, propelled oil prices to record highs. The energy component of the Standard & Poor’s 500SM Index soared nearly 46% during the period, while the next closest utilities rose about 17%. The overall return for the S&P 500® was 10.38% . In 2005, the S&P 500 beat the small cap Russell 2000® Index for the first time in six years, but quickly lost that advantage when the Russell benchmark jumped nearly 9% in January, pushing its 12 month return to 18.89% . Mid caps did even better: The 21.45% return of the Russell Midcap® Index doubled the broader market’s performance for the period. The NASDAQ Composite® Index fared well, gaining 12.75%, but the Dow Jones Industrial AverageSM increased only 6.00% .
For the 12 months that ended January 31, 2006, the fund returned 18.37%, outperforming the Russell 3000® Utilities Index and the LipperSM Utility Funds Average, which returned 10.67% and 17.81%, respectively. An overweighting and strong security selection in the independent power and energy trading group helped the fund’s performance relative to the index, as did our choices elsewhere within utilities. Positive stock selection in both wireless telecommunication services and integrated telecom services also proved beneficial. Fund performance was held back by security selection in oil and gas exploration and production, as well as in oil and gas storage and transport, groups that make up a very small part of the Russell index. The top contributor to fund performance was Texas based independent power producer TXU. British Energy Group also was a winner. Shares of wireless tower operator American Tower rose significantly, and solar cell manufacturer Suntech Power Holdings’ stock appreciated as well. The share price of Qwest Communications increased, and the fund also benefited from underweighting cable TV provider Comcast, which underperformed. Conversely, satellite TV operator EchoStar Communications was a disappointment. Wireless services provider Inphonic also declined. Two of the fund’s larger holdings, Sprint Nextel and Verizon, were notable absolute detractors. Some stocks I’ve mentioned in this report were no longer held at period end.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.
| Annual Report |
| 6 6 |
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (August 1, 2005 to January 31, 2006).
| Actual Expenses |
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the share holder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Expenses Paid | ||||||||||||
| Beginning | Ending | During Period* | ||||||||||
| Account Value | Account Value | August 1, 2005 to | ||||||||||
| August 1, 2005 | January 31, 2006 | January 31, 2006 | ||||||||||
| Actual | $ | 1,000.00 | $ | 1,065.40 | $ | 4.53 | ||||||
| Hypothetical (5% return per year | ||||||||||||
| before expenses) | $ | 1,000.00 | $ | 1,020.82 | $ | 4.43 |
* Expenses are equal to the Fund’s annualized expense ratio of .87%; multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one half year period).
7 Annual Report
| Investment Changes | ||||
| Top Ten Stocks as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| AT&T, Inc. | 11.9 | 10.4 | ||
| Verizon Communications, Inc. | 11.4 | 7.9 | ||
| Sprint Nextel Corp. | 7.7 | 7.6 | ||
| TXU Corp. | 7.0 | 10.6 | ||
| AES Corp. | 6.8 | 2.5 | ||
| Exelon Corp. | 4.9 | 2.3 | ||
| BellSouth Corp. | 4.9 | 6.9 | ||
| Public Service Enterprise Group, Inc. | 4.8 | 0.0 | ||
| Comcast Corp. Class A | 4.1 | 4.0 | ||
| Qwest Communications International, Inc. | 3.9 | 2.3 | ||
| 67.4 | ||||
| Top Five Industries as of January 31, 2006 | ||||
| % of fund’s | % of fund’s net assets | |||
| net assets | 6 months ago | |||
| Diversified Telecommunication Services | 34.4 | 34.7 | ||
| Independent Power Producers & Energy Traders | 19.7 | 14.1 | ||
| Electric Utilities | 11.6 | 13.8 | ||
| Wireless Telecommunication Services | 11.2 | 13.0 | ||
| Multi Utilities | 10.3 | 7.3 | ||
| Annual Report |
| 8 |
| Investments January 31, 2006 | ||||||||
| Showing Percentage of Net Assets | ||||||||
| Common Stocks 97.9% | ||||||||
| Shares | Value (Note 1) | |||||||
| (000s) | ||||||||
| CONSUMER DISCRETIONARY – 4.6% | ||||||||
| Media – 4.6% | ||||||||
| Cablevision Systems Corp. – NY Group Class A (a) | 218,000 | $ | 5,363 | |||||
| Comcast Corp. Class A (a)(d) | 1,518,803 | 42,253 | ||||||
| 47,616 | ||||||||
| ENERGY 0.8% | ||||||||
| Oil, Gas & Consumable Fuels – 0.8% | ||||||||
| Cheniere Energy, Inc. (a)(d) | 136,300 | 5,299 | ||||||
| Western Gas Resources, Inc. | 63,900 | 3,035 | ||||||
| 8,334 | ||||||||
| HEALTH CARE – 0.3% | ||||||||
| Pharmaceuticals – 0.3% | ||||||||
| Merck & Co., Inc. | 88,500 | 3,053 | ||||||
| INDUSTRIALS – 1.9% | ||||||||
| Construction & Engineering – 0.3% | ||||||||
| URS Corp. (a) | 64,000 | 2,738 | ||||||
| Electrical Equipment – 1.6% | ||||||||
| Suntech Power Holdings Co. Ltd. sponsored ADR | 391,550 | 16,637 | ||||||
| TOTAL INDUSTRIALS | 19,375 | |||||||
| INFORMATION TECHNOLOGY – 0.5% | ||||||||
| Electronic Equipment & Instruments – 0.5% | ||||||||
| Itron, Inc. (a) | 112,900 | 5,405 | ||||||
| TELECOMMUNICATION SERVICES – 45.6% | ||||||||
| Diversified Telecommunication Services – 34.4% | ||||||||
| AT&T, Inc. | 4,715,983 | 122,379 | ||||||
| BellSouth Corp. | 1,736,800 | 49,968 | ||||||
| Citizens Communications Co. | 592,131 | 7,265 | ||||||
| Level 3 Communications, Inc. (a) | 1,466,600 | 5,500 | ||||||
| Qwest Communications International, Inc. (a) | 6,738,627 | 40,567 | ||||||
| TELUS Corp. | 268,500 | 10,743 | ||||||
| Verizon Communications, Inc. | 3,701,905 | 117,202 | ||||||
| 353,624 | ||||||||
| Wireless Telecommunication Services – 11.2% | ||||||||
| ALLTEL Corp. | 472,600 | 28,370 | ||||||
| Nextel Partners, Inc. Class A (a) | 229,300 | 6,418 | ||||||
See accompanying notes which are an integral part of the financial statements.
