FIDELITY FINANCIAL TRUST, 485BPOS, 1994-01-14

FIDELITY FINANCIAL TRUST
485BPOS, 1994-01-14

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO. 2-79910)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No.26 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Amendment No. [ ]
Fidelity Financial Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Offices)
Registrant's Telephone Number: (617) 570-7000
Arthur S. Loring, Secretary
82 Devonshire Street,
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to paragraph (b)
[x] On January 19, 1994 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)
[ ] On ( ) pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and will file the notice required by such
Rule before January 31, 1994.

FIDELITY FINANCIAL TRUST:
FIDELITY CONVERTIBLE SECURITIES FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
1 Cover Page

2a Expenses

b, c Contents; The Fund at a Glance; Who May Want to
Invest

3a Financial Highlights

b *

c Performance

4a i Charter

ii The Fund at a Glance; Investment Principles;
Securities & Investment Practices

b Securities & Investment Practices

c Who May Want to Invest; Investment Principles;
Securities & Investment Practices

5a Charter

b i Doing Business with Fidelity; Charter

ii Charter; Breakdown of Expenses

iii Expenses; Breakdown of Expenses

c, d Charter; Breakdown of Expenses

e Expenses

f Charter

6a i Charter

ii How to Buy Shares; How to Sell Shares; Transaction
Details; Exchange Restrictions

iii *

b *

c Exchange Restrictions

d *

e Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services

f, g Dividends, Capital Gains, and Taxes

7a Charter

b How to Buy Shares; Transaction Details

c Sales Charge Reductions and Waivers

d How to Buy Shares

e, f *

8 How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions

9 *

* Not Applicable
FIDELITY CONVERTIBLE SECURITIES FUND
CROSS REFERENCE SHEET
(continued)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
10 Cover Page

11 Cover Page

12 *

13a - c Investment Policies and Limitations

d Portfolio Transactions

14a - c Trustees and Officers

15a, b *

c Trustees and Officers

16a i FMR; Portfolio Transactions

ii Trustees and Officers

iii Management Contract

b Management Contract

c, d Contracts with Companies Affiliated with FMR

e - g *

h Description of the Fund

i Contracts with Companies Affiliated with FMR

17a - d Portfolio Transactions

e *

18a Description of the Fund

b *

19a Additional Purchase and Redemption Information

b Additional Purchase and Redemption Information;
Valuation of Portfolio Securities

c *

20 Distributions and Taxes

21a, b Contracts with Companies Affiliated with FMR

c *

22 Performance

23 Financial Statements

Many of the fund's investments are lower-quality debt securities, which
carry increased risk of default and price volatility, and may present
problems of liquidity and valuation.
FIDELITY
CONVERTIBLE
SECURITIES
FUND
PROSPECTUS
JANUARY 19, 1994
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
CVS-pro-194
(Registered trademark)
82 Devonshire Street, Boston, MA 02109
CONTENTS

KEY FACTS 3 THE FUND AT A GLANCE

3 WHO MAY WANT TO INVEST

EXPENSES AND PERFORMANCE 4 EXPENSES The fund's yearly
operating expenses.

5 FINANCIAL HIGHLIGHTS A summary
of the fund's financial data.

6 PERFORMANCE How the fund has
done over time.

YOUR ACCOUNT 8 DOING BUSINESS WITH FIDELITY

8 TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.

10 HOW TO BUY SHARES Opening an
account and making additional
investments.

12 HOW TO SELL SHARES Taking money
out and closing your account.

14 INVESTOR SERVICES Services to
help you manage your account.

16 DIVIDENDS, CAPITAL GAINS, AND
TAXES

SHAREHOLDER AND 18 TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.

20 EXCHANGE RESTRICTIONS

THE FUND IN DETAIL 21 CHARTER How the fund is
organized.

22 BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

23 INVESTMENT PRINCIPLES The fund's
overall approach to investing.

24 SECURITIES AND INVESTMENT
PRACTICES

KEY FACTS

THE FUND AT A GLANCE
GOAL: High total return through a combination of current income and capital
appreciation. As with any mutual fund, there is no assurance that the fund
will achieve its goal.
STRATEGY: Invests primarily in securities that are convertible into common
stock.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. Foreign affiliates of FMR
help choose investments for the fund.
SIZE: As of November 30, 1993, the fund had over $1 billion in
assets.
WHO MAY WANT TO INVEST
The fund is designed for those who want income and exposure to changes in
the bond market, but are also looking for exposure to the stock market. The
value of convertible securities typically moves up and down with the
underlying stocks, but with less potential for gain or loss. The fund may
be appropriate for investors who are willing to ride out stock market
fluctuations in pursuit of potentially high long-term returns. The fund is
not in itself a balanced investment plan.
The fund's investments are sensitive to interest rates, credit quality, and
changes in the stock market. Over time, stocks have shown greater growth
potential than other types of securities. In the short-term, however, stock
prices can fluctuate dramatically in response to company, market, or
economic news. The value of the fund's investments and the income they
generate will vary. When you sell your fund shares, they may be worth more
or less tha n what you paid for them.

THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk.
Convertible Securities is in
the GROWTH AND INCOME
category.
(bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(bullet) INCOME Seeks income by
investing in bonds.
(arrow) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
<r>EXPENSES & PERFORMANCE</r>

EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of the fund's assets. The fund
pays a management fee that varies based on its performance . It also
incurs other expenses for services such as maintaining shareholder records
and furnishing shareholder statements and fund reports. The fund's expenses
are factored into its share price or dividends and are not charged directly
to shareholder accounts (see page 22 ).
The following are projections based on historical expenses and are
calculated as a percentage of average net assets.
Management fee .53 %
12b-1 fee None
Other expenses .39 %
Total fund operating expenses .92 %
EXAMPLES: Let's say, hypothetically, that the fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 year $ 9
After 3 years $ 29
After 5 years $ 51
After 10 years $ 113
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.

UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)
FINANCIAL HIGHLIGHTS
The table that follows has been audited by Price Waterhouse ,
independent accountants. Their unqualified report is included in the fund's
Annual Report. The Annual Report is incorporated by reference into (is
legally a part of) the Statement of Additional Information.
SELECTED PER-SHARE DATA

<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
1.Years ended
1987A 1988 1989 1990 1991 1992 1993
November 30,

2.Net asset value,
$ 10.00 $ 9.05 $ 10.01 $ 11.81 $ 10.53 $ 13.45 $ 15.77
beginning
of period

3.Income from

Investment
Operations

4. Net investment
.40 .63 .80 .64 .60 .67 .75
income

5. Net realized
(1.11) .93 1.72 (1.15) 2.94 2.66 2.24
and unrealized
gain (loss) on
investments

6. Total from
(.71) 1.56 2.52 (.51) 3.54 3.33 2.99
investment
operations

7.Less

Distributions

8. From net
(.24) (.60) (.72) (.77) (.62) (.64) (.73)
investment
income

9. From net
- - - - - (.37) (.40)
realized gain

10. Total
(.24) (.60) (.72) (.77) (.62) (1.01) (1.13)
distributions

11.Net asset
$ 9.05 $ 10.01 $ 11.81 $ 10.53 $ 13.45 $ 15.77 $ 17.63
value, end of
period

12.Total returnB
(7.47) 17.69 26.28 (4.61) 34.52 26.18 19.94

% % % % % % %

13.RATIOS AND SUPPLEMENTAL DATA

14.Net assets, end
$ 39,502 $ 44,628 $ 59,627 $ 57,205 $ 126,23 $ 412,36 $ 1,056,2
of period (000 0 3 82
omitted)

15.Ratio of
1.60 1.60 1.38 1.31 1.17 .96 .92
expenses to
%C % % % % % %
average net assets

16.Ratio of net
5.45 6.20 7.48 5.63 4.99 4.82 4.62
investment income
%C % % % % % %
to average net
assets

17.Portfolio
233 191 207 223 152 258 312
turnover rate
%C % % % % % %

</TABLE>

A FROM JANUARY 5, 1987 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30,
1987
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C ANNUALIZED
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN. The total
returns that follow are based on historical fund results and do not reflect
the effect of taxes.
The fund's fiscal year runs from December 1 through November 30. The tables
below show the fund's performance over past fiscal years compared to two
measures: investing in a broad selection of stocks (Merrill Lynch
Convertible Securities Index) , and not investing at all (inflation,
or CPI). To help you compare this fund to other funds, the chart on page
7 displays calendar-year performance.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Life of
November 30, 1993 year years fundA
Convertible Securities 19.94% 19.65% 15.27%
Merrill Lynch
Convertible Securities Index 20.82% 15.01% .n/a
Consumer Price
Index 2.68% 3.92% 4.09%
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Life of
November 30, 1993 year years fundA
Convertible Securities 19.94 % 145. 22 % 167. 04 %
Merrill Lynch
Convertible Securities Index 20.82% 101.24% .n/a
Consumer Price
Index 2.68% 21.20% 31.95%
A FROM JANUARY 5, 1987
EXAMPLE: Let's say, hypothetically, that an investor put $10,000 in the
fund on January 5, 1987. From that date through November 30, 1993, the
fund's total return was 167.04 %. That $10,000 would have grown to
$ 26,704 (the initial investment plus 167.04 % of $10,000).
$10,000 OVER LIFE OF FUND
Fiscal years 1987 1990 1993
Row: 1, Col: 1, Value: 10000.0
Row: 2, Col: 1, Value: 10350.2
Row: 3, Col: 1, Value: 10437.75
Row: 4, Col: 1, Value: 10282.1
Row: 5, Col: 1, Value: 10252.92
Row: 6, Col: 1, Value: 10429.22
Row: 7, Col: 1, Value: 10949.7
Row: 8, Col: 1, Value: 11195.21
Row: 9, Col: 1, Value: 11119.15
Row: 10, Col: 1, Value: 9020.630000000001
Row: 11, Col: 1, Value: 9000.740000000002
Row: 12, Col: 1, Value: 9253.190000000001
Row: 13, Col: 1, Value: 9598.15
Row: 14, Col: 1, Value: 9993.849999999999
Row: 15, Col: 1, Value: 10126.04
Row: 16, Col: 1, Value: 10321.56
Row: 17, Col: 1, Value: 10249.53
Row: 18, Col: 1, Value: 10675.2
Row: 19, Col: 1, Value: 10602.15
Row: 20, Col: 1, Value: 10445.63
Row: 21, Col: 1, Value: 10582.76
Row: 22, Col: 1, Value: 10752.08
Row: 23, Col: 1, Value: 10593.34
Row: 24, Col: 1, Value: 10723.6
Row: 25, Col: 1, Value: 11181.78
Row: 26, Col: 1, Value: 11301.78
Row: 27, Col: 1, Value: 11630.81
Row: 28, Col: 1, Value: 12061.99
Row: 29, Col: 1, Value: 12338.38
Row: 30, Col: 1, Value: 12437.47
Row: 31, Col: 1, Value: 12997.21
Row: 32, Col: 1, Value: 13422.61
Row: 33, Col: 1, Value: 13433.81
Row: 34, Col: 1, Value: 13161.96
Row: 35, Col: 1, Value: 13377.18
Row: 36, Col: 1, Value: 13542.0
Row: 37, Col: 1, Value: 13040.01
Row: 38, Col: 1, Value: 13191.78
Row: 39, Col: 1, Value: 13450.8
Row: 40, Col: 1, Value: 13344.42
Row: 41, Col: 1, Value: 13876.3
Row: 42, Col: 1, Value: 14031.24
Row: 43, Col: 1, Value: 13935.54
Row: 44, Col: 1, Value: 13014.48
Row: 45, Col: 1, Value: 12372.24
Row: 46, Col: 1, Value: 12129.89
Row: 47, Col: 1, Value: 12760.01
Row: 48, Col: 1, Value: 13150.08
Row: 49, Col: 1, Value: 13965.01
Row: 50, Col: 1, Value: 14866.38
Row: 51, Col: 1, Value: 15261.64
Row: 52, Col: 1, Value: 15436.49
Row: 53, Col: 1, Value: 15961.03
Row: 54, Col: 1, Value: 15657.98
Row: 55, Col: 1, Value: 16289.35
Row: 56, Col: 1, Value: 16908.09
Row: 57, Col: 1, Value: 17190.33
Row: 58, Col: 1, Value: 17930.53
Row: 59, Col: 1, Value: 17164.81
Row: 60, Col: 1, Value: 18244.09
Row: 61, Col: 1, Value: 19164.97
Row: 62, Col: 1, Value: 19792.24
Row: 63, Col: 1, Value: 19458.45
Row: 64, Col: 1, Value: 19620.15
Row: 65, Col: 1, Value: 19997.46
Row: 66, Col: 1, Value: 19878.15
Row: 67, Col: 1, Value: 20422.38
Row: 68, Col: 1, Value: 20027.81
Row: 69, Col: 1, Value: 20504.91
Row: 70, Col: 1, Value: 20985.6
Row: 71, Col: 1, Value: 21658.57
Row: 72, Col: 1, Value: 22261.35
Row: 73, Col: 1, Value: 23005.78
Row: 74, Col: 1, Value: 22604.93
Row: 75, Col: 1, Value: 23729.83
Row: 76, Col: 1, Value: 23946.74
Row: 77, Col: 1, Value: 24539.62
Row: 78, Col: 1, Value: 24511.54
Row: 79, Col: 1, Value: 24759.72
Row: 80, Col: 1, Value: 25343.67
Row: 81, Col: 1, Value: 25638.1
Row: 82, Col: 1, Value: 26227.48
Row: 83, Col: 1, Value: 26704.0
$
$26,704
EXPLANATION OF TERMS
UNDERSTANDING
PERFORMANCE
Because this fund invests in
convertible securities, its
performance is related to that
of the overall stock market.
Historically, stock market
performance has been
characterized by volatility in
the short run and growth in the
long run. You can see these
two characteristics reflected in
the fund's performance; the
year-by-year total returns on
page 7 show that short-term
returns can v a ry widely, while
the returns at left show
long-term growth.
(checkmark)
TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIE LD refers to the income generated by an investment in the fund
over a given period of time, expressed as an annual percentage rate. Yields
are calculated according to a standard that is required for all stock and
bond funds. Because this differs from other accounting methods, the quoted
yield may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE MERRILL LYNCH CONVERTIBLE SECURITIES INDEX is an unmanaged index
of over 450 securities, representing approximately 95% of the total amount
of U.S. convertible securities outstanding. The figures assume reinvestment
of all dividends paid by the securities included in the index. They do not,
however, include any allowance for the brokerage commissions or other fees
you would pay if you actually invested in those securities.
THE COMPETITIVE FUNDS AVERAGE is the Lipper Convertible Securities Funds
Average, which currently reflects the performance of over 24 mutual
funds with similar objectives. This average, which assumes reinvestment of
distributions, is published by Lipper Analytical Services, Inc.
Other illustrations of fund performance may show moving averages over
specified periods.
The fund's recent strategies, performance, and holdings are detailed twice
a year in financial reports , which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF FUTURE
PERFORMANCE.
YEAR-BY-YEAR TOTAL RETURNS
Calendar years 1988 1989 1990 1991 1992
Convertible Securities 15.89% 26.28% -2.89% 38.74%
22.02%
Competitive funds average 12.14 % 13.81 % -5.63 %
29.46 % 14.22 %
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: 15.89
Row: 5, Col: 2, Value: 12.14
Row: 6, Col: 1, Value: 26.28
Row: 6, Col: 2, Value: 13.81
Row: 7, Col: 1, Value: -2.89
Row: 7, Col: 2, Value: -5.63
Row: 8, Col: 1, Value: 38.74
Row: 8, Col: 2, Value: 29.46
Row: 9, Col: 1, Value: 22.02
Row: 9, Col: 2, Value: 14.22
Row: 10, Col: 1, Value: nil
Row: 10, Col: 2, Value: nil
Convertible
Securities
Competitive
funds
average

