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This plan as I was told by Fidelity reps. DOES NOT allow me to buy individual stocks only mutual funds.

Yep - that's pretty typical for a 401(k) plan, and is based on the plan rules that your company has set up with Fidelity - not what Fidelity allows or doesn't allow. So if you have an issue with not being able to pick individual stocks in your 401(k), you need to take it up with your company, not with Fidelity. However, be aware that the 401(k) plans that do allow individual stock picking usually charge pretty significant fees to participants who choose to use that option, when compared to the mutual fund only choices.

The problem I have is my current picks (AAGPX, EHSTX, FAGIX, FCNTX, FCPGX, FEMKX and RMCVX) has only earned 3.4% for the year.

Well, seems like you're actually a little ahead of the market. The S&P was closed at 1271.87 on Dec 31, 2010 and closed yesterday at 1313.64 for a gain of 3.28% So, can you redefine your problem?

Any advice on particular mutual funds managed by Fidelity that I should include and do I have any funds that I should jettison.

It depends on what the choices in your plan are. I've had 4 different 401(k)s that have been managed by Fidelity, and each one had different choices. Choices available in your plan are dependent on the choices your company has made.

I am fast approaching 40 and I am starting to worry about my future (I know I should have started worrying 39 years ago).
I know that I should contribute more but I am unable to do so at this time or the near future due to unforeseen circumstances.

I would highly recommend figuring out a way around your 'unforseen circumstances' in order to start maxing out your 401(k) and/or maxing out a Roth and/or investing in a taxable account (but only if you have paid off your consumer debt). If you are like many people who get 'worried about the future' when approaching 40, you probably have consumer debt that you need to pay off and not a lot of retirement savings. If that's the case, it would indicate that you have been living above your means and need to make some changes to your lifestyle.

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