| 9 Annual Report |
| Investments continued | ||||||
| Common Stocks continued | ||||||
| Shares | Value (Note 1) | |||||
| (000s) | ||||||
| TELECOMMUNICATION SERVICES – continued | ||||||
| Wireless Telecommunication Services – continued | ||||||
| Sprint Nextel Corp. | 3,455,801 | $ | 79,103 | |||
| Ubiquitel, Inc. (a) | 105,700 | 1,035 | ||||
| 114,926 | ||||||
| TOTAL TELECOMMUNICATION SERVICES | 468,550 | |||||
| UTILITIES – 44.2% | ||||||
| Electric Utilities – 11.6% | ||||||
| Allegheny Energy, Inc. (a) | 142,600 | 4,961 | ||||
| Edison International | 130,950 | 5,738 | ||||
| Entergy Corp. | 556,000 | 38,648 | ||||
| Exelon Corp. | 882,200 | 50,656 | ||||
| FirstEnergy Corp. | 378,800 | 18,978 | ||||
| 118,981 | ||||||
| Gas Utilities 2.6% | ||||||
| AGL Resources, Inc. | 147,400 | 5,274 | ||||
| Questar Corp. | 194,900 | 15,880 | ||||
| Southern Union Co. | 218,200 | 5,499 | ||||
| 26,653 | ||||||
| Independent Power Producers & Energy Traders – 19.7% | ||||||
| AES Corp. (a) | 4,123,500 | 70,264 | ||||
| Constellation Energy Group, Inc. | 97,900 | 5,705 | ||||
| Dynegy, Inc. Class A (a)(d) | 1,059,800 | 5,829 | ||||
| Mirant Corp. (a) | 1,139,000 | 31,892 | ||||
| NRG Energy, Inc. (a) | 352,199 | 17,001 | ||||
| TXU Corp. | 1,424,900 | 72,157 | ||||
| 202,848 | ||||||
| Multi-Utilities – 10.3% | ||||||
| CMS Energy Corp. (a) | 534,800 | 7,739 | ||||
| Dominion Resources, Inc. (d) | 366,300 | 27,667 | ||||
| Energy East Corp. | 212,900 | 5,291 | ||||
| Public Service Enterprise Group, Inc. | 709,300 | 49,381 | ||||
| Sempra Energy | 343,700 | 16,515 | ||||
| 106,593 | ||||||
| TOTAL UTILITIES | 455,075 | |||||
| TOTAL COMMON STOCKS | ||||||
| (Cost $1,003,277) | 1,007,408 | |||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 10 |
| Money Market Funds 3.2% | ||||||||
| Shares | Value (Note 1) | |||||||
| (000s) | ||||||||
| Fidelity Cash Central Fund, 4.46% (b) | 16,278,302 | $ | 16,278 | |||||
| Fidelity Securities Lending Cash Central Fund, | ||||||||
| 4.48% (b)(c) | 16,543,100 | 16,543 | ||||||
| TOTAL MONEY MARKET FUNDS | ||||||||
| (Cost $32,821) | 32,821 | |||||||
| TOTAL INVESTMENT PORTFOLIO 101.1% | ||||||||
| (Cost $1,036,098) | 1,040,229 | |||||||
| NET OTHER ASSETS – (1.1)% | (11,424) | |||||||
| NET ASSETS 100% | $ | 1,028,805 | ||||||
| Legend (a) Non-income producing (b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund’s holdings as of its most recent quarter end is available upon request. |
| (c) Investment made with cash collateral received from securities on loan. (d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds
Information regarding fiscal year to date income received by the fund from the affiliated Central funds is as follows:
| Fund | Income received | |||
| (Amounts in | ||||
| thousands) | ||||
| Fidelity Cash Central Fund | $ | 733 | ||
| Fidelity Securities Lending Cash Central Fund | 99 | |||
| Total | $ | 832 | ||
Income Tax Information
At January 31, 2006, the fund had a capital loss carryforward of approximately $479,474,000 of which $212,572,000, $255,837,000 and $11,065,000 will expire on January 31, 2010, 2011 and 2012, respectively.
See accompanying notes which are an integral part of the financial statements.
11 Annual Report
| Financial Statements | ||||||||
| Statement of Assets and Liabilities | ||||||||
| Amounts in thousands (except per share amount) | January 31, 2006 | |||||||
| Assets | ||||||||
| Investment in securities, at value (including securities | ||||||||
| loaned of $16,117) See accompanying schedule: | ||||||||
| Unaffiliated issuers (cost $1,003,277) | $ | 1,007,408 | ||||||
| Affiliated Central Funds (cost $32,821) | 32,821 | |||||||
| Total Investments (cost $1,036,098) | $ | 1,040,229 | ||||||
| Receivable for investments sold | 19,905 | |||||||
| Receivable for fund shares sold | 490 | |||||||
| Dividends receivable | 3,697 | |||||||
| Interest receivable | 38 | |||||||
| Prepaid expenses | 5 | |||||||
| Other affiliated receivables | 14 | |||||||
| Other receivables | 183 | |||||||
| Total assets | 1,064,561 | |||||||
| Liabilities | ||||||||
| Payable for investments purchased | $ | 15,929 | ||||||
| Payable for fund shares redeemed | 2,461 | |||||||
| Accrued management fee | 514 | |||||||
| Other affiliated payables | 251 | |||||||
| Other payables and accrued expenses | 58 | |||||||
| Collateral on securities loaned, at value | 16,543 | |||||||
| Total liabilities | 35,756 | |||||||
| Net Assets | $ | 1,028,805 | ||||||
| Net Assets consist of: | ||||||||
| Paid in capital | $ | 1,524,973 | ||||||
| Distributions in excess of net investment income | (38) | |||||||
| Accumulated undistributed net realized gain (loss) on | ||||||||
| investments and foreign currency transactions | (500,261) | |||||||
| Net unrealized appreciation (depreciation) on | ||||||||
| investments | 4,131 | |||||||
| Net Assets, for 66,625 shares outstanding | $ | 1,028,805 | ||||||
| Net Asset Value, offering price and redemption price per | ||||||||
| share ($1,028,805 ÷ 66,625 shares) | $ | 15.44 | ||||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 12 |
| Statement of Operations | ||||||
| Amounts in thousands | Year ended January 31, 2006 | |||||
| Investment Income | ||||||
| Dividends | $ | 23,335 | ||||
| Interest | 5 | |||||
| Income from affiliated Central Funds | 832 | |||||
| Total income | 24,172 | |||||
| Expenses | ||||||
| Management fee | ||||||
| Basic fee | $ | 4,780 | ||||
| Performance adjustment | 1,309 | |||||
| Transfer agent fees | 2,281 | |||||
| Accounting and security lending fees | 327 | |||||
| Independent trustees’ compensation | 5 | |||||
| Appreciation in deferred trustee compensation account | 2 | |||||
| Custodian fees and expenses | 27 | |||||
| Registration fees | 45 | |||||
| Audit | 63 | |||||
| Legal | 11 | |||||
| Miscellaneous | 8 | |||||
| Total expenses before reductions | 8,858 | |||||
| Expense reductions | (315) | 8,543 | ||||
| Net investment income (loss) | 15,629 | |||||
| Realized and Unrealized Gain (Loss) | ||||||
| Net realized gain (loss) on: | ||||||
| Investment securities: | ||||||
| Unaffiliated issuers | 146,971 | |||||
| Foreign currency transactions | 42 | |||||
| Total net realized gain (loss) | 147,013 | |||||
| Change in net unrealized appreciation (depreciation) on | ||||||
| investment securities | 6,332 | |||||
| Net gain (loss) | 153,345 | |||||
| Net increase (decrease) in net assets resulting from | ||||||
| operations | $ | 168,974 | ||||
See accompanying notes which are an integral part of the financial statements.