<r>YOUR ACCOUNT</r>

DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity
has over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in the fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers the fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.

FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $200 billion
(bullet) Number of shareholder
accounts: over 14 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANTS
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age
and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(bullet) 401(K) PROGRAMS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
THE FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. The fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page 11 . If there is no application
accompanying this prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500

<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

PHONE (bullet) Exchange from another (bullet) Exchange from another
1-800-544-7777 Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
MAIL (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to "Fidelity
check payable to Convertible Securities
"Fidelity Convertible Fund." Indicate your
Securities Fund." Mail fund account number
to the address on your check and mail
indicated on the to the address printed
application. on your account
statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.

</TABLE>

<TABLE>
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IN PERSON (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.

</TABLE>

WIRE (bullet) Call 1-800-544-7777 to (bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify "Fidelity
Bank Routing Convertible Securities
#021001033, Fund" and include your
Account #00163053. account number and
Specify "Fidelity your name.
Convertible Securities
Fund" and include your
new account number
and your name.

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<S> <C> <C>
AUTOMATICALLY (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or
call 1-800-544-6666 to
add it.

TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118

</TABLE>

HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open ($500 for retirement
accounts) .
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
ACCOUNT TYPE SPECIAL REQUIREMENTS

<TABLE>
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PHONE All account types (bullet) Maximum check request:
1-800-544-7777 except retirement $100,000.
(bullet) For Money Line transfers to
your bank account; minimum:
none ; maximum: $100,000.
All account types (bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.

MAIL OR IN PERSON Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship, required to sign for
UGMA, transactions, exactly as their
UTMA names appear on the
Retirement account account.
(bullet) The account owner should
complete a retirement
Trust distribution form. Call
1-800-544-6666 to request
one.
(bullet) The trustee must sign the
Business or letter indicating capacity as
Organization trustee. If the trustee's name
is not in the account
registration, provide a copy of
the trust document certified
within the last 60 days.
Executor, (bullet) At least one person
Administrator, authorized by corporate
Conservator, resolution to act on the
Guardian account must sign the letter.
(bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.

WIRE All account types (bullet) You must sign up for the wire
except retirement feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118

</TABLE>

INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)

24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of the fund are limited to four per calendar year,
and that they may have tax consequences for you. For complete policies and
restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page
20 .
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions
from your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS

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FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.

DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.

FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
A BECAUSE ITS SHARE PRICE FLUCTUATES, THE FUND MAY NOT BE AN APPROPRIATE
CHOICE FOR DIRECT DEPOS I T OF YOUR ENTIRE CHECK.

</TABLE>

UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
The fund earns dividends
from stocks and interest from
bond, money market, and
other investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund
realizes capital gains
whenever it sells securities
for a higher price than it paid
for them. These are passed
along as CAPITAL GAIN
DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in the fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, the fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of the fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before the fund deducts a
distribution from its NAV, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, the fund
may have to limit its investment activity in some types of instruments.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>

TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates the fund's net asset value as of the
close of business of the NYSE, normally 4 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The fund's assets are valued primarily on the basis of market quotations.
If quotations are not readily available, assets are valued by a method that
the Board of Trustees believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates.
THE FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page 20 . Purchase orders may be refused if, in FMR's opinion,
they are of a size that would disrupt management of the fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) The fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees the fund or its transfer agent
has incurred.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUND THROUGH A BROKER, who may charge you
a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders
on behalf of customers by phone, with payment to follow no later than the
time when the fund is priced on the following business day. If payment is
not received by that time, the financial institution could be held liable
for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect the
fund, it may take up to seven days to pay you.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) The fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000 , you will be given
30 days' notice to reestablish the minimum balance. If you do not increase
your balance, Fidelity reserves the right to close your account and send
the proceeds to you. Your shares will be redeemed at the NAV on the day
your account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the fund without reimbursement
from the fund. Qualified recipients are securities dealers who have sold
fund shares or others, including banks and other financial institutions,
under special arrangements in connection with FDC's sales activities. In
some instances, these incentives may be offered only to certain
institutions whose representatives provide services in connection with the
sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of the fund
for shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, the fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and
Department of Labor regulations. See your plan materials for further
information.
(bullet) The fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if the fund receives
or anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves the right to terminate or modify the exchange privilege in
the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.

THE FUND IN DETAIL

THE BASIC FEE RATE (calculated monthly) is calculated by adding a group fee
rate to an individual fund fee rate, and multiplying the result by the
fund's average net assets. The group fee rate is based on the average net
assets of all the mutual funds advised by FMR. This rate cannot rise above
.52%, and it drops as total assets under management increase.
For November 30, 1993, the group fee rate was .3250 %. The individual
fund fee rate is .20%. The basic fee rate for fiscal 19 93 was
.53 %.
UNDERSTANDING THE
MANAGEMENT FEE
The basic fee FMR receives
is designed to be responsive
to changes in FMR's total
assets under management.
Building this variable into the
fee calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
A nother variable, the
performance adjustment,
rewards FMR when the fund
outperforms the Merrill Lynch
Convertible Securities Index
(an established index of stock
market performance) and
reduces FMR's fee when the
fund underperforms this
index.
(checkmark)
THE PERFORMANCE ADJUSTMENT RATE is calculated monthly by comparing the
fund's performance to that of the Merrill Lynch Convertible Securities
Index. The performance period began on December 1, 1993 and will eventually
span 36 months, but the performance adjustment will not take effect until
November 1994. The difference is translated into a dollar amount that is
added to or subtracted from the basic fee. The maximum annualized
performance adjustment rate is ".15%.
The total management fee for fiscal 1993 was .53 %.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers provide FMR with investment research and advice on companies
based outside the United States. Under the sub - advisory agreements,
FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of the costs of providing these services.
The sub - advisers may also provide investment management services .
In return, FMR pays FMR U.K. and FMR Far East 50% of its
management fee rate with respect to the fund's investments that the
sub - adviser manages on a discretionary basis.
OTHER EXPENSES
While the management fee is a significant component of the fund's annual
operating costs, the fund has other expenses as well.
The fund contracts with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing the fund's investments, and handling securities loans. In fiscal
1993, the fund paid FSC fees equal to .33 % of its average net
assets.
The fund also pays other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
The fund has adopted a Distribution and Service Plan. This plan recognizes
that FMR may use its resources, including management fees, to pay expenses
associated with the sale of fund shares. This may include payments to third
parties, such as banks or broker-dealers, that provide shareholder support
services or engage in the sale of the fund's shares. It is important to
note, however, that the fund does not pay FMR any separate fees for this
service.
The fund's portfolio turnover rate for fiscal 1993 was 312 %. This
rate varies from year to year. High turnover rates increase transaction
costs and may increase taxable capital gains. FMR considers these effects
when evaluating the anticipated benefits of short-term investing.
INVESTMENT PRINCIPLES
THE FUND SEEKS HIGH TOTAL RETURN through a combination of current
income and capital appreciation. FMR normally invests at least 65% of the
fund's total assets in convertible securities. The balance, however, may be
invested in other types of securities.
Convertible securities are bonds, preferred stocks, and other securities
that pay a fixed rate of interest or dividend. As an additional feature,
however, they offer the buyer the option of converting the security into
common stock.
The value of convertible securities depends partially on interest rate
changes and the credit quality of the issuer. Because the buyer is also
exposed to the risk and reward potential of the underlying stock,
convertible securities pay less income than similar non - convertible
bonds. Many of the fund's investments may be in lower - quality
securities.
The value of convertible securities is sensitive to company, market, and
other economic news, and will change based on the price of the underlying
common stock. For this reason, FMR considers the growth potential of the
underlying stock when selecting the fund's investments. Convertible
securities have less potential for gain than common stock, but also less
potential for loss, since their income provides a cushion against the
stock's price declines.
THE FUND WILL SPREAD INVESTMENT RISK by limiting its holdings in any one
company or industry. FMR may use various investment techniques to hedge the
fund's risks, but there is no guarantee that these strategies will work as
FMR intends. When you sell your shares, they may be worth more or less than
what you paid for them.
FMR normally invests the fund's assets according to its investment
strategy. When FMR considers it appropriate, however, it may temporarily
invest substantially in non-convertible bonds, money market instruments, or
obligations of banks and the U.S. government.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, and strategies FMR may employ in
pursuit of the fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
fund achieve its goal. As a shareholder, you will receive financial reports
every six months detailing fund holdings and describing recent investment
activities.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. This ownership interest
often gives the fund the right to vote on measures affecting the company's
organization and operations. Although common stocks have a history of
long-term growth in value, their prices tend to fluctuate in the short
term, particularly those of smaller companies.
RESTRICTIONS: With respect to 75% of total assets, the fund may not own
more than 10% of the outstanding voting securities of a single issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities (commonly called "junk bonds") are often
considered to be speculative and involve greater risk of default or
price changes due to changes in interest rates, economic conditions, and
the issuer's creditworthiness. As a result, their market prices tend to
fluctuate more than higher-quality securities. Lower-quality securities are
those rated lower than BBB by Moody's or S&P, and unrated debt
securities of equivalent quality.
The default rate of lower-quality debt securities is likely to be higher
when issuers have difficulty meeting projected goals or obtaining
additional financing. This could occur during economic recessions or
periods of high interest rates. If an issuer defaults, the fund may try to
protect its interests and those of other security holders if it determines
this to be in the interest of its shareholders.
Lower-quality securities may be thinly traded, making them difficult to
sell promptly at an acceptable price. If market quotations are unavailable,
lower-quality securities are valued under guidelines established by the
Board of Trustees, including the use of outside pricing services. Negative
publicity or investor perceptions may make this difficult, and could hurt
the fund's ability to dispose of these securities.
The table on page 26 provides a summary of ratings assigned
to debt holdings (not including money market instruments) in the fund's
portfolio. These figures are dollar-weighted averages of month-end
portfolio holdings during fiscal 1993, and are presented as a percentage of
total investments. These percentages are historical and do not necessarily
indicate the fund's current or future debt holdings.
FISCAL 1993 DEBT HOLDINGS, BY RATING
MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Ratin g Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 1.14 % AA 3.16 %
Upper-medium grade A A
Medium grade Baa 7.93 % BBB 7.42 %
LOWER QUALITY
Moderately speculative Ba 6.86 % BB 4.54 %
Speculative B 20.61 % B 18.77 %
Highly speculative Caa 2.76 % CCC 5.46 %
Poor quality Ca 0.08 % CC 0.00 %
Lowest quality, no interest C C
In default, in arrears -- 0.00% D 0.00 %
39.38 % 39.35 %
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S OR
S&P AMOUNTED TO 10.26 %. THIS MAY INCLUDE SECURITIES RATED BY
OTHER
NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES.
UNRATED SECURITIES ARE NOT NECESSARILY LOWER-QUALITY SECURITIES. REFER TO
THE
APPENDIX FOR A MORE COMPLETE DISCUSSION OF THESE RATINGS.