13 Annual Report
| Financial Statements continued | ||||||||
| Statement of Changes in Net Assets | ||||||||
| Year ended | Year ended | |||||||
| January 31, | January 31, | |||||||
| Amounts in thousands | 2006 | 2005 | ||||||
| Increase (Decrease) in Net Assets | ||||||||
| Operations | ||||||||
| Net investment income (loss) | $ | 15,629 | $ | 21,326 | ||||
| Net realized gain (loss) | 147,013 | 47,361 | ||||||
| Change in net unrealized appreciation (depreciation) . | 6,332 | 58,692 | ||||||
| Net increase (decrease) in net assets resulting | ||||||||
| from operations | 168,974 | 127,379 | ||||||
| Distributions to shareholders from net investment income | . | (18,475) | (20,382) | |||||
| Share transactions | ||||||||
| Proceeds from sales of shares | 230,194 | 135,317 | ||||||
| Reinvestment of distributions | 16,748 | 18,262 | ||||||
| Cost of shares redeemed | (305,906) | (187,378) | ||||||
| Net increase (decrease) in net assets resulting from | ||||||||
| share transactions | (58,964) | (33,799) | ||||||
| Total increase (decrease) in net assets | 91,535 | 73,198 | ||||||
| Net Assets | ||||||||
| Beginning of period | 937,270 | 864,072 | ||||||
| End of period (including distributions in excess of net | ||||||||
| investment income of $38 and undistributed net in- | ||||||||
| vestment income of $2,160, respectively) | $ | 1,028,805 | $ | 937,270 | ||||
| Other Information | ||||||||
| Shares | ||||||||
| Sold | 16,120 | 10,799 | ||||||
| Issued in reinvestment of distributions | 1,159 | 1,454 | ||||||
| Redeemed | (21,233) | (15,326) | ||||||
| Net increase (decrease) | (3,954) | (3,073) | ||||||
See accompanying notes which are an integral part of the financial statements.
| Annual Report |
| 14 |
| Financial Highlights | ||||||||||||||||||||
| Years ended January 31, | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||
| Selected Per Share Data | ||||||||||||||||||||
| Net asset value, beginning of | ||||||||||||||||||||
| period | $ | 13.28 | $ | 11.73 | $ | 9.44 | $ | 12.73 | $ | 17.22 | ||||||||||
| Income from Investment | ||||||||||||||||||||
| Operations | ||||||||||||||||||||
| Net investment income (loss)B | 22 | .30C | .21 | .19 | .16 | |||||||||||||||
| Net realized and unrealized | ||||||||||||||||||||
| gain (loss) | 2.20 | 1.54 | 2.30 | (3.28) | (4.49) | |||||||||||||||
| Total from investment operations | 2.42 | 1.84 | 2.51 | (3.09) | (4.33) | |||||||||||||||
| Distributions from net investment | ||||||||||||||||||||
| income | (.26) | (.29) | (.22) | (.20) | (.16) | |||||||||||||||
| Net asset value, end of period | $ 15.44 | $ | 13.28 | $ | 11.73 | $ | 9.44 | $ | 12.73 | |||||||||||
| Total ReturnA | 18.37% | 15.85% | 26.91% | (24.34)% | (25.22)% | |||||||||||||||
| Ratios to Average Net AssetsD | ||||||||||||||||||||
| Expenses before reductions | 87% | .89% | .75% | .99% | .94% | |||||||||||||||
| Expenses net of fee waivers, if | ||||||||||||||||||||
| any | 87% | .89% | .75% | .99% | .94% | |||||||||||||||
| Expenses net of all reductions | 84% | .85% | .73% | .95% | .89% | |||||||||||||||
| Net investment income (loss) | 1.54% | 2.49%C | 2.01% | 1.90% | 1.05% | |||||||||||||||
| Supplemental Data | ||||||||||||||||||||
| Net assets, end of period (in | ||||||||||||||||||||
| millions) | $ | 1,029 | $ | 937 | $ | 864 | $ | 788 | $ | 1,318 | ||||||||||
| Portfolio turnover rate | 66% | 57% | 21% | 32% | 58% | |||||||||||||||
| A Total returns would have been lower had certain expenses not been reduced during the periods shown. B Calculated based on average shares outstanding during the period. C Investment income per share reflects a special dividend which amounted to $.12 per share. Excluding the special dividend, the ratio of net investment income to average net assets would have been 1.48% . D Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund. |
See accompanying notes which are an integral part of the financial statements.
15 Annual Report
Notes to Financial Statements
| For the period ended January 31, 2006 (Amounts in thousands except ratios) |
1. Significant Accounting Policies.
Fidelity Utilities Fund (the fund) is a non diversified fund of Fidelity Devonshire Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is regis tered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open end management investment company organized as a Massachusetts business trust. The fund may invest in affiliated money market central funds (Money Market Central Funds) which are open end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, 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. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open end mutual funds are valued at their closing net asset value each business day. Short term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securi ties markets, reviewing developments in foreign markets and evaluating the perfor mance of ADRs, futures contracts and exchange traded funds. Because the fund’s utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
| Annual Report |
| 16 |
1. Significant Accounting Policies continued
Foreign Currency. The fund uses foreign currency contracts to facilitate transactions in foreign denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts’ terms.
Foreign denominated assets, including investment securities, and liabilities are trans lated into U.S. dollars at the exchange rate at period end. Purchases and sales of invest ment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transac tion date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex dividend date, except for certain dividends from foreign securities where the ex dividend date may have passed, which 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securi ties. 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 each fund in the trust.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent 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, and are marked to market. Deferred amounts remain in the fund until distributed in accordance with the Plan.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result,
17 Annual Report
| Notes to Financial Statements continued | ||
| (Amounts in thousands except ratios) | ||
| 1. Significant Accounting Policies continued | ||
Income Tax Information and Distributions to Shareholders continued | ||
no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex dividend date. Income and capital gain distribu tions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book tax differences will reverse in a subsequent period.
Book tax differences are primarily due to foreign currency transactions, deferred trus tees compensation, capital loss carryforwards and losses deferred due to wash sales.
The tax basis components of distributable earnings and the federal tax cost as of period end were as follows:
| Unrealized appreciation | $ | 128,586 | ||||||
| Unrealized depreciation | (145,244) | |||||||
| Net unrealized appreciation (depreciation) | (16,658) | |||||||
| Capital loss carryforward | (479,474) | |||||||
| Cost for federal income tax purposes | $ | 1,056,887 | ||||||
The tax character of distributions paid was as follows: | ||||||||
| January 31, 2006 | January 31, 2005 | |||||||
| Ordinary Income | $ | 18,475 | $ | 20,382 | ||||
| 2. Operating Policies. | ||||||||
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non government securities. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to
| Annual Report |
| 18 |
2. Operating Policies continued
Repurchase Agreements continued
the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
3. Purchases and Sales of Investments.
Purchases and sales of securities, other than short term securities and U.S. government securities, aggregated $659,899 and $722,052, respectively.
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment manage ment related services for which the fund pays a monthly management fee. The manage ment fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the fund’s average net assets and a group fee rate that averaged .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ±.15% of the fund’s average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the fund’s relative investment performance as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .60% of the fund’s 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 ac count. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .22% of average net assets.
Accounting and Security Lending Fees. FSC maintains the fund’s accounting rec ords. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Affiliated Central Funds. The fund may invest in Money Market Central Funds which seek preservation of capital and current income and are managed by Fidelity Invest ments Money Management, Inc. (FIMM), an affiliate of FMR.
The Money Market Central Funds do not pay a management fee.
19 Annual Report
| Notes to Financial Statements continued | ||
| (Amounts in thousands except ratios) | ||
| 4. Fees and Other Transactions with Affiliates continued | ||
Brokerage Commissions. The fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $9 for the period.
| 5. Committed Line of Credit. |
The fund participates with other funds managed by FMR in a $4.2 billion credit facility (the “line of credit”) to be utilized for temporary or emergency purposes to fund share holder redemptions or for other short term liquidity purposes. The fund has agreed to pay commitment fees on its pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.
| 6. Security Lending. |
The fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, 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, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the fund’s Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from affiliated central funds. Net income from lending portfolio securities during the period amounted to $99.
| 7. Expense Reductions. |
Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $297 for the period. 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 the fund’s expenses. During the period, these credits reduced the fund’s custody and transfer agent expenses by $2 and $16, respectively.
| Annual Report |
| 20 |
| 8. Other. |
The fund’s organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the fund. In the normal course of business, the fund may also enter into contracts that provide general indemnifications. The fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the fund. The risk of material loss from such claims is considered remote.
21 Annual Report
Report of Independent Registered Public Accounting Firm
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 sched ule 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, 2006 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 of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assur ance 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 esti mates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at January 31, 2006 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
| /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts March 10, 2006 |
| Annual Report |
| 22 |
Trustees and Officers
The Trustees, Members of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund’s activities, review contractual arrangements with companies that provide services to the fund, and review the fund’s performance. Except for William O. McCoy and Albert R. Gamper, Jr., each of the Trustees oversees 326 funds advised by FMR or an affiliate. Mr. McCoy oversees 328 funds advised by FMR or an affiliate. Mr. Gamper oversees 251 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instru ment signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
| Interested Trustees*: |
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
| Name, Age; Principal Occupation Edward C. Johnson 3d (75) |
Year of Election or Appointment: 1985
Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Research & Analysis Company; Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001 present) and a Director (2000 present) of FMR Co., Inc.
23 Annual Report
Trustees and Officers - continued
| Name, Age; Principal Occupation Stephen P. Jonas (53) |
Year of Election or Appointment: 2005
Mr. Jonas is Senior Vice President of Utilities (2005 present). He also serves as Senior Vice President of other Fidelity funds (2005 present). Mr. Jonas is Executive Director of FMR (2005 present). Previously, Mr. Jonas served as President of Fidelity Enterprise Operations and Risk Services (2004 2005), Chief Administrative Officer (2002 2004), and Chief Financial Officer of FMR Co. (1998 2000). Mr. Jonas has been with Fidelity Investments since 1987 and has held various financial and management positions including Chief Financial Officer of FMR. In addition, he serves on the Boards of Boston Ballet (2003 present) and Sim mons College (2003 present).
| Robert L. Reynolds (53) |
Year of Election or Appointment: 2003
Mr. Reynolds is a Director (2003 present) and Chief Operating Officer (2002 present) of FMR Corp. He also serves on the Board at Fidelity Investments Canada, Ltd. (2000 present). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996 2000).
* Trustees have been determined to be “Interested Trustees” by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.
| Independent Trustees: |
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
| Annual Report |
| 24 |
| Name, Age; Principal Occupation Dennis J. Dirks (57) |
Year of Election or Appointment: 2005
Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999 2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999 2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999 2003). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001 2003) and Chief Executive Officer and Board member of the Mortgage Backed Securities Clearing Corporation (2001 2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of Manhattan College (2005 present) and a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006 present).
| Albert R. Gamper, Jr. (63) |
Year of Election or Appointment: 2006
Mr. Gamper also serves as a Trustee (2006 present) or Member of the Advisory Board (2005 present) of other investment companies advised by FMR. Prior to his retirement in December 2004, Mr. Gamper served as Chairman of the Board of CIT Group Inc. (commercial finance). During his tenure with CIT Group Inc. Mr. Gamper served in numerous senior management positions, including Chairman (1987 1989; 1999 2001; 2002 2004), Chief Executive Officer (1987 2004), and President (1989 2002). He currently serves as a member of the Board of Directors of Public Service Enterprise Group (utilities, 2001 present), Chairman of the Board of Governors, Rutgers University (2004 present), and Chairman of the Board of Saint Barnabas Health Care System.
| Robert M. Gates (62) |
Year of Election or Appointment: 1997
Dr. Gates is Chairman of the Independent Trustees (2006 present). Dr. Gates is President of Texas A&M University (2002 present). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001 present), and Brinker International (restaurant management, 2003 present). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999 2001).