FOREIGN SECURITIES and foreign currencies may involve additional risks.
These include currency fluctuations, risks relating to political or
economic conditions in the foreign country, and the potentially less
stringent investor protection and disclosure standards of foreign
markets. In addition to the political and economic factors that can
affect foreign securities, a governmental issuer may be unwilling to repay
principal and interest when due, and may require that the conditions for
payment be renegotiated. These factors could make foreign investments,
especially those in developing countries, more volatile.
ADJUSTING INVESTMENT EXPOSURE. The fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, purchasing
indexed securities, and selling securities short.
FMR can use these practices to adjust the risk and return characteristics
of the fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for the fund, or there may be a
requirement that the fund supply additional cash to a borrower on demand.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to
the fund.
RESTRICTIONS: The fund may not purchase a security if, as a result, more
than 10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of total assets, the fund may not invest
more than 5% of its total assets in any one issuer. The fund also may not
invest more than 25% of its total assets in any one industry. These
limitations do not apply to U.S. government securities.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If the fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: The fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering the fund's securities. The
fund may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of the fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
The fund seeks a high level of total return through a combination of
current income and capital appreciation. The fund seeks to achieve this
objective by investing primarily in convertible securities. With respect to
75% of total assets, the fund may not invest more than 5% of its total
assets in any one issuer and may not own more than 10% of the outstanding
voting securities of a single issuer. The fund may not invest more than 25%
of its total assets in any one industry. The fund may borrow only for
temporary or emergency purposes, but not in an amount exceeding 33% of its
total assets. Loans, in the aggregate, may not exceed 33% of the fund's
total assets.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND
RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA - Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
BAA - Bonds rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
CA - Bonds rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issued so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND
RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard
& Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher-rated issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rate BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will likely
impair capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to
senior debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C rating
may be used to cover a situation where a bankruptcy petition has been filed
but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest
is being paid.
D - Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on the date
due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The D
rating will also be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.

This prospectus is printed on recycled paper using soy-based inks.

1FIDELITY CONVERTIBLE SECURITIES FUND
2A FUND OF FIDELITY FINANCIAL TRUST
3STATEMENT OF ADDITIONAL INFORMATION
4JANUARY 19, 1994
5This Statement is not a prospectus but should be read in conjunction with
the fund's current Prospectus (dated January 19, 1994). Please retain this
document for future reference. The Annual Report for the fiscal year ended
November 30, 1993 is incorporated herein by reference. To obtain an
additional copy of the Prospectus or the Annual Report, please call
Fidelity Distributors Corporation at 1-800-544-8888.
6TABLE OF CONTENTS 7PAGE