25 Annual Report
Trustees and Officers - continued
| Name, Age; Principal Occupation George H. Heilmeier (69) |
Year of Election or Appointment: 2004
Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineer ing and information technology support for the government), and HRL Laboratories (private research and development, 2004 present). He is Chairman of the General Motors Science & Technology Advisory Board and a Life Fellow of the Institute of Electrical and Electronics Engineers (IEEE). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences, and the Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992 2002), Compaq (1994 2002), Auto matic Data Processing, Inc. (ADP) (technology based business outsourcing, 1995 2002), INET Technologies Inc. (telecommunications network surveillance, 2001 2004), and Teletech Holdings (customer management services). He is the recipient of the 2005 Kyoto Prize in Advanced Technology for his invention of the liquid crystal display.
| Marie L. Knowles (59) |
Year of Election or Appointment: 2001
Prior to Ms. Knowles’ retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996 2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing) and McKesson Corporation (healthcare service, 2002 present). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
| Annual Report |
| 26 |
| Name, Age; Principal Occupation Ned C. Lautenbach (61) |
Year of Election or Appointment: 2000
Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Italtel Holding S.p.A. (telecommunications (Milan, Italy), 2004 present) and Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005 present), as well as a member of the Council on Foreign Relations.
| William O. McCoy (72) |
Year of Election or Appointment: 1997
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Duke Realty Corporation (real estate), and Progress Energy, Inc. (electric utility). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999 2000) and a member of the Board of Visitors for the University of North Carolina at Chapel Hill and currently serves as Chairman of the Board of Directors of the University of North Carolina Health Care Sys tem and the Board of Visitors of the Kenan Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16 school system).
| Cornelia M. Small (61) |
Year of Election or Appointment: 2005
Ms. Small is a member (2000 present) and Chairperson (2002 present) of the Investment Committee, and a member (2002 present) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999 2000), Director of Global Equity Investments (1996 1999), and a member of the Board of Directors of Scudder, Stevens & Clark (1990 1997) and Scudder Kemper Investments (1997 1999). In addition, Ms. Small served as Co Chair (2000 2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
27 Annual Report
Trustees and Officers - continued
| Name, Age; Principal Occupation William S. Stavropoulos (66) |
Year of Election or Appointment: 2002
Mr. Stavropoulos is Chairman of the Board (2000 present) and a Member of the Board of Directors of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993 2000; 2002 2003), CEO (1995 2000; 2002 2004), and Chairman of the Executive Committee (2000 2004). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate, 2002 present), and Metalmark Capital (private equity investment firm, 2005 present). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council and the University of Notre Dame Advisory Council for the College of Science.
| Kenneth L. Wolfe (66) |
Year of Election or Appointment: 2005
Prior to his retirement in 2001, Mr. Wolfe was Chairman and Chief Executive Officer of Hershey Foods Corporation (1993 2001). He currently serves as a member of the boards of Adelphia Communications Corporation (2003 present), Bausch & Lomb, Inc., and Revlon Inc. (2004 present).
Advisory Board Member and Executive Officers:
Correspondence intended for Mr. Keyes may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
| Name, Age; Principal Occupation James H. Keyes (65) |
Year of Election or Appointment: 2006
Member of the Advisory Board of Fidelity Devonshire Trust. Prior to his retirement in 2003, Mr. Keyes was Chairman, President, and Chief Executive Officer of Johnson Controls, Inc. (automotive supplier, 1993 2003). He currently serves as a member of the boards of LSI Logic Corporation (semiconductor technologies, 1984 present), Navistar International Corporation (manufacture and sale of trucks, buses, and diesel engines, 2002 present), and Pitney Bowes, Inc. (integrated mail, messaging, and document management solutions, 1998 present).
| Annual Report |
| 28 |
| Name, Age; Principal Occupation Peter S. Lynch (62) |
Year of Election or Appointment: 2003
Member of the Advisory Board of Fidelity Devonshire Trust. Vice Chairman and a Director of FMR, and Vice Chairman (2001 present) and a Director (2000 present) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990 2003). In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
| Eric D. Roiter (57) |
Year of Election or Appointment: 1998
Secretary of Utilities. He also serves as Secretary of other Fidelity funds; Vice President, General Counsel, and Secretary of FMR Co., Inc. (2001 present) and FMR; Assistant Secretary of Fidelity Management & Research (U.K.) Inc. (2001 present), Fidelity Research & Analysis Company (2001 present), and Fidelity Investments Money Management, Inc. (2001 present). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003 present). Previously, Mr. Roiter served as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (1998 2005).
| Stuart Fross (46) |
Year of Election or Appointment: 2003
Assistant Secretary of Utilities. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003 present), Vice President and Secretary of FDC (2005 present), and is an employee of FMR.
| Christine Reynolds (47) |
Year of Election or Appointment: 2004
President and Treasurer of Utilities. Ms. Reynolds also serves as President and Treasurer of other Fidelity funds (2004 present) and is a Vice President (2003 present) and an employee (2002 present) of FMR. Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980 2002), where she was most recently an audit partner with PwC’s investment management practice.
| R. Stephen Ganis (39) |
Year of Election or Appointment: 2006
Anti Money Laundering (AML) officer of Utilities. Mr. Ganis also serves as AML officer of other Fidelity funds (2006 present) and FMR Corp. (2003 present). Before joining Fidelity Investments, Mr. Ganis practiced law at Goodwin Proctor, LLP (2000 2002).
29 Annual Report
Trustees and Officers - continued
| Name, Age; Principal Occupation Paul M. Murphy (58) |
Year of Election or Appointment: 2005
Chief Financial Officer of Utilities. Mr. Murphy also serves as Chief Financial Officer of other Fidelity funds (2005 present). He also serves as Senior Vice President of Fidelity Pricing and Cash Management Services Group (FPCMS).
| Kenneth A. Rathgeber (58) |
Year of Election or Appointment: 2004
Chief Compliance Officer of Utilities. Mr. Rathgeber also serves as Chief Compliance Officer of other Fidelity funds (2004 present) and Executive Vice President of Risk Oversight for Fidelity Investments (2002 present). He is Chief Compliance Officer of FMR (2005 present), FMR Co., Inc. (2005 present), Fidelity Management & Research (U.K) Inc. (2005 present), Fidelity Research & Analysis Company (2005 present), and Fidelity Investments Money Management, Inc. (2005 present), and Strategic Advisors, Inc. (2005 present). Previously, Mr. Rathgeber served as Executive Vice President and Chief Operating Officer for Fidelity Investments Institutional Services Company, Inc. (1998 2002).
| Bryan A. Mehrmann (44) |
Year of Election or Appointment: 2005
Deputy Treasurer of Utilities. Mr. Mehrmann also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an employee of FMR. Previously, Mr. Mehrmann served as Vice President of Fidelity Invest ments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998 2004).