8Investment Policies and Limitations 9

10Portfolio Transactions 11

12Valuation of Portfolio Securities 13

14Performance 15

16Additional Purchase and Redemption Information 17

18Distributions and Taxes 19

20FMR 21

22Trustees and Officers 23

24Management Contract 25

26Distribution and Service Plan 27

28Contracts with Companies Affiliated with FMR 29

30Description of the Trust 31

32Financial Statements 33

6INVESTMENT ADVISER
7Fidelity Management & Research Company (FMR)
8INVESTMENT SUB-ADVISERS
9Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
10Fidelity Management & Research (Far East) Inc. (FMR Far East)
11DISTRIBUTOR
12Fidelity Distributors Corporation (FDC)
13TRANSFER AGENT
14Fidelity Service Co. (FSC)
15 CVS-ptb-194
16
17INVESTMENT POLICIES AND LIMITATIONS
18The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the fund's investment
policies and limitations.
19The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, except for the fundamental investment limitations set forth below,
the investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed without
shareholder approval. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
20(1) purchase the securities of any issuer (other than obligations issued
or guaranteed by the United States government or its agencies or
instrumentalities) if, as a result thereof, more than 5% of the fund's
total assets would be invested in the securities of such issuer, or it
would hold more than 10% of the voting securities of such issuer, except
that up to 25% of the value of the fund's total assets may be invested
without regard to these limitations;
21(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
22(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
23(4) underwrite securities issued by others, except to the extent that
the sale of restricted securities or the purchase of bonds in accordance
with the fund's investment objective, policies, and limitations, either
directly from the issuer, or from an underwriter for an issuer, may be
deemed to be underwriting;
24(5) purchase any security if, as a result, more than 25% of its total
assets would be invested in the securities of companies having their
principal business activities in the same industry (this limitation does
not apply to securities issued or guaranteed by the United States
government or its agencies or instrumentalities);
25(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
26(7) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements; or
27(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities).
28THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
29(i) The fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
30(ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
31(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an affiliate
serves as investment adviser or (b) by engaging in reverse repurchase
agreements with any party (reverse repurchase agreements are treated as
borrowings for purposes of fundamental investment limitation (3)). The
fund will not purchase any security while borrowings representing more than
5% of its total assets are outstanding. The fund will not borrow from
other funds advised by FMR or its affiliates if total outstanding
borrowings immediately after such borrowing would exceed 15% of the fund's
total assets.
32(iv) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
33(v) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
34(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
35(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
36(viii) The fund does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by domestic or
foreign governments or political subdivisions thereof) if, as a result,
more than 5% of its total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of less
than three years of continuous operation.
37(ix) The fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or
attached to securities are not subject to these restrictions.
38(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
39For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page 7. For the fund's limitations on short sales, see the
section entitled "Short Sales" on page 9.
40AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the fund may engage in
transactions with banks that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. Such
transactions may be entered into only pursuant to procedures established
and periodically reviewed by the Board of Trustees. These transactions may
include repurchase agreements with custodian banks; purchases, as
principal, of short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); transactions in municipal
securities; and transactions in U.S. government securities with affiliated
banks that are primary dealers in these securities.
41FUND'S RIGHTS AS A SHAREHOLDER. The fund does not intend to direct or
administer the day-to-day operations of any company. The fund, however,
may exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of the fund's investment in the company.
The activities that the fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
a company's direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or opposing third
party takeover efforts. This area of corporate activity is increasingly
prone to litigation and it is possible that the fund could be involved in
lawsuits related to such activities. FMR will monitor such activities with
a view to mitigating, to the extent possible, the risk of litigation
against the fund and the risk of actual liability if the fund is involved
in litigation. No guarantee can be made, however, that litigation against
the fund will not be undertaken or liabilities incurred.
42 CONVERTIBLE SECURITIES are bonds, debentures, notes, preferred
stocks or other securities that may be converted or exchanged by the holder
into shares of the underlying common stock at a stated exchange ratio. A
convertible security may also be subject to redemption by the issuer, but
only after a particular date and under certain circumstances (including a
specified price) established upon issue. If a convertible security held by
the fund is called for redemption, the fund could be required to tender it
for redemption, convert it into the underlying common stock, or sell it to
a third party.
43 Convertible securities generally provide yields higher than the
underlying common stocks (but generally lower than comparable
non-convertible securities). Because of this higher yield, convertible
securities generally sell at prices above their "conversion value," which
is the current market value of the stock to be received upon conversion.
The difference between this conversion value and the price of convertible
securities will vary over time depending on the value of the underlying
common stocks and interest rates. When the underlying common stocks
decline in value, convertible securities will tend not to decline to the
same extent because the yield acts as a price support. When the underlying
common stocks rise in value, the value of convertible securities may also
be expected to increase. At the same time, however, the difference between
the market value of convertible securities and their conversion value will
narrow, which means that the convertible securities will generally not
increase to the same extent as the underlying common stocks. Because
convertible securities are also interest-rate sensitive, their value will
tend to increase as interest rates fall and decrease as interest rates
rise.
44ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of
in the ordinary course of business at approximately the prices at which
they are valued. Under the supervision of the Board of Trustees, FMR
determines the liquidity of the fund's investments and, through reports
from FMR, the Board monitors investments in illiquid instruments. In
determining the liquidity of the fund's investments, FMR may consider
various factors, including (1) the frequency of trades and quotations, (2)
the number of dealers and prospective purchasers in the marketplace, (3)
dealer undertakings to make a market, (4) the nature of the security
(including any demand or tender features), and (5) the nature of the
marketplace for trades (including the ability to assign or offset the
fund's rights and obligations relating to the investment). Investments
currently considered by the fund to be illiquid include repurchase
agreements not entitling the holder to payment of principal and interest
within seven days, over-the-counter options, and non-government stripped
fixed-rate mortgage-backed securities. Also, FMR may determine some
restricted securities, government-stripped fixed-rate mortgage-backed
securities, loans and other direct debt instruments, and swap agreements to
be illiquid. However, with respect to over-the-counter options the fund
writes, all or a portion of the value of the underlying instrument may be
illiquid depending on the assets held to cover the option and the nature
and terms of any agreement the fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
priced at fair value as determined in good faith by a committee appointed
by the Board of Trustees. If through a change in values, net assets, or
other circumstances, the fund were in a position where more than 10% of its
net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
45RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
46LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower
to lenders or lending syndicates (loans and loan participations), to
suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to the fund's policies
regarding the quality of debt securities.
47Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of
principal and interest. Direct debt instruments may not be rated by any
nationally recognized rating service. If the fund does not receive
scheduled interest or principal payments on such indebtedness, the fund's
share price and yield could be adversely affected. Loans that are fully
secured offer the fund more protections than an unsecured loan in the event
of non-payment of scheduled interest or principal. However, there is no
assurance that the liquidation of collateral from a secured loan would
satisfy the borrower's obligation, or that the collateral can be
liquidated. Indebtedness of borrowers whose creditworthiness is poor
involves substantially greater risks, and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. Direct
indebtedness of developing countrie s also involves a risk that the
governmental entities responsible for the repayment of the debt may be
unable, or unwilling, to pay interest and repay principal when due.
48Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional risks
to the fund. For example, if a loan is foreclosed, the fund could become
part owner of any collateral, and would bear the costs and liabilities
associated with owning and disposing of the collateral. In addition, it is
conceivable that under emerging legal theories of lender liability, the
fund could be held liable as a co-lender. Direct debt instruments may also
involve a risk of insolvency of the lending bank or other intermediary.
Direct debt instruments that are not in the form of securities may offer
less legal protection to the fund in the event of fraud or
misrepresentation. In the absence of definitive regulatory guidance, the
fund relies on FMR's research in an attempt to avoid situations where fraud
or misrepresentation could adversely affect the fund.
49A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of the
loan, as specified in the loan agreement. Unless, under the terms of the
loan or other indebtedness, the fund has direct recourse against the
borrower, it may have to rely on the agent to apply appropriate credit
remedies against a borrower. If assets held by the agent for the benefit
of the fund were determined to be subject to the claims of the agent's
general creditors, the fund might incur certain costs and delays in
realizing payment on the loan or loan participation and could suffer a loss
of principal or interest.
50Direct indebtedness purchased by the fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These commitments
may have the effect of requiring the fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
company's condition makes it unlikely that the amount will ever be repaid.
The fund will set aside appropriate liquid assets in a segregated custodial
account to cover its potential obligations under standby financing
commitments.
51The fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see limitations 1 and 5).
For purposes of these limitations, the fund generally will treat the
borrower as the "issuer" of indebtedness held by the fund. In the case of
loan participations where a bank or other lending institution serves as
financial intermediary between the fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating a
financial intermediary as an issuer of indebtedness may restrict the fund's
ability to invest in indebtedness related to a single financial
intermediary, or a group of intermediaries engaged in the same industry,
even if the underlying borrowers represent many different companies and
industries.
52SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease the fund's exposure to long- or
short-term interest rates (in the U.S. or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such as
security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names. The fund is not
limited to any particular form of swap agreement if FMR determines it is
consistent with the fund's investment objective and policies.
53In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a fee
by the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
54Swap agreements will tend to shift the fund's investment exposure from
one type of investment to another. For example, if the fund agreed to
exchange payments in dollars for payments in foreign currency, the swap
agreement would tend to decrease the fund's exposure to U.S. interest rates
and increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of the fund's investments and its share price and yield.
55The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from the fund. If a swap
agreement calls for payments by the fund, the fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. The fund expects to be able to
eliminate its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
56The fund will maintain appropriate liquid assets in a segregated
custodial account to cover its current obligations under swap agreements.
If the fund enters into a swap agreement on a net basis, it will segregate
assets with a daily value at least equal to the excess, if any, of the
fund's accrued obligations under the swap agreement over the accrued amount
the fund is entitled to receive under the agreement. If the fund enters
into a swap agreement on other than a net basis, it will segregate assets
with a value equal to the full amount of the fund's accrued obligations
under the agreement.
57INDEXED SECURITIES. The fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed: that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
58The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more volatile
than the underlying instruments.
59REPURCHASE AGREEMENTS. In a repurchase agreement, the fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed-upon price, which obligation is
in effect secured by the value (at least equal to the amount of the
agreed-upon resale price and marked to market daily) of the underlying
security. The fund may engage in a repurchase agreement with respect to
any security in which it is authorized to invest. While it does not
presently appear possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of the
underlying securities, as well as delays and costs to the fund in
connection with bankruptcy proceedings), it is the fund's current policy to
limit repurchase agreement transactions to those parties whose
creditworthiness has been reviewed and found satisfactory by FMR.
60REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the
fund sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The fund will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the fund's
assets and may be viewed as a form of leverage.
61INTERFUND BORROWING PROGRAM. The fund has received permission from the
SEC to lend money to and borrow from other funds advised by FMR or its
affiliates. Interfund loans and borrowings normally will extend overnight,
but can have a maximum duration of seven days. Loans may be called on one
day's notice. The fund will lend through the program only when the returns
are higher than those available at the same time from other short-term
instruments (such as repurchase agreements), and will borrow through the
program only when the costs are equal to or lower than the cost of bank
loans. The fund may have to borrow from a bank at a higher interest rate
if an interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or additional
borrowing costs.
62SECURITIES LENDING. The fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and
a subsidiary of FMR Corp.
63Securities lending allows the fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may
be delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
64FMR understands that it is the current view of the SEC Staff that the
fund may engage in loan transactions only under the following conditions:
(1) the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to
terminate the loan at any time; (4) the fund must receive reasonable
interest on the loan or a flat fee from the borrower, as well as amounts
equivalent to any dividends, interest, or other distributions on the
securities loaned and to any increase in market value; (5) the fund may pay
only reasonable custodian fees in connection with the loan; and (6) the
Board of Trustees must be able to vote proxies on the securities loaned,
either by terminating the loan or by entering into an alternative
arrangement with the borrower.
65Cash received through loan transactions may be invested in any security
in which the fund is authorized to invest. Investing this cash subjects
that investment, as well as the security loaned, to market forces (i.e.,
capital appreciation or depreciation).
66FOREIGN INVESTMENTS. Foreign investments can involve significant risks
in addition to the risks inherent in U.S. investments. The value of
securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and
disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an
issuer's financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions, and
custodial costs, are generally higher than for U.S. investments.
67Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It may also be
difficult to enforce legal rights in foreign countries.
68Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention.
There may be a greater possibility of default by foreign governments or
foreign government-sponsored enterprises. Investments in foreign countries
also involve a risk of local political, economic or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.
69The considerations noted above generally are intensified for investments
in developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
70The fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject
to transfer restrictions may be marketable abroad, they may be less liquid
than foreign securities of the same class that are not subject to such
restrictions.
71American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs) are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.
72FOREIGN CURRENCY TRANSACTIONS. The fund may hold foreign currency
deposits from time to time, and may convert dollars and foreign currencies
in the foreign exchange markets. Currency conversion involves dealer
spreads and other costs, although commissions usually are not charged.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering
into forward contracts to purchase or sell foreign currencies at a future
date and price. Forward contracts generally are traded in an interbank
market conducted directly between currency traders (usually large
commercial banks) and their customers. The parties to a forward contract
may agree to offset or terminate the contract before its maturity, or may
hold the contract to maturity and complete the contemplated currency
exchange.
73The fund may use currency forward contracts to manage currency risks and
to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the fund.
74In connection with purchases and sales of securities denominated in
foreign currencies, the fund may enter into currency forward contracts to
fix a definite price for the purchase or sale in advance of the trade's
settlement date. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge." FMR expects to enter into settlement hedges
in the normal course of managing the fund's foreign investments. The fund
could also enter into forward contracts to purchase or sell a foreign
currency in anticipation of future purchases or sales of securities
denominated in foreign currency, even if the specific investments have not
yet been selected by FMR.
75The fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For
example, if the fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return for
U.S. dollars to hedge against possible declines in the pound's value. Such
a hedge, sometimes referred to as a "position hedge," would tend to offset
both positive and negative currency fluctuations, but would not offset
changes in security values caused by other factors. The fund could also
hedge the position by selling another currency expected to perform
similarly to the pound sterling - for example, by entering into a forward
contract to sell Deutschemarks or European Currency Units in return for
U.S. dollars. This type of hedge, sometimes referred to as a "proxy
hedge," could offer advantages in terms of cost, yield, or efficiency, but
generally would not hedge currency exposure as effectively as a simple
hedge into U.S. dollars. Proxy hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.
76Under certain conditions, SEC guidelines require mutual funds to set
aside appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
77Successful use of forward currency contracts will depend on FMR's skill
in analyzing and predicting currency values. Forward contracts may
substantially change the fund's investment exposure to changes in currency
exchange rates, and could result in losses to the fund if currencies do not
perform as FMR anticipates. For example, if a currency's value rose at a
time when FMR had hedged the fund by selling that currency in exchange for
dollars, the fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, the
fund could realize currency losses from the hedge and the security position
at the same time if the two currencies do not move in tandem. Similarly,
if FMR increases the fund's exposure to a foreign currency, and that
currency's value declines, the fund will realize a loss. There is no
assurance that FMR's use of forward currency contracts will be advantageous
to the fund or that it will hedge at an appropriate time. The policies
described in this section are non-fundamental policies of the fund.
78LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The fund intends to comply with Section 4.5 of the
regulations under the Commodity Exchange Act, which limits the extent to
which the fund can commit assets to initial margin deposits and option
premiums.
79In addition, the fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
80The above limitations on the fund's investments in futures contracts and
options, and the fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information may be
changed as regulatory agencies permit.
81FUTURES CONTRACTS. When the fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date.
When the fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's 500 Composite Stock
Price Index (S&P 500). Futures can be held until their delivery dates,
or can be closed out before then if a liquid secondary market is available.
82The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the fund sells a
futures contract, by contrast, the value of its futures position will tend
to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
83FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the fund, the fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
84 PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
85 The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of purchasing
the option, a put buyer can expect to suffer a loss (limited to the amount
of the premium paid, plus related transaction costs).
86 The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
87 WRITING PUT AND CALL OPTIONS. When the fund writes a put option, it
takes the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract, the fund will be required to make margin payments to an FCM as
described above for futures contracts. The fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
88 If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
89 Writing a call option obligates the fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
90 COMBINED POSITIONS. The fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the fund may purchase a put option and write a call
option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a
futures contract. Another possible combined position would involve writing
a call option at one strike price and buying a call option at a lower
price, in order to reduce the risk of the written call option in the event
of a substantial price increase. Because combined options positions
involve multiple trades, they result in higher transaction costs and may be
more difficult to open and close out.
91 CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely that
the standardized contracts available will not match the fund's current or
anticipated investments exactly. The fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests,
which involves a risk that the options or futures position will not track
the performance of the fund's other investments.
92 Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
93 LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the fund's access to other assets held to cover its options or
futures positions could also be impaired.
94 OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract size,
and strike price, the terms of over-the-counter options (options not traded
on exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
95 OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
96 The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed above.
The fund may purchase and sell currency futures and may purchase and write
currency options to increase or decrease its exposure to different foreign
currencies. The fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
the fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect
the fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of the fund's
foreign-denominated investments changes in response to many factors other
than exchange rates, it may not be possible to match the amount of currency
options and futures to the value of the fund's investments exactly over
time.
97ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The fund will comply
with guidelines established by the SEC with respect to coverage of
options and futures strategies by mutual funds, and if the guidelines so
require will set aside appropriate liquid assets in a segregated custodial
account in the amount prescribed. Securities held in a segregated account
cannot be sold while the futures or option strategy is outstanding, unless
they are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the fund's assets
could impede fund management or the fund's ability to meet redemption
requests or other current obligations.
98SHORT SALES. The fund may enter into short sales with respect to stocks
underlying its convertible security holdings. For example, if FMR
anticipates a decline in the price of the stock underlying a convertible
security the fund holds, it may sell the stock short. If the stock price
subsequently declines, the proceeds of the short sale could be expected to
offset all or a portion of the effect of the stock's decline on the value
of the convertible security. The fund currently intends to hedge no more
than 15% of its total assets with short sales on equity securities
underlying its convertible security holdings under normal circumstances.
99When the fund enters into a short sale, it will be required to set aside
securities equivalent in kind and amount to those sold short (or securities
convertible or exchangeable into such securities) and will be required to
continue to hold them aside while the short sale is outstanding. The fund
will incur transaction costs, including interest expense, in connection
with opening, maintaining, and closing short sales.
100PORTFOLIO TRANSACTIONS
101All orders for the purchase or sale of portfolio securities are placed
on behalf of the fund by FMR pursuant to authority contained in the
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. In selecting broker-dealers,
subject to applicable limitations of the federal securities laws, FMR will
consider various relevant factors, including, but not limited to, the size
and type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions; and arrangements for payment of fund
expenses. Commissions for foreign investments traded on foreign
exchanges will generally be higher than for U.S. investments and may not be
subject to negotiation.
102The fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers is
generally made by FMR (to the extent possible consistent with execution
considerations) in accordance with a ranking of broker-dealers determined
periodically by FMR's investment staff based upon the quality of research
and execution services provided.
103The receipt of research from broker-dealers that execute transactions on
behalf of the fund may be useful to FMR in rendering investment management
services to the fund or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
104Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the fund and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
105FMR is authorized to use research services provided by and place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund or shares of other Fidelity
funds, to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI), and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of
FMR Corp., if the commissions are fair, reasonable, and comparable to
commission charged by non-affiliated, qualified brokerage firms for similar
services.
106 FMR may allocate brokerage transactions to broker-dealers who have
entered into arrangements with FMR under which the broker-dealer allocates
a portion of the commissions paid by the fund toward payment of the fund's
expenses, such as transfer agent fees of FSC or custodian fees. The
transaction quality must, however, be comparable to those of other
qualified broker-dealers.
107Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the Securities and Exchange Commission. Pursuant to such
regulations, the Board of Trustees has approved a written agreement that
permits FBSI to effect portfolio transactions on national securities
exchanges and to retain compensation in connection with such transactions.
108The Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the fund and review the commissions paid by the fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund.
109For the fiscal years ended November 30, 1993 and 1992, the fund's
portfolio turnover rates were 312 % and 258%, respectively.
110For fiscal 1993, 1992, and 1991, the fund paid brokerage commissions of
$ 1,938,000 , $625,0 00 , and $172, 000 , respectively.
During fiscal 1993, approximately $ 1,517,000 or 78.3 % of
these commissions were paid to brokerage firms that provided research
services, although the provision of such services was not necessarily a
factor in the placement of all of this business with such firms. The fund
pays both commissions and spreads in connection with the placement of
portfolio transactions; FBSI is paid on a commission basis. During fiscal
1993, 1992, and 1991, the fund paid brokerage commissions of
$ 374,000 , $105, 000 , and $5 2,000 , respectively, to
FBSI. During fiscal 1993, this amounted to approximately 19.3 % of
the aggregate brokerage commissions paid by the fund for transactions
involving approximately 18.7 % of the aggregate dollar amount of
transactions in which the fund paid brokerage commissions. The difference
in the percentage of brokerage commissions paid to and the percentage of
the dollar amount of transactions effected through FBSI is a result of the
low commission rates charged by FBSI.
111From time to time the Trustees will review whether the recapture for the
benefit of the fund of some portion of the brokerage commissions or similar
fees paid by the fund on portfolio transactions is legally permissible and
advisable. The fund seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture
arrangements are in effect. The Trustees intend to continue to review
whether recapture opportunities are available and are legally permissible
and, if so, to determine in the exercise of their business judgment,
whether it would be advisable for the fund to seek such recapture.
112Although the Trustees and officers of the fund are substantially the
same as those of other funds managed by FMR, investment decisions for the
fund are made independently from those of other funds managed by FMR or
accounts managed by FMR affiliates. It sometimes happens that the same
security is held in the portfolio of more than one of these funds or
accounts. Simultaneous transactions are inevitable when several funds are
managed by the same investment adviser, particularly when the same security
is suitable for the investment objective of more than one fund.
113When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with a formula considered by the officers of the funds involved
to be equitable to each fund. In some cases this system could have a
detrimental effect on the price or value of the security as far as the fund
is concerned. In other cases, however, the ability of the fund to
participate in volume transactions will produce better executions and
prices for the fund. It is the current opinion of the Trustees that the
desirability of retaining FMR as investment adviser to the fund outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
114VALUATION OF PORTFOLIO SECURITIES
115Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Equity securities for
which the primary market is the U.S. are valued at last sale price or, if
no sale has occurred, at the closing bid price. Equity securities for
which the primary market is outside the U.S. are valued using the official
closing price or the last sale price in the principal market where they are
traded. If the last sale price (on the local exchange) is unavailable, the
last evaluated quote or last bid price is normally used. Short-term
securities are valued either at amortized cost or at original cost plus
accrued interest, both of which approximate current value. Fixed-income
securities are valued primarily by a pricing service that uses a vendor
security valuation matrix which incorporates both dealer-supplied
valuations and electronic data processing techniques. This twofold
approach is believed to more accurately reflect fair value because it takes
into account appropriate factors such as institutional trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics, and other market data, without exclusive reliance
upon quoted, exchange, or over-the counter prices. Use of pricing services
has been approved by the Board of Trustees.
116Securities and other assets for which there is no readily available
market are valued in good faith by a committee appointed by the Board of
Trustees. The procedures set forth above need not be used to determine the
value of the securities owned by the fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
117Generally, the valuation of foreign and domestic equity securities, as
well as corporate bonds, U.S. government securities, money market
instruments, and repurchase agreements, is substantially completed each day
at the close of the NYSE. The values of any such securities held by the
fund are determined as of such time for the purpose of computing the fund's
net asset value. Foreign security prices are furnished by independent
brokers or quotation services which express the value of securities in
their local currency. FSC gathers all exchange rates daily at the close of
the NYSE using the last quoted price on the local currency and then
translates the value of foreign securities from their local currency into
U.S. dollars. Any changes in the value of forward contracts due to
exchange rate fluctuations and days to maturity are included in the
calculation of net asset value. If an extraordinary event that is expected
to materially affect the value of a portfolio security occurs after the
close of an exchange on which that security is traded, then the security
will be valued as determined in good faith by a committee appointed by the
Board of Trustees.
118PERFORMANCE
119The fund may quote its performance in various ways. All performance
information supplied by the fund in advertising is historical and is not
intended to indicate future returns. The fund's share price, yield, and
total returns fluctuate in response to market conditions and other factors,
and the value of fund shares when redeemed may be more or less than their
original cost.
120YIELD CALCULATIONS. Yields for the fund used in advertising are
computed by dividing the fund's interest and dividend income for a given
30-day or one-month period, net of expenses, by the average number of
shares entitled to receive distributions during the period, dividing this
figure by the fund's net asset value per share (NAV) at the end of the
period, and annualizing the result (assuming compounding of income) in
order to arrive at an annual percentage rate. Income is calculated for
purposes of yield quotations in accordance with standardized methods
applicable to all stock and bond funds. Dividends from equity investments
are treated as if they were accrued on a daily basis, solely for the
purposes of yield calculations. In general, interest income is reduced
with respect to bonds trading at a premium over their par value by
subtracting a portion of the premium from income on a daily basis, and is
increased with respect to bonds trading at a discount by adding a portion
of the discount to daily income. Capital gains and losses generally are
excluded from the calculation.
121Income calculated for the purpose of determining the fund's yield
differs from income as determined for other accounting purposes. Because
of the different accounting methods used, and because of the compounding
assumed in yield calculations, the fund's yield may not equal its
distribution rate, the income paid to your account, or the rate of income
reported in the fund's financial statements.
122In calculating the fund's yield, the fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in order
to reflect the risk premium on that security. This practice will have the
effect of reducing the fund's yield.
123TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of the fund's returns, including the effect of reinvesting
dividends and capital gain distributions, and any change in the fund's NAV
over the period. Average annual returns are calculated by determining the
growth or decline in value of a hypothetical historical investment in the
fund over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of
growth or decline in value had been constant over the period. For example,
a cumulative return of 100% over ten years would produce an average annual
return of 7.18%, which is the steady annual rate of return that would equal
100% growth on a compounded basis in ten years. While average annual
returns are a convenient means of comparing investment alternatives,
investors should realize that the fund's performance is not constant over
time, but changes from year to year, and that average annual returns
represent averaged figures as opposed to the actual year-to-year
performance of the fund.
124In addition to average annual returns, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is on page 12. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
125NET ASSET VALUE. Charts and graphs using the fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
126MOVING AVERAGES. The fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's
adjusted closing NAV for a specified period. A short-term moving average
is the average of each day's adjusted closing NAV for a specified period.
Moving Average Activity Indicators combine adjusted closing NAVs from the
last business day of each week with moving averages for a specified period
to produce indicators showing when an NAV has crossed, stayed above, or
stayed below its moving average. On November 26 , 1993, the 13-week
and 39-week long-term moving averages were 17.55 and 16.82 ,
respectively.
127HISTORICAL FUND RESULTS. The table on page 12 shows the income
and capital elements of the fund's total return for the period January 5,
1987 (commencement of operations) through November 30, 1993. The table
compares the fund's return to the record of the Standard & Poor's 500
Composite Stock Price Index (S&P 500), the Dow Jones Industrial Average
(DJIA), and the cost of living (measured by the Consumer Price Index, or
CPI) over the same period. The S&P 500 and the DJIA comparisons are
provided to show how the fund's total return compared to the record of a
broad average of common stock prices and a narrower set of stocks of major
industrial companies, respectively, over the same period. The fund has the
ability to invest in securities not included in these indices, and its
investment portfolio may or may not be similar in composition to the
indices. Figures for the indices are based on the prices of unmanaged
groups of stocks and, unlike the fund's return, their returns do not
include the effect of paying brokerage commissions and other costs of
investing.
128During the period from January 5, 1987 through November 30, 1993, a
hypothetical $10,000 investment in Fidelity Convertible Securities Fund
would have grown to $ 26,704 , assuming all distributions were
reinvested. This was a period of widely fluctuating stock prices and
interest rates and should not be considered representative of the dividend
income or capital gain or loss that could be realized from an investment in
the fund today.
129FIDELITY CONVERTIBLE SECURITIES FUND INDICES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
158 159Value of 160Value of 161Value of 162 163 164 165

166 Period 167Initial 168Reinveste 169Reinveste 170 171 172 173 Cost
d d

174 Ended 175$10,000 176Dividend 177Capital 178To 179 180 181 of
Gain tal S&
;P

182November 30 183Investment 184Distributio 185Distributio 186Va 187 188 189
ns ns lue 500 DJIA Living**

</TABLE>

1901987* 191$ 9,050 192$ 203 193$ 0 194$ 195$ 196$ 197$10,4

9,253 9,609 9,775 43

1981988 199 10,010 200 880 201 0 202 203 204 205

10,890 11,850 11,685 10,887

2061989 207 11,810 208 1,942 209 0 210 211 212 213

13,752 15,506 15,519 11,394

2141990 215 10,530 216 2,587 217 0 218 219 220 221

13,117 14,965 15,259 12,109

2221991 223 13,450 224 4,195 225 0 226 227 228 229

17,645 18,012 17,848 12,471

2301992 231 15,770 232 5,901 233594 234 235 236 237

22,265 21,344 20,98 8 12,851

2381993 239 17,630 240 7,761 241 1,313 242 243 244 245

26,704 23,500 24,081 13,195

</TABLE>

130 * From commencement of operations, January 5, 1987.
131 ** From month-end closest to initial investment date.
132Explanatory Notes: With an initial investment of $10,000 made on
January 5, 1987, the net amount invested in fund shares was $10,000. The
cost of the initial investment ($10,000), together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted to
$16,366. If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $4,320 for income
dividends and $770 for capital gain distributions. Tax consequences of
different investments have not been factored into the above figures.
133 The fund's performance may be compared to the performance of other
mutual funds in general, or to the performance of particular types of
mutual funds. These comparisons may be expressed as mutual fund rankings
prepared by Lipper Analytical Services, Inc. (Lipper), an independent
service located in Summit, New Jersey that monitors the performance of
mutual funds. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to
the mutual fund rankings, the fund's performance may be compared to mutual
fund performance indices prepared by Lipper.
134 From time to time, the fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
135 Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial strategies.
For example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and
services.
136 Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
137 Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to
those of the funds. Ibbotson calculates total returns in the same method
as the funds. The funds may also compare performance to that of other
compilations or indices that may be developed and made available in the
future.
138 In advertising materials, Fidelity may reference or discuss its
products and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
139 The fund may present its fund number, Quotron(registered trademark)
number, and CUSIP number, and discuss or quote its current portfolio
manager.
140 VOLATILITY. The fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may compare
these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns to
those of a benchmark. Measures of benchmark correlation indicate how valid
a comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data.
141 MOMENTUM INDICATORS indicate the fund's price movements over specific
periods of time. Each point on the momentum indicator represents the
fund's percentage change in price movements over that period.
142 The fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares are purchased at the
same intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
143 The fund may be available for purchase through retirement plans or
other programs offering deferral of, or exemption from, income taxes, which
may produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
144As of November 30, 1993, FMR managed approximately $ 125 billion
in equity fund assets as defined and tracked by Lipper. This figure
represents the largest amount of equity fund assets under management by a
mutual fund investment adviser in the United States, making FMR America's
leading equity (stock) fund manager. From time to time, the fund may use
any of the above information in its advertising and sales literature.
145ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
146The fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day (observed) , Labor Day, Thanksgiving Day, and
Christmas Day (observed). Although FMR expects the same holiday
schedule , with the addition of New Year's Day, to be observed in the
future, the NYSE may modify its holiday schedule at any time.
147FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the fund's NAV may be affected on days when investors
do not have access to the fund to purchase or redeem shares.
148If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
149Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the
1940 Act), the fund is required to give shareholders at least 60 days'
notice prior to terminating or modifying its exchange privilege. Under the
Rule, the 60-day notification requirement may be waived if (i) the only
effect of a modification would be to reduce or eliminate an administrative
fee, redemption fee, or deferred sales charge ordinarily payable at the
time of an exchange, or (ii) the fund suspends the redemption of the shares
to be exchanged as permitted under the 1940 Act or the rules and
regulations thereunder, or the fund to be acquired suspends the sale of its
shares because it is unable to invest amounts effectively in accordance
with its investment objective and policies.
150In the Prospectus, the fund has notified shareholders that it reserves
the right at any time, without prior notice, to refuse exchange purchases
by any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
151DISTRIBUTIONS AND TAXES
152DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, Fidelity may reinvest your distributions at
the then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
153DIVIDENDS. A portion of the fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that the fund's income is derived from qualifying dividends.
Because the fund may earn other types of income, such as interest income
from securities loans, non-qualifying dividends, and short-term capital
gains, the percentage of dividends from the fund that qualifies for the
deduction generally will be less than 100%. The fund will notify corporate
shareholders annually of the percentage of fund dividends that qualifies
for the dividends-received deduction. A portion of the fund's dividends
derived from certain U.S. government obligations may be exempt from state
and local taxation. Gains (losses) attributable to foreign currency
fluctuations are generally taxable as ordinary income and therefore will
increase (decrease) dividend distributions. The fund will send each
shareholder a notice in January describing the tax status of dividends and
capital gains distributions for the prior year.
154CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the fund
on the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains regardless of the length of time
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of the fund and such shares are held
six months or less and are sold at a loss, the portion of the loss equal to
the amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
155Short-term capital gains distributed by the fund are taxable to
shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction.
156FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Because the fund does
not currently anticipate that securities of foreign issuers will constitute
more than 50% of its total assets at the end of its fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction
on their federal income tax returns with respect to foreign taxes withheld.
157TAX STATUS OF THE FUND. The fund has qualified and intends to continue
to qualify each year as a "regulated investment company" for tax purposes
so that it will not be liable for federal tax on income and capital gains
distributed to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at the
fund level, the fund intends to distribute substantially all of its net
investment income and net realized capital gains within each calendar year
as well as on a fiscal year basis. The fund intends to comply with other
tax rules applicable to regulated investment companies, including a
requirement that capital gains from the sale of securities held less than
three months constitute less than 30% of the fund's gross income for each
fiscal year. Gains from some forward currency contracts, futures
contracts, and options are included in this 30% calculation, which may
limit the fund's investments in such instruments. The fund is treated as a
separate entity from other funds of Fidelity Financial Trust for tax
purposes.
158If the fund purchases shares in certain foreign investment entities,
defined as passive foreign investment companies (PFICs) in the Internal
Revenue Code, it may be subject to U.S. federal income tax on a portion of
any excess distribution or gain from the disposition of such shares.
Interest charges may also be imposed on the fund with respect to deferred
taxes arising from such distributions or gains.
159The fund is treated as a separate entity from other funds of Fidelity
Financial Trust for tax purposes.
160OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting the fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on distributions received from the fund. Investors should
consult their tax advisers to determine whether the fund is suitable to
their particular tax situation.
161FMR
162FMR is a wholly owned subsidiary of FMR Corp., a parent company
organized in 1972. At present, the principal operating activities of FMR
Corp. are those conducted by three of its divisions as follows: FSC, which
is the transfer and shareholder servicing agent for certain of the funds
advised by FMR; Fidelity Investments Institutional Operations Company,
which performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
163Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research, and may
supply portfolio management services, to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FMR Texas Inc., a wholly owned subsidiary of FMR formed in 1989, supplies
portfolio management and research services in connection with certain money
market funds advised by FMR.
164TRUSTEES AND OFFICERS
165The Trustees and executive officers of the trust are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. All persons named as
Trustees also serve in similar capacities for other funds advised by FMR.
Unless otherwise noted, the business address of each Trustee and officer is
82 Devonshire Street, Boston, Massachusetts 02109, which is also the
address of FMR. Those Trustees who are "interested persons" (as defined in
the Investment Company Act of 1940) by virtue of their affiliation with
either the trust or FMR are indicated by an asterisk (*).
166*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief
Executive Officer 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
FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
167*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc. and Fidelity Management &
Research (Far East) Inc.
168RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
169PHYLLIS BURKE DAVIS, 340 E. 64th Street #22C, New York, NY, Trustee
(1992). Prior to her retirement in September 1991, Mrs. Davis was the
Senior Vice President of Corporate Affairs of Avon Products, Inc. She is
currently a Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores, 1990), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she serves as a Director
of the New York City Chapter of the National Multiple Sclerosis Society,
and is a member of the Advisory Council of the International Executive
Service Corps. and the President's Advisory Council of The University of
Vermont School of Business Administration (1988).
170RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
171E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls , OH, Trustee
(1990). Prior to his retirement in 1984, Mr. Jones was Chairman and Chief
Executive Officer of LTV Steel Company. Prior to May 1990, he was Director
of National City Corporation (a bank holding company) and National City
Bank of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he
serves as a Trustee of First Union Real Estate Investments; Chairman of the
Board of Trustees and a member of the Executive Committee of the Cleveland
Clinic Foundation, a Trustee and a member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic Florida.
172DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), the National Arts Stabilization Fund, Greenwich
Hospital Association (1989), and Valuation Research Corp. (appraisals and
valuations, 1993).
173*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior
to his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction, 1988). In addition, he serves as a Trustee
of Boston College, Massachusetts Eye & Ear Infirmary, Historic
Deerfield (1989) and Society for the Preservation of New England
Antiquities, and as an Overseer of the Museum of Fine Arts of Boston
(1990).
174GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989),
is Chairman of G.M. Management Group (strategic advisory services). Prior
to his retirement in July 1988, he was Chairman and Chief Executive Officer
of Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989) , Commercial Intertech Corp. (water treatment equipment,
1992), and Associated Estates Realty Corporation (a real estate
investment trust, 1993).
175EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee
(1988). Prior to his retirement in 1985, Mr. Malone was Chairman, General
Electric Investment Corporation and a Vice President of General Electric
Company. He is a Director of Allegheny Power Systems, Inc. (electric
utility), General Re Corporation (reinsurance) and Mattel Inc. (toy
manufacturer). He is also a Trustee of Rensselaer Polytechnic Institute
and of Corporate Property Investors and a member of the Advisory Boards of
Butler Capital Corporation Funds and Warburg, Pincus Partnership Funds.
176
177MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
178THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee (1988), is President of The Wales Group, Inc. (management and
financial advisory services). Prior to retiring in 1987, Mr. Williams
served as Chairman of the Board of First Wachovia Corporation (bank holding
company), and Chairman and Chief Executive Officer of The First National
Bank of Atlanta and First Atlanta Corporation (bank holding company). He
is currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software, 1988), Georgia Power Company (electric utility), Gerber
Alley & Associates, Inc. (computer software), National Life Insurance
Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
179GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
180ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President-Legal of FMR Corp., and Vice President
and Clerk of FDC.
181ROBERT H. MORRISON, Manager, Security Transactions, is an employee of
FMR.
182Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
183 As of November 30, 1993, Charles Schwab & Co., Inc./Mutual Fund
Department, San Francisco, CA and Julius Baer Securities, Inc., New York,
NY were known by the fund to own of record or beneficially approximately
9.5% and 5.57%, respectively, of the fund's outstanding shares. Also as of
that date, the Trustees and officers of the fund owned ,
in the aggregate , less than 1% of the outstanding shares of the
fund.
184MANAGEMENT CONTRACT
185The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or FMR
performing services relating to research, statistical, and investment
activities.
186In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of the fund. These services include providing
facilities for maintaining the fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
187In addition to the management fee payable to FMR and the fees payable to
FSC, the fund pays all of its expenses, without limitation, that are not
assumed by those parties. The fund pays for typesetting, printing, and
mailing proxy material to shareholders, legal expenses, and the fees of the
custodian, auditor, and non-interested Trustees. Although the fund's
management contract provides that the fund will pay for typesetting,
printing, and mailing prospectuses, statements of additional information,
notices, and reports to existing shareholders, the trust has entered into a
revised transfer agent agreement with FSC, pursuant to which FSC bears the
cost of providing these services to existing shareholders. Other expenses
paid by the fund include interest, taxes, brokerage commissions, the fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. The fund is also liable for such nonrecurring expenses as
may arise, including costs of any litigation to which the fund may be a
party, and any obligation it may have to indemnify the trust's officers and
Trustees with respect to litigation.
188FMR is the fund's manager pursuant to a management contract dated
December 1, 1993, which was approved by shareholders on November 17, 1993.
For the services of FMR under the contract, the fund pays FMR a monthly
management fee composed of the sum of two elements: a basic fee and a
performance adjustment based on a comparison of the fund's performance to
that of the Merrill Lynch Convertible Securities Index (the Index).
189COMPUTING THE BASIC FEE. The fund's basic fee rate is composed of two
elements: a group fee rate and individual fund fee rate.
190The group fee rate is based on the monthly average net assets of all of
the registered investment companies with which FMR has management contracts
and is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown below on the left. On the right, the effective fee
rate schedule shows the results of cumulatively applying the annualized
rates at varying asset levels. For example, the effective annual fee rate
at $ 227 billion of group net assets - their approximate level
for November 1993 - was . 3250 %, which is the weighted average
of the respective fee rates for each level of group net assets up to
$ 227 billion.
307GROUP FEE RATE SCHEDULE* 308EFFECTIVE ANNUAL FEE
RATES