| Kimberley H. Monasterio (42) |
Year of Election or Appointment: 2004
Deputy Treasurer of Utilities. Ms. Monasterio also serves as Deputy Treasurer of other Fidelity funds (2004) and is an employee of FMR (2004). Before joining Fidelity Investments, Ms. Monasterio served as Treasurer (2000 2004) and Chief Financial Officer (2002 2004) of the Franklin Templeton Funds and Senior Vice President of Franklin Templeton Services, LLC (2000 2004).
| Kenneth B. Robins (36) |
Year of Election or Appointment: 2005
Deputy Treasurer of Utilities. Mr. Robins also serves as Deputy Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2004 present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG’s department of professional practice (2002 2004) and a Senior Manager (1999 2000). In addition, Mr. Robins served as Assistant Chief Accountant, United States Securities and Exchange Commission (2000 2002).
| Annual Report |
| 30 |
| Name, Age; Principal Occupation Robert G. Byrnes (39) |
Year of Election or Appointment: 2005
Assistant Treasurer of Utilities. Mr. Byrnes also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Byrnes served as Vice President of FPCMS (2003 2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000 2003).
| John H. Costello (59) |
Year of Election or Appointment: 1987
Assistant Treasurer of Utilities. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
| Peter L. Lydecker (52) |
Year of Election or Appointment: 2004
Assistant Treasurer of Utilities. Mr. Lydecker also serves as Assistant Treasurer of other Fidelity funds (2004) and is an employee of FMR.
| Mark Osterheld (50) |
Year of Election or Appointment: 2002
Assistant Treasurer of Utilities. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
| Gary W. Ryan (47) |
Year of Election or Appointment: 2005
Assistant Treasurer of Utilities. Mr. Ryan also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Previously, Mr. Ryan served as Vice President of Fund Reporting in FPCMS (1999 2005).
| Salvatore Schiavone (40) |
Year of Election or Appointment: 2005
Assistant Treasurer of Utilities. Mr. Schiavone also serves as Assistant Treasurer of other Fidelity funds (2005 present) and is an employee of FMR (2005 present). Before joining Fidelity Investments, Mr. Schiavone worked at Deutsche Asset Management, where he most recently served as Assistant Treasurer (2003 2005) of the Scudder Funds and Vice President and Head of Fund Reporting (1996 2003).
31 Annual Report
| Distributions |
A total of .08% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.
The fund designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends received deduction for corporate shareholders.
The fund designates 100% of the dividends distributed in the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2007 of amounts for use in preparing 2006 income tax returns.
| Annual Report |
| 32 |
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Utilities Fund
On January 19, 2006, the Board of Trustees, including the Independent Trustees (together, the Board), voted to approve a general research services agreement (the Agreement) between FMR, FMR Co., Inc. (FMRC), Fidelity Investments Money Manage ment, Inc. (FIMM), and Fidelity Research & Analysis Company (FRAC) (together, the Investment Advisers) for the fund, effective January 20, 2006, pursuant to which FRAC may provide general research and investment advisory support services to FMRC and FIMM. The Board considered that it has approved previously various sub advisory agreements for the fund with affiliates of FMR that allow FMR to obtain research, non discretionary advice, or discretionary portfolio management at no additional expense to the fund. The Board, assisted by the advice of fund counsel and independent Trustees’ counsel, considered a broad range of information and determined that it would be beneficial for the fund to access the research and investment advisory support services supplied by FRAC at no additional expense to the fund.
The Board reached this determination in part because the new arrangement will involve no changes in (i) the contractual terms of and fees payable under the fund’s manage ment contract or sub advisory agreements; (ii) the investment process or strategies employed in the management of the fund’s assets; (iii) the nature or level of services provided under the fund’s management contract or sub advisory agreements; (iv) the day to day management of the fund or the persons primarily responsible for such man agement; or (v) the ultimate control or beneficial ownership of FMR, FMRC, or FIMM. The Board also considered that the establishment of the Agreement would not necessi tate prior shareholder approval of the Agreement or result in an assignment and termination of the fund’s management contract or sub advisory agreements under the Investment Company Act of 1940.
Because the Board was approving an arrangement with FRAC under which the fund will not bear any additional management fees or expenses and under which the fund’s portfolio manager would not change, it did not consider the fund’s investment perfor mance, competitiveness of management fee and total expenses, costs of services and profitability, or economies of scale to be significant factors in its decision.
In connection with its future renewal of the fund’s management contract and sub advisory agreements, the Board will consider: (i) the nature, extent, and quality of services provided to the fund, including shareholder and administrative services and investment performance; (ii) the competitiveness of the fund’s management fee and total expenses; (iii) the costs of the services and profitability, including the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering, and servicing the fund and its shareholders; and (iv) whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have
33 Annual Report
Board Approval of Investment Advisory Contracts and Management Fees continued
appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the fund’s Agreement is fair and reasonable, and that the fund’s Agreement should be approved.
| Annual Report |
| 34 |
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.
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.
* 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 guar anteed 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.