309 310AVERAGE 311 312GROUP 313EFFECTIV
E

314 315GROUP 316ANNUALIZED 317NET 318 ANNUAL

319 320ASSETS 321 RATE 322ASSETS 323FEE
RATE

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
324 325 326- 327$ 3 billion 328.520% 329$ 0.5 billion 330.5200%
0

331 332 333- 334 6 335.490 336 25 337.4238
3

338 339 340- 341 9 342.460 343 50 344.3823
6

345 346 347- 348 12 349.430 350 75 351.3626
9

352 353 354- 355 15 356.400 357100 358.3512
12

359 360 361- 362 18 363.385 364125 365.3430
15

366 367 368- 369 21 370.370 371150 372.3371
18

373 374 375- 376 24 377.360 378175 379.3325
21

380 381 382- 383 30 384.350 385200 386.3284
24

387 388 389- 390 36 391.345 392225 393.3253
30

394 395 396- 397 42 398.340 399250 400.3223
36

401 402 403- 404 48 405.335 406275 407.3198
42

408 409 410- 411 66 412.325 413300 414.3175
48

415 416 417- 418 84 419.320 420325 421.3153
66

422 423 424- 425102 426.315 427350 428.3133
84

429 4301 431- 432138 433.310 434 435
02

436 4371 438- 439228 440.300 441 442
74

443 4442 445- 446282 447.295 448 449
28

450 4512 452- 453336 454.290 455 456
82

457 458O 4593 460 461.285 462 463
ver 36

</TABLE>

468 . 3250 % 469+ 470.20% 471= 472
. 5250 %

192One twelfth (1/12) of this annual basic fee rate is then applied to the
fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
193COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee is subject to
upward or downward adjustment, depending upon whether, and to what extent,
the fund's investment performance for the performance period exceeds, or is
exceeded by, the record of the Merrill Lynch Convertible Securities Index
(the Index) over the same period. The fund's performance period commenced
on December 1, 1993. Starting with the twelfth month, the performance
adjustment will take effect. Each month subsequent to the twelfth month, a
new month will be added to the performance period until the performance
period equals 36 months. Thereafter, the performance period will consist
of the most recent month plus the previous 35 months. Each percentage
point of different (up to a maximum difference of + or -7.5%) is multiplied
by a performance adjustment rate of .02%. Thus, the maximum annualized
adjustment rate is + or -.15%. This performance comparison is made at the
end of each month. One twelfth (1/12) of this rate is then applied to the
fund's average net assets for the entire performance period, giving a
dollar amount which will be added to (or subtracted from) the basic fee.
194The fund's performance is calculated based on change in net asset value.
For purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the fund are treated as if reinvested in
fund shares at the net asset value as of the record date for payment. The
record of the Index is based on change in value and is adjusted for any
cash distributions from the companies whose securities compose the Index.
195Because the adjustment to the basic fee is based on the fund's
performance compared to the investment record of the Index, the controlling
factor is not whether the fund's performance is up or down per se, but
whether it is up or down more or less than the record of the Index.
Moreover, the comparative investment performance of the fund is based
solely on the relevant performance period without regard to the cumulative
performance over a longer or shorter period of time.
196During the fiscal years ended November 30, 1993, 1992, and 1991, FMR
received $4,131,000 , $1,3 60,000 , and $469,0 00 ,
respectively, for its services as investment adviser to the fund. These
fees were equivalent to .53 %, .54%, and .54%, respectively, of the
average net assets of the fund for each of these years.
197To comply with the California Code of Regulations, FMR will reimburse
the fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating the fund's expenses for purposes of this regulation, the
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
198SUB-ADVISERS. On December 1, 1993, FMR entered into
sub-advisory agreements with FMR U.K., and FMR Far East, wholly owned
subsidiaries of FMR. Pursuant to the sub-advisory agreements, FMR may
receive investment advice and research services with respect to companies
based outside the U.S. from the sub-advisers and may grant the sub-advisers
investment management authority as well as the authority to buy and sell
securities if FMR believes it would be beneficial to the fund.
199The sub-advisory agreements provide that FMR will pay fees to FMR U.K.
and FMR Far East equal to 110% and 105%, respectively, of FMR U.K.'s and
FMR Far East's costs incurred in connection with providing investment
advice and research services. FMR also will pay fees equal to 50% of its
monthly management fee (including performance adjustment) with respect to
the fund's average net assets managed by the sub-advisers on a
discretionary basis.
200Prior to December 1, 1993, FMR had sub-advisory agreements with FMR U.K.
and FMR Far East on behalf of the fund, pursuant to which each sub-adviser
provided FMR with investment advice and research services. Under those
agreements, FMR U.K. and FMR Far East were compensated for their services
according to the same formulas as they are compensated currently for
providing investment advice and research services.
201The fees paid by FMR to FMR U.K. and FMR Far East for fiscal
1993, 1992, and 1991 are shown in the following tables.

<TABLE>
<CAPTION>
<S> <C> <C>
FISCAL YEAR FEES PAID TO FMR U.K. FEES PAID TO FMR FAR EAST

1993 $4,347 $6,578

1992 1,515 1,450

1991 5 5

</TABLE>

202DISTRIBUTION AND SERVICE PLAN
203The fund has adopted a distribution and service plan (the plan) under
Rule 12b-1 of the Investment Company Act of 1940 (the Rule). The Rule
provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is primarily intended to result
in the sale of shares of the fund except pursuant to a plan adopted by the
fund under the Rule. The fund's Board of Trustees has adopted the plan to
allow the fund and FMR to incur certain expenses that might be considered
to constitute indirect payment by the fund of distribution expenses. Under
the plan, if the payment by the fund to FMR of management fees should be
deemed to be indirect financing by the fund of the distribution of its
shares, such payment is authorized by the plan.
204The plan specifically recognizes that FMR, either directly or through
FDC, may use its management fee revenues, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the fund. In addition, the
plan provides that FMR may use its resources, including its management fee
revenues, to make payments to third parties that provide assistance in
selling shares of the fund, or to third parties, including banks, that
render shareholder support services. For the fiscal year ended November
30, 1993, payments to third parties amounted to $ 40,000 .
205As required by the Rule, the Trustees carefully considered all pertinent
factors relating to the implementation of the plan prior to its approval,
and have determined that there is a reasonable likelihood that the plan
will benefit the fund and its shareholders. In particular, the Trustees
noted that the plan does not authorize payments by the fund other than
those made to FMR under its management contract with the fund. To the
extent that the plan gives FMR and FDC greater flexibility in connection
with the distribution of shares of the fund, additional sales of the fund's
shares may result. Additionally, certain shareholder support services may
be provided more effectively under the plan by local entities with whom
shareholders have other relationships. The plan was approved by the fund's
shareholders on August 25, 1987.
206The Glass-Steagall Act generally prohibits federally and state chartered
or supervised banks from engaging in the business of underwriting, selling,
or distributing securities. Although the scope of this prohibition under
the Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the fund
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of these occurrences. The fund may execute portfolio transactions
with and purchase securities issued by depository institutions that receive
payments under the plan. No preference will be shown in the selection of
investments for the instruments of such depository institutions. In
addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein, and banks and other
financial institutions may be required to register as dealers pursuant to
state law.
207CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
208FSC is transfer, dividend disbursing, and shareholders' servicing agent
for the fund. Under the trust's contract with FSC, the fund pays an annual
fee of $25.50 per basic retail account with a balance of $5,000 or more,
$15.00 per basic retail account with a balance of less than $5,000, and a
supplemental activity charge of $5.61 for monetary transactions. These
fees and charges are subject to annual cost escalation based on postal rate
changes and changes in wage and price levels as measured by the National
Consumer Price Index for Urban Areas. With respect to institutional client
master accounts, the fund pays FSC a per-account fee of $95 and monetary
transaction charges of $20 or $17.50, depending on the nature of services
provided. With respect to certain broker-dealer master accounts, the fund
pays FSC a per-account fee of $30, and a charge of $6 for monetary
transactions. Fees for certain institutional retirement plan accounts are
based on the net assets of all such accounts in the fund.
209Under the contract, FSC pays out-of-pocket expenses associated with
providing transfer agent services. In addition, FSC bears the expense of
typesetting, printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
shareholders, with the exception of proxy statements. Transfer agent fees,
including reimbursement for out-of-pocket expenses, paid to FSC for the
fiscal years ended November 30, 1993, 1992, and 1991, were
$ 2,171,000 , $68 5,000 , and $258, 000 , respectively.
If a portion of the fund's brokerage commissions during fiscal 1993 had not
resulted in payment of certain of these fees, the fund would have paid
transfer agent fees of $2,183,000.
210The trust's contract with FSC also provides that FSC will perform the
calculations necessary to determine the fund's net asset value per share
and dividends, and maintain the fund's accounting records. Prior to July
1, 1991, the annual fee for these pricing and bookkeeping services was
based on two schedules, one pertaining to the fund's average net assets,
and one pertaining to the type and number of transactions the fund made.
The fee rates in effect as of July 1, 1991 are based on the fund's average
net assets, specifically, .06% for the first $500 million of average net
assets and .03% for average net assets in excess of $500 million. The fee
is limited to a minimum of $45,000 and a maximum of $750,000 per year.
Pricing and bookkeeping fees, including related out-of-pocket expenses,
paid to FSC for fiscal 1993, 1992, and 1991, were $388,000 ,
$156, 000 , and $75, 000 , respectively.
211FSC also receives fees for administering the fund's securities lending
program. Securities lending fees are based on the number and duration of
individual securities loans. Securities lending fees for fiscal 1993,
1992, and 1991 were $ 33,000 , $ 1 3,000 , and $0,
respectively.
212The fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreement calls
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of the fund, which are continuously offered
at net asset value. Promotional and administrative expenses in connection
with the offer and sale of shares are paid by FMR.
213DESCRIPTION OF THE TRUST
214TRUST ORGANIZATION. Fidelity Convertible Securities Fund is a fund of
Fidelity Financial Trust (the trust), an open-end management investment
company organized as a Massachusetts business trust on October 20, 1982.
On December 17, 1982, the Declaration of Trust was amended to change the
name of the trust from Fidelity Tax-Qualified Equity Fund to Fidelity
Freedom Fund , and on January 1, 1987, the Declaration of Trust was
further amended to change the name of the trust to Fidelity Financial
Trust. Currently, there are three funds of the trust: Fidelity
Convertible Securities Fund, Fidelity Retirement Growth Fund, and Fidelity
Equity-Income II Fund. The Declaration of Trust permits the Trustees to
create additional funds.
215In the event that FMR ceases to be the investment adviser to the trust
or a fund, the right of the trust or fund to use the identifying name
"Fidelity" may be withdrawn.
216The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to
be allocated in proportion to the asset value of the respective funds,
except where allocations of direct expense can otherwise be fairly made.
The officers of the trust, subject to the general supervision of the Board
of Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
217SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against
shareholders except for the payment of the purchase price of shares,
and requires that each agreement, obligation, or instrument entered into or
executed by the trust or the Trustees include a provision limiting the
obligations created thereby to the trust and its assets. The Declaration
of Trust provides for indemnification out of each fund's property of any
shareholder held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which a fund itself would be unable to meet
its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
218The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects
Trustee s against any liability to which they would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
their office.
219VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar value
of net asset value per share you own. The shares have no preemptive or
conversion rights; the voting and dividend rights, the right of redemption,
and the privilege of exchange are described in the Prospectus. Shares are
fully paid and nonassessable, except as set forth under the heading
"Shareholder and Trustee Liability" above. Shareholders representing 10%
or more of the trust or a fund may, as set forth in the Declaration of
Trust, call meetings of the trust or a fund for any purpose related to the
trust or fund, as the case may be, including, in the case of a meeting of
the entire trust, the purpose of voting on removal of one or more Trustees.
The trust or any fund may be terminated upon the sale of its assets to
another open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a
majority of the trust or the fund , as determined by the current
value of each shareholder's investment in the fund or trust. If not so
terminated, the trust and its funds will continue indefinitely.
220CUSTODIAN. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of the fund. The custodian is
responsible for the safekeeping of the fund's assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the fund or in deciding which
securities are purchased or sold by the fund. The fund may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
221FMR, its officers and directors, its affiliated companies, and the
trust's Trustees may from time to time have transactions with various
banks, including banks serving as custodians for certain of the funds
advised by FMR. The Boston branch of the fund's custodian leases its
office space from an affiliate of FMR at a lease payment which, when
entered into, was consistent with prevailing market rates. Transactions
that have occurred to date include mortgages and personal and general
business loans. In the judgment of FMR, the terms and conditions of those
transactions were not influenced by existing or potential custodial or
other fund relationships.
222AUDITOR. Price Waterhouse, 160 Federal Street, Boston,
Massachusetts serves as the trust's independent accountant. The
auditor examines financial statements for the fund and provides other
audit, tax, and related services.
223FINANCIAL STATEMENTS
224 The fund's Annual Report for the fiscal year ended November 30, 1993 is
a separate report supplied with this Statement of Additional Information
and is incorporated herein by reference.
FIDELITY RETIREMENT GROWTH FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION

<TABLE>
<CAPTION>
<S> <C>
1................................... Cover Page
...

2a.................................. Expenses
..

b, Contents; The Fund at a Glance; Who May Want to
c................................ Invest

3a.................................. Financial Highlights
..

*
b...................................
.

Performance
c....................................

4a Charter
i.................................

The Fund at a Glance; Investment Principles;
ii............................... Securities & Investment Practices, Fundamental
Investment Policies and Restrictions.

b................................... Securities & Investment Practices
..

Who May Want to Invest; Investment Principles;
c.................................... Securities & Investment Practices

5a.................................. Charter
..

b(i)................................ Doing Business with Fidelity; Charter

Charter
(ii)..............................

..(iii)........................... Expenses; Breakdown of Expenses

c, Charter; FMR and Its Affiliates; Breakdown of
d................................ Expenses, Cover Page

FMR and Its Affiliates
e....................................

Expenses
f....................................

g(i)................................ FMR and its Affiliates
..

(ii)................................. *
..

5A................................. Performance
.

6a Charter
i.................................

How to Buy Shares; How to Sell Shares; Transaction
ii................................ Details; Exchange Restrictions

*
iii...............................

*
b...................................
.

Exchange Restrictions
c....................................

*
d...................................
.

Doing Business with Fidelity; How to Buy Shares;
e.................................... How to Sell Shares; Investor Services

f,g................................. Dividends, Capital Gains, and Taxes
..

7a.................................. Cover Page; Charter
..

How to Buy Shares; Transaction Details
b...................................
.

*
c....................................

How to Buy Shares
d...................................
.

e.................................... *

f, ................................ *

8................................... How to Sell Shares; Investor Services; Transaction
... Details; Exchange Restrictions

9................................... *
...

</TABLE>

* Not Applicable
FIDELITY RETIREMENT GROWTH FUND
CROSS REFERENCE SHEET
(continued)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION

<TABLE>
<CAPTION>
<S> <C>
10, 11.......................... Cover Page

12.................................. *
..

13a - Investment Policies and Limitations
c............................

*
d..................................

14a - Trustees and Officers
c............................

15a, *
b..............................

Trustees and Officers
c..................................

16a FMR, Portfolio Transactions
i................................

Trustees and Officers
ii..............................

Management Contract
iii.............................

Management Contract
b.................................

c, Contracts with Companies Affiliated with FMR
d.............................

e - *
g...........................

Description of the Trust
h.................................

Contracts with Companies Affiliated with FMR
i.................................

17a - Portfolio Transactions
c............................

*
d,e..............................

18a................................ Description of the Trust
..

*
b.................................

19a................................ Additional Purchase and Redemption Information
..

Additional Purchase and Redemption Information;
b.................................. Valuation of Portfolio Securities

*
c..................................

20.................................. Distributions and Taxes
..

21a, Contracts with Companies Affiliated with FMR
b..............................

*
c.................................

22.................................. Performance
..

23.................................. Financial Statements
..

</TABLE>

* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how the fund
invests and the services available to shareholders.
A Statement of Additional Information dated January 19, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, nor are they federally insured or otherwise
protected by the FDIC, the Federal Reserve Board, or any other agency.
Retirement Growth is a growth fund designed for retirement investors and
non-profit organizations. It seeks to increase the value of your investment
over the long term.
FIDELITY
RETIREMENT GROWTH
FUND
PROSPECTUS
JANUARY 19, 1994
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
CVS-pro-194
(Registered trademark)
82 Devonshire Street, Boston, MA 02109
CONTENTS

KEY FACTS 3 THE FUND AT A GLANCE

3 WHO MAY WANT TO INVEST

EXPENSES AND PERFORMANCE 4 EXPENSES The fund's yearly
operating expenses.

5 FINANCIAL HIGHLIGHTS A summary
of the fund's financial data.

6 PERFORMANCE How the fund has
done over time.

YOUR ACCOUNT 8 DOING BUSINESS WITH FIDELITY

8 TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.

10 HOW TO BUY SHARES Opening an
account and making additional
investments.

12 HOW TO SELL SHARES Taking money
out and closing your account.

14 INVESTOR SERVICES Services to
help you manage your account.

16 DIVIDENDS, CAPITAL GAINS, AND
TAXES

SHAREHOLDER AND 18 TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.

20 EXCHANGE RESTRICTIONS

THE FUND IN DETAIL 21 CHARTER How the fund is
organized.

21 BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

23 INVESTMENT PRINCIPLES The fund's
overall approach to investing.

24 SECURITIES AND INVESTMENT
PRACTICES

KEY FACTS

THE FUND AT A GLANCE
GOAL: Capital appreciation (increase in the value of the fund's shares). As
with any mutual fund, there is no assurance that the fund will achieve its
goal.
STRATEGY: Invests mainly in common stocks, although the fund has broad
flexibility to invest in any type of security.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. Foreign affiliates of FMR
help choose investments for the fund.
SIZE: As of November 30, 1993, the fund had over $ 2.6 billion in
assets.
WHO MAY WANT TO INVEST
The fund may be appropriate for investors who are willing to ride out stock
market fluctuations in pursuit of potentially high long-term returns.
However, because the fund is designed for non-profit organizations and
investors in tax-qualified retirement plans, it does not consider the
effect of taxes when it buys and sells securities. The fund seeks capital
appreciation. It does not pursue income, and is not in itself a balanced
investment plan.
Over time, stocks have shown greater growth potential than other types of
securities. In the short term, however, stock prices can fluctuate
dramatically in response to company, market, or economic news. When you
sell your fund shares, they may be worth more or less than what you paid
for them.

THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk.
Convertible Securities is in
the GROWTH category .
(bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(bullet) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(arrow) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
EXPENSES AND PERFORMANCE

EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of the fund's assets. The fund
pays a management fee that varies based on its performance. It also incurs
other expenses for services such as maintaining shareholder records and
furnishing shareholder statements and fund reports. The fund's expenses are
factored into its share price or dividends and are not charged directly to
shareholder accounts (see page 22 ).
The following are projections based on historical expenses and are
calculated as a percentage of average net assets.
Management fee . 76 %
12b-1 fee None
Other expenses . 29 %
Total fund operating expenses 1.05 %
EXAMPLES: Let's say, hypothetically, that the fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 year $ 11
After 3 years $ 33
After 5 years $ 58
After 10 years $ 128
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.

UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)
FINANCIAL HIGHLIGHTS
The table that follows has been audited by Price Waterhouse, independent
accountants. Their unqualified report is included in the fund's Annual
Report. The Annual Report is incorporated by reference into (is legally a
part of) the Statement of Additional Information.
SELECTED PER-SHARE DATA

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
18.Years Ended 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
November 30,

19.Net asset value, $ 12.6 $ 12.1 $ 14.8 $ 16.9 $ 12.9 $ 12.5 $ 15.62 $ 13.1 $ 17.2 $ 19.7
beginning 8 5 8 3 4 5 3 1 7
of period

20.Income from
Investment
Operations

21. Net .24 .37 .16 .19 .22 .37 .34 .27 .14 .09
investment income

22. Net realized (.31) 2.75 3.22 (.54) 2.80 2.91 (1.88) 3.92 3.66 3.09
and unrealized
gain (loss) on
investments

23. Total from (.07) 3.12 3.38 (.35) 3.02 3.28 (1.54) 4.19 3.80 3.18
investment
operations

24.Less
Distributions

25. From net (.04) (.24) (.35) (.14) (.23) (.21) (.45) (.11) (.20) (.16)
investment
income

26. From net (.42) (.15) (.98) (3.50) (3.18 - (.50) - (1.04 (3.53
realized gain ) ) )

27. Total (.46) (.39) (1.33 (3.64) (3.41 (.21) (.95) (.11) (1.24 (3.69
distributions ) ) ) )

28.Net asset value, $ 12.1 $ 14.8 $ 16.9 $ 12.9 $ 12.5 $ 15.6 $ 13.13 $ 17.2 $ 19.7 $ 19.2
end of period 5 8 3 4 5 2 1 7 6

29.Total ReturnA (.65) 26.45 24.45 (3.95) 26.94 26.62 (10.59 32.15 23.39 19.47
% % % % % % )% % % %

30.RATIOS AND SUPPLEMENTAL DATA

31.Net assets, end $ 388 $ 601 $ 916 $ 993 $ 1,24 $ 1,44 $ 1,292 $ 1,57 $ 2,16 $ 2,68
of period 4 8 7 6 8
(in millions)

32.Ratio of 1.13 1.14 1.07 .97% 1.09 .92% .98% .83% 1.02 1.05
expenses to % % % % % %
average net assets

33.Ratio of net 3.08 2.86 1.11 1.25 1.79 2.51 2.34% 1.56 1.01 .80%
investment income % % % % % % % %
to average net
assets