35 Annual Report
To Visit Fidelity
| For directions and hours, please call 1-800-544-9797. Arizona 7001 West Ray Road Chandler, AZ 7373 N. Scottsdale Road Scottsdale, AZ California 815 East Birch Street Brea, CA 1411 Chapin Avenue Burlingame, CA 851 East Hamilton Avenue Campbell, CA 19200 Von Karman Avenue Irvine, CA 601 Larkspur Landing Circle Larkspur, CA 10100 Santa Monica Blvd. Los Angeles, CA 27101 Puerta Real Mission Viejo, CA 73 575 El Paseo Palm Desert, CA 251 University Avenue Palo Alto, CA 123 South Lake Avenue Pasadena, CA 16995 Bernardo Ctr. Drive Rancho Bernardo, CA 1740 Arden Way Sacramento, CA 7676 Hazard Center Drive San Diego, CA 8 Montgomery Street San Francisco, CA 3793 State Street Santa Barbara, CA 21701 Hawthorne Boulevard Torrance, CA 2001 North Main Street Walnut Creek, CA 6300 Canoga Avenue Woodland Hills, CA |
| Colorado 1625 Broadway Denver, CO 9185 East Westview Road Littleton, 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 121 Alhambra Plaza Coral Gables, FL 2948 N. Federal Highway Ft. Lauderdale, FL 1907 West State Road 434 Longwood, FL 8880 Tamiami Trail, North Naples, FL 3550 Tamiami Trail, South Sarasota, FL 1502 N. Westshore Blvd. Tampa, FL 2465 State Road 7 Wellington, FL 3501 PGA Boulevard West Palm Beach, FL Georgia 3445 Peachtree Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA Illinois One North LaSalle Street Chicago, IL 875 North Michigan Ave. 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 Kansas 5400 College Boulevard Overland Park, KS Maine Three Canal Plaza Portland, ME Maryland 7315 Wisconsin Avenue Bethesda, MD One W. Pennsylvania Ave. Towson, MD Massachusetts 801 Boylston Street Boston, MA 155 Congress Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 405 Cochituate Road Framingham, MA 416 Belmont Street Worcester, MA Michigan 500 E. Eisenhower Pkwy. Ann Arbor, MI 280 Old N. Woodward Ave. Birmingham, MI 43420 Grand River Avenue Novi, MI 29155 Northwestern Hwy. Southfield, MI Minnesota 7600 France Avenue South Edina, MN Missouri 8885 Ladue Road Ladue, MO |
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| Nevada 2225 Village Walk Drive Henderson, NV New Jersey 150 Essex Street Millburn, NJ 56 South Street Morristown, NJ 396 Route 17, North Paramus, NJ 3518 Route 1 North Princeton, NJ 530 Highway 35 Shrewsbury, NJ New York 1055 Franklin Avenue Garden City, NY 37 West Jericho Turnpike Huntington Station, NY 1271 Avenue of the Americas New York, NY 61 Broadway New York, NY 350 Park Avenue New York, NY 200 Fifth Avenue New York, NY 733 Third Avenue New York, NY 11 Penn Plaza New York, NY 2070 Broadway New York, NY 1075 Northern Blvd. Roslyn, NY North Carolina 4611 Sharon Road Charlotte, NC Ohio 3805 Edwards Road Cincinnati, OH 1324 Polaris Parkway Columbus, OH 28699 Chagrin Boulevard Woodmere Village, OH Oregon 16850 SW 72nd Avenue Tigard, OR |
| Pennsylvania 600 West DeKalb Pike King of Prussia, PA 1735 Market Street Philadelphia, PA 12001 Perry Highway Wexford, PA Rhode Island 47 Providence Place Providence, RI Tennessee 6150 Poplar Avenue Memphis, TN Texas 10000 Research Boulevard Austin, TX 4001 Northwest Parkway Dallas, TX 12532 Memorial Drive Houston, TX 2701 Drexel Drive Houston, TX 6500 N. MacArthur Blvd. Irving, TX 6005 West Park Boulevard Plano, TX 14100 San Pedro San Antonio, TX 1576 East Southlake Blvd. Southlake, TX 19740 IH 45 North Spring, TX Utah 215 South State Street Salt Lake City, UT Virginia 1861 International Drive McLean, VA Washington 411 108th Avenue, N.E. Bellevue, WA 1518 6th Avenue Seattle, WA Washington, DC 1900 K Street, N.W. Washington, DC Wisconsin 595 North Barker Road Brookfield, WI |
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
37 Annual Report
37
To Write Fidelity
We’ll give your correspondence immediate attention and send you written confirmation upon completion of your request.
| (such as changing name, address, bank, etc.) Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0002 |
| Buying shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 Overnight Express Fidelity Investments Attn: Distribution Services 100 Crosby Parkway KC1H Covington, KY 41015 Selling shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0035 Overnight Express Fidelity Investments Attn: Distribution Services 100 Crosby Parkway KC1H Covington, KY 41015 General Correspondence Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 |
| Buying shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0003 Selling shares Fidelity Investments P.O. Box 770001 Cincinnati, OH 45277-0035 Overnight Express Fidelity Investments Attn: Distribution Services 100 Crosby Parkway KC1H Covington, KY 41015 General Correspondence Fidelity Investments P.O. Box 500 Merrimack, NH 03054-0500 |
Annual Report 38
39 Annual Report
| Investment Adviser Fidelity Management & Research Company Boston, MA Investment Sub Advisers FMR Co., Inc. Fidelity Research & Analysis Company (formerly Fidelity Management & Research (Far East) Inc.) Fidelity Management & Research (U.K.) Inc. Fidelity Investments Japan Limited Fidelity International Investment Advisors Fidelity International Investment Advisors (U.K.) Limited General Distributor Fidelity Distributors Corporation Boston, MA Transfer and Service Agent Fidelity Service Company, Inc. Boston, MA Custodian Brown Brothers Harriman & Co. Boston, MA |
| 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®) (automated phone logo) | 1-800-544-5555 | |
| (automated phone logo) Automated line for quickest service | ||
| UIF UANN-0306 1.789258.103 |
Item 2. Code of Ethics
As of the end of the period, January 31, 2006, Fidelity Devonshire Trust (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
Item 3. Audit Committee Financial Expert
The Board of Trustees of the trust has determined that Marie L. Knowles is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Ms. Knowles is independent for purposes of Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services
(a) Audit Fees.
For the fiscal years ended January 31, 2006 and January 31, 2005 , the aggregate Audit Fees billed by PricewaterhouseCoopers LLP (PwC) for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, for Fidelity Equity-Income Fund, Fidelity Large Cap Growth Fund, Fidelity Large Cap Value Fund , Fidelity Mid Cap Growth Fund, Fidelity Mid Cap Value Fund and Fidelity Utilities Fund (the funds) and for all funds in the Fidelity Group of Funds are shown in the table below.
Fund | 2006A | 2005A |
Fidelity Equity-Income Fund | $228,000 | $147,000 |
Fidelity Large Cap Growth Fund | $42,000 | $39,000 |
Fidelity Large Cap Value Fund | $43,000 | $40,000 |
Fidelity Mid Cap Growth Fund | $43,000 | $40,000 |
Fidelity Mid Cap Value Fund | $45,000 | $40,000 |
Fidelity Utilities Fund | $55,000 | $51,000 |
All funds in the Fidelity Group of Funds audited by PwC | $12,300,000 | $11,000,000 |
A | Aggregate amounts may reflect rounding. |
For the fiscal years ended January 31, 2006 and January 31, 2005, the aggregate Audit Fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, "Deloitte Entities") for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, for Fidelity Tax-Free Bond Fund (the fund) and for all funds in the Fidelity Group of Funds are shown in the table below.
Fund | 2006A | 2005A |
Fidelity Tax-Free Bond Fund | $29,000 | $32,000 |
All funds in the Fidelity Group of Funds audited by Deloitte Entities | $5,700,000 | $4,500,000 |
A | Aggregate amounts may reflect rounding. |
(b) Audit-Related Fees.
In each of the fiscal years ended January 31, 2006 and January 31, 2005, the aggregate Audit-Related Fees billed by PwC for services rendered for assurance and related services to each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Fund | 2006A | 2005A |
Fidelity Equity-Income Fund | $0 | $0 |
Fidelity Large Cap Growth Fund | $0 | $0 |
Fidelity Large Cap Value Fund | $0 | $0 |
Fidelity Mid Cap Growth Fund | $0 | $0 |
Fidelity Mid Cap Value Fund | $0 | $0 |
Fidelity Utilities Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended January 31, 2006 and January 31, 2005, the aggregate Audit-Related Fees billed by Deloitte Entities for services rendered for assurance and related services to the fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Fund | 2006A | 2005A |
Fidelity Tax-Free Bond Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended January 31, 2006 and January 31, 2005, the aggregate Audit-Related Fees that were billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for services rendered on behalf of Fidelity Management & Research Company (FMR) and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the funds ("Fund Service Providers") for assurance and related services that relate directly to the operations and financial reporting of each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.
Billed By | 2006A | 2005A |
PwC | $0 | $0 |
Deloitte Entities | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
Fees included in the audit-related category comprise assurance and related services (e.g., due diligence services) that are traditionally performed by the independent registered public accounting firm. These audit-related services include due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews, attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.
(c) Tax Fees.
In each of the fiscal years ended January 31, 2006 and January 31, 2005, the aggregate Tax Fees billed by PwC for professional services rendered for tax compliance, tax advice, and tax planning for each fund is shown in the table below.
Fund | 2006A | 2005A |
Fidelity Equity-Income Fund | $4,600 | $4,200 |
Fidelity Large Cap Growth Fund | $2,700 | $2,500 |
Fidelity Large Cap Value Fund | $2,700 | $2,500 |
Fidelity Mid Cap Growth Fund | $2,700 | $2,500 |
Fidelity Mid Cap Value Fund | $2,700 | $2,500 |
Fidelity Utilities Fund | $3,600 | $3,400 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended January 31, 2006 and January 31, 2005, the aggregate Tax Fees billed by Deloitte Entities for professional services rendered for tax compliance, tax advice, and tax planning for the fund is shown in the table below.
Fund | 2006A | 2005A |
Fidelity Tax-Free Bond Fund | $4,000 | $3,700 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended January 31, 2006 and January 31, 2005, the aggregate Tax Fees billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for professional services rendered on behalf of the Fund Service Providers for tax compliance, tax advice, and tax planning that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2006A | 2005A |
PwC | $0 | $0 |
Deloitte Entities | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
Fees included in the Tax Fees category comprise all services performed by professional staff in the independent registered public accounting firm's tax division except those services related to the audit. Typically, this category would include fees for tax compliance, tax planning, and tax advice. Tax compliance, tax advice, and tax planning services include preparation of original and amended tax returns, claims for refund and tax payment-planning services, assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities.
(d) All Other Fees.
In each of the fiscal years ended January 31, 2006 and January 31, 2005, the aggregate Other Fees billed by PwC for all other non-audit services rendered to the funds is shown in the table below.
Fund | 2006A | 2005A |
Fidelity Equity-Income Fund | $24,300 | $21,700 |
Fidelity Large Cap Growth Fund | $1,400 | $1,300 |
Fidelity Large Cap Value Fund | $1,600 | $1,300 |
Fidelity Mid Cap Growth Fund | $1,500 | $1,300 |
Fidelity Mid Cap Value Fund | $1,500 | $1,300 |
Fidelity Utilities Fund | $2,200 | $2,000 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended January 31, 2006 and January 31, 2005, the aggregate Other Fees billed by Deloitte Entities for all other non-audit services rendered to the fund is shown in the table below.
Fund | 2006A | 2005A |
Fidelity Tax-Free Bond Fund | $0 | $0 |
A | Aggregate amounts may reflect rounding. |
In each of the fiscal years ended January 31, 2006 and January 31, 2005 the aggregate Other Fees billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for all other non-audit services rendered on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund is shown in the table below.
Billed By | 2006A | 2005A |
PwC | $190,000 | $490,000 |
Deloitte Entities | $160,000 | $760,000 |
A | Aggregate amounts may reflect rounding. |
Fees included in the All Other Fees category include services related to internal control reviews, strategy and other consulting, financial information systems design and implementation, consulting on other information systems, and other tax services unrelated to the fund.
(e) (1) | Audit Committee Pre-Approval Policies and Procedures: |
The trust's Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The trust's Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity Fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund (Covered Service) are subject to approval by the Audit Committee before such service is provided. Non-audit services provided by a fund audit firm for a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund (Non-Covered Service) but that are expected to exceed $50,000 are also subject to pre-approval by the Audit Committee.
All Covered Services, as well as Non-Covered Services that are expected to exceed $50,000, must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee. Neither pre-approval nor advance notice of Non-Covered Service engagements for which fees are not expected to exceed $50,000 is required; such engagements are to be reported to the Audit Committee monthly.
(e) (2) | Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X: |
Audit-Related Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended January 31, 2006 and January 31, 2005on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended January 31, 2006 and January 31, 2005 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
Tax Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended January 31, 2006 and January 31, 2005 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years January 31, 2006 and January 31, 2005 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended January 31, 2006 and January 31, 2005 on behalf of each fund.
There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended January 31, 2006 and January 31, 2005 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund.
(f) Not applicable.
(g) For the fiscal years ended January 31, 2006 and January 31, 2005 the aggregate fees billed by PwC of $1,250,000A and $1,400,000A,B for non-audit services rendered on behalf of the funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and Fund Service Providers relating to Covered Services and Non-Covered Services are shown in the table below.
2006A | 2005A | |
Covered Services | $250,000 | $500,000 |
Non-Covered Services | $1,000,000 | $900,000B |
A | Aggregate amounts may reflect rounding. |
B | Reflects current period presentation. |
For the fiscal years ended January 31, 2006 and January 31, 2005, the aggregate fees billed by Deloitte Entities of $425,000A and $1,100,000A,B for non-audit services rendered on behalf of the fund, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and Fund Service Providers relating to Covered Services and Non-Covered Services are shown in the table below.
2006A | 2005A | |
Covered Services | $175,000 | $750,000 |
Non-Covered Services | $250,000 | $350,000B |
A | Aggregate amounts may reflect rounding. |
B | Reflects current period presentation. |
(h) The trust's Audit Committee has considered Non-Covered Services that were not pre-approved that were provided by PwC and Deloitte Entities to Fund Service Providers to be compatible with maintaining the independence of PwC and Deloitte Entities in their audit of the funds, taking into account representations from PwC and Deloitte Entities, in accordance with Independence Standards Board Standard No.1, regarding their independence from the funds and their related entities.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) | Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Devonshire Trust
By: | /s/Christine Reynolds |
Christine Reynolds | |
President and Treasurer | |
Date: | March 27, 2006 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/Christine Reynolds |
Christine Reynolds | |
President and Treasurer | |
Date: | March 27, 2006 |
By: | /s/Paul M. Murphy |
Paul M. Murphy | |
Chief Financial Officer | |
Date: | March 27, 2006 |