34.Portfolio 97% 100% 161% 171% 156% 139% 127% 119% 138% 101%
turnover rate

</TABLE>

A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN. The total
returns that follow are based on historical fund results and do not reflect
the effect of taxes.
The fund's fiscal year runs from December 1 through November 30. The tables
below show the fund's performance over past fiscal years compared to two
measures: investing in a broad selection of stocks (Merrill Lynch
Convertible Securities), and not investing at all (inflation, or CPI). To
help you compare this fund to other funds, the chart on page 7
displays calendar-year performance.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Past 10
November 30, 199 3 year years years
Convertible Securities 19.47% 17.14% 15.44%
Merrill Lynch Convertible Securities 10.10% 14.67%
14.74%
Consumer Price
Index 2.68% 3.92% 3.72%
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Past 5 Past 10
November 30, 199 3 year years years
Convertible Securities 19.47% 120.54% 320.40%
Merrill Lynch Convertible Securities 10.10% 98.31%
295.47%
Consumer Price
Index 2.68% 21.20% 44.07%
EXAMPLE: Let's say, hypothetically, that an investor put $10,000 in the
fund on November 30, 1983. From that date through November 30, 1993, the
fund's total return was 320.40 %. That $10,000 would have grown to
$ 42,040 (the initial investment plus 320.40 % of $10,000).
$10,000 OVER TEN YEARS

Fiscal years 1983 1998 1993
Row: 1, Col: 1, Value: 10000.0
Row: 2, Col: 1, Value: 9913.26
Row: 3, Col: 1, Value: 9738.4
Row: 4, Col: 1, Value: 9190.57
Row: 5, Col: 1, Value: 9337.75
Row: 6, Col: 1, Value: 9370.449999999999
Row: 7, Col: 1, Value: 8789.91
Row: 8, Col: 1, Value: 9125.15
Row: 9, Col: 1, Value: 8961.620000000001
Row: 10, Col: 1, Value: 10106.35
Row: 11, Col: 1, Value: 9951.0
Row: 12, Col: 1, Value: 10024.59
Row: 13, Col: 1, Value: 9934.640000000001
Row: 14, Col: 1, Value: 10237.18
Row: 15, Col: 1, Value: 11237.13
Row: 16, Col: 1, Value: 11178.03
Row: 17, Col: 1, Value: 10975.41
Row: 18, Col: 1, Value: 10781.23
Row: 19, Col: 1, Value: 11254.01
Row: 20, Col: 1, Value: 11498.85
Row: 21, Col: 1, Value: 11684.59
Row: 22, Col: 1, Value: 11549.5
Row: 23, Col: 1, Value: 11051.39
Row: 24, Col: 1, Value: 11617.05
Row: 25, Col: 1, Value: 12562.62
Row: 26, Col: 1, Value: 13195.82
Row: 27, Col: 1, Value: 13777.86
Row: 28, Col: 1, Value: 15135.33
Row: 29, Col: 1, Value: 15975.67
Row: 30, Col: 1, Value: 15883.32
Row: 31, Col: 1, Value: 16363.52
Row: 32, Col: 1, Value: 16058.78
Row: 33, Col: 1, Value: 14793.65
Row: 34, Col: 1, Value: 15874.09
Row: 35, Col: 1, Value: 14738.25
Row: 36, Col: 1, Value: 15458.54
Row: 37, Col: 1, Value: 15633.99
Row: 38, Col: 1, Value: 15061.45
Row: 39, Col: 1, Value: 17175.37
Row: 40, Col: 1, Value: 18324.26
Row: 41, Col: 1, Value: 18985.75
Row: 42, Col: 1, Value: 18997.35
Row: 43, Col: 1, Value: 19368.71
Row: 44, Col: 1, Value: 20018.59
Row: 45, Col: 1, Value: 21562.05
Row: 46, Col: 1, Value: 22211.93
Row: 47, Col: 1, Value: 22037.86
Row: 48, Col: 1, Value: 16096.11
Row: 49, Col: 1, Value: 15016.84
Row: 50, Col: 1, Value: 16465.41
Row: 51, Col: 1, Value: 16754.01
Row: 52, Col: 1, Value: 18181.82
Row: 53, Col: 1, Value: 18166.63
Row: 54, Col: 1, Value: 18500.8
Row: 55, Col: 1, Value: 18409.66
Row: 56, Col: 1, Value: 19366.6
Row: 57, Col: 1, Value: 19138.76
Row: 58, Col: 1, Value: 18607.13
Row: 59, Col: 1, Value: 19169.14
Row: 60, Col: 1, Value: 19305.84
Row: 61, Col: 1, Value: 19062.81
Row: 62, Col: 1, Value: 19021.71
Row: 63, Col: 1, Value: 20489.67
Row: 64, Col: 1, Value: 20072.46
Row: 65, Col: 1, Value: 20597.84
Row: 66, Col: 1, Value: 21571.33
Row: 67, Col: 1, Value: 21988.54
Row: 68, Col: 1, Value: 21679.49
Row: 69, Col: 1, Value: 23719.19
Row: 70, Col: 1, Value: 23997.33
Row: 71, Col: 1, Value: 24352.73
Row: 72, Col: 1, Value: 23502.86
Row: 73, Col: 1, Value: 24136.4
Row: 74, Col: 1, Value: 24806.36
Row: 75, Col: 1, Value: 23584.23
Row: 76, Col: 1, Value: 23830.75
Row: 77, Col: 1, Value: 24027.97
Row: 78, Col: 1, Value: 23337.7
Row: 79, Col: 1, Value: 25523.56
Row: 80, Col: 1, Value: 26098.78
Row: 81, Col: 1, Value: 26000.17
Row: 82, Col: 1, Value: 23337.7
Row: 83, Col: 1, Value: 20856.02
Row: 84, Col: 1, Value: 20182.18
Row: 85, Col: 1, Value: 21579.16
Row: 86, Col: 1, Value: 22287.21
Row: 87, Col: 1, Value: 23314.58
Row: 88, Col: 1, Value: 25236.75
Row: 89, Col: 1, Value: 25899.57
Row: 90, Col: 1, Value: 26065.27
Row: 91, Col: 1, Value: 26926.93
Row: 92, Col: 1, Value: 25203.61
Row: 93, Col: 1, Value: 26844.08
Row: 94, Col: 1, Value: 27987.44
Row: 95, Col: 1, Value: 28335.42
Row: 96, Col: 1, Value: 29346.21
Row: 97, Col: 1, Value: 28517.69
Row: 98, Col: 1, Value: 32446.83
Row: 99, Col: 1, Value: 32518.02
Row: 100, Col: 1, Value: 32980.78999999999
Row: 101, Col: 1, Value: 31966.27
Row: 102, Col: 1, Value: 32322.24
Row: 103, Col: 1, Value: 32927.39
Row: 104, Col: 1, Value: 31717.09
Row: 105, Col: 1, Value: 32802.8
Row: 106, Col: 1, Value: 31912.87
Row: 107, Col: 1, Value: 32286.64
Row: 108, Col: 1, Value: 33301.16
Row: 109, Col: 1, Value: 35187.81
Row: 110, Col: 1, Value: 35884.97
Row: 111, Col: 1, Value: 36779.91
Row: 112, Col: 1, Value: 35623.03
Row: 113, Col: 1, Value: 36627.12
Row: 114, Col: 1, Value: 36343.35000000001
Row: 115, Col: 1, Value: 38264.2
Row: 116, Col: 1, Value: 38766.24
Row: 117, Col: 1, Value: 39028.18
Row: 118, Col: 1, Value: 41210.96
Row: 119, Col: 1, Value: 41363.75999999999
Row: 120, Col: 1, Value: 42586.12
Row: 121, Col: 1, Value: 42040.42
$
$42,040
UNDERSTANDING
PERFORMANCE
Because this fund invests in
stocks, its performance is
related to that of the overall
stock market. Historically,
stock market performance
has been characterized by
volatility in the short run and
growth in the long run. You
can see these two
characteristics reflected in the
fund's performance; the
year-by-year total returns on
page 7 show that short-term
returns can vary widely, while
the returns at left show
long-term growth.
(checkmark)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YEAR-BY-YEAR TOTAL RETURNS
Calendar years 1984 1985 1986 1987 1988 1989 1990 1991 1992
Convertible Securities 3.27% 28.90% 14.14% 9.32% 15.53% 30.41% (10.16)%
45.
58% 10.60%
Competitive funds average n/a n/a n/a 1.13% 13.84% 26.70% (7.76)%
40.35% 8.28 %
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: 3.27
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: 28.9
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: 14.14
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: 9.32
Row: 5, Col: 2, Value: 1.13
Row: 6, Col: 1, Value: 15.53
Row: 6, Col: 2, Value: 13.84
Row: 7, Col: 1, Value: 30.41
Row: 7, Col: 2, Value: 26.7
Row: 8, Col: 1, Value: -10.16
Row: 8, Col: 2, Value: -7.76
Row: 9, Col: 1, Value: 45.58
Row: 9, Col: 2, Value: 40.34999999999999
Row: 10, Col: 1, Value: 10.6
Row: 10, Col: 2, Value: 8.279999999999999
Convertible
Securities
Competitive
funds
average

THE S&P 500(Registered trademark) is the Standard & Poor's 500
Composite Stock Price Index, a widely recognized, unmanaged index of common
stock prices. The S&P 500 figures assume reinvestment of all dividends
paid by stocks included in the index. They do not, however, include any
allowance for the brokerage commissions or other fees you would pay if you
actually invested in those stocks.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGE is the Lipper Capital Appreciation Funds
Average , which currently reflects the performance of over 113
mutual funds with similar objectives. This average, which assumes
reinvestment of distributions, is published by Lipper Analytical Services,
Inc., and was created in 1987.
Other illustrations of fund performance may show moving averages over
specified periods.
The fund's recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF FUTURE
PERFORMANCE.
YOUR ACCOUNT

DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in the fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers the fund through a retirement program,
contact your employer for more information. Otherwise, call Fidelity
directly.

FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 200 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age
and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(bullet) 401(K) PROGRAMS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
THE FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. The fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page 11 . If there is no application
accompanying this prospectus, call 1-800-544-8888.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $250
For Fidelity retirement accounts $250

<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
MAIL (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to "Fidelity
check payable to Retirement Growth
"Fidelity Retirement Fund." Indicate your
Growth Fund." Mail to fund account number
the address indicated on your check and mail
on the application. to the address printed
on your account
statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.

</TABLE>

WIRE (bullet) Call 1-800-544-7777 to (bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify "Fidelity
Bank Routing Retirement Growth
#021001033, Fund." and include your
Account #00163053. account number and
Specify "Fidelity your name.
Retirement Growth
Fund." and include your
new account number
and your name.

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118

</TABLE>

HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $250
worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
ACCOUNT TYPE SPECIAL REQUIREMENTS

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PHONE All account types (bullet) Maximum check request:
1-800-544-7777 except retirement $100,000.
(bullet) For Money Line transfers to
All account types your bank account; minimum:
none ; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.

MAIL OR IN PERSON Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Retirement account names appear on the
account.
(bullet) The account owner should
Trust complete a retirement
distribution form. Call
1-800-544-6666 to request
one.
Business or (bullet) The trustee must sign the
Organization letter indicating capacity as
trustee. If the trustee's name
is not in the account
registration, provide a copy of
the trust document certified
Executor, within the last 60 days.
Administrator, (bullet) At least one person
Conservator, authorized by corporate
Guardian resolution to act on the
account must sign the letter.
(bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.

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TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118

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FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

</TABLE>

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<CAPTION>
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FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

</TABLE>

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MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.

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A BECAUSE ITS SHARE PRICE FLUCTUATES, THE FUND MAY NOT BE AN APPROPRIATE
CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distributes substantially all of its net income and capital gains
to shareholders each year. Normally, dividends and Capital gains are
distributed in December and January.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. The fund offers four
options:
5. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
6. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
7. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
8. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
When the fund deducts a distribution from its NAV, the reinvestment price
is the fund's NAV at the close of business that day. Cash distribution
checks will be mailed within seven days.

SHAREHOLDER AND ACCOUNT POLICIES

TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates the fund's net asset value as of the
close of business of the NYSE, normally 4 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The fund's assets are valued primarily on the basis of market quotations.
If quotations are not readily available, assets are valued by a method that
the Board of Trustees believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates.
THE FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange
Restrictions " on page 20. Purchase orders may be refused if, in
FMR's opinion, they are of a size that would disrupt management of the
fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) The fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees the fund or its transfer agent
has incurred.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUND THROUGH A BROKER, who may charge you
a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders
on behalf of customers by phone, with payment to follow no later than the
time when the fund is priced on the following business day. If payment is
not received by that time, the financial institution could be held liable
for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect the
fund, it may take up to seven days to pay you.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) The fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
IF YOUR ACCOUNT BALANCE FALLS BELOW $250, you will be given 30 days' notice
to reestablish the minimum balance. If you do not increase your balance,
Fidelity reserves the right to close your account and send the proceeds to
you. Your shares will be redeemed at the NAV on the day your account is
closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the fund without reimbursement
from the fund. Qualified recipients are securities dealers who have sold
fund shares or others, including banks and other financial institutions,
under special arrangements in connection with FDC's sales activities. In
some instances, these incentives may be offered only to certain
institutions whose representatives provide services in connection with the
sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of the fund
for shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, the fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and
Department of Labor regulations. See your plan materials for further
information.
(bullet) The fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if the fund receives
or anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves the right to terminate or modify the exchange privilege in
the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.

THE FUND IN DETAIL

UNDERSTANDING THE
MANAGEMENT FEE
The basic fee FMR receives
is designed to be responsive
to changes in FMR's total
assets under management.
Building this variable into the
fee calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
Another variable, the
performance adjustment,
rewards FMR when the fund
outperforms the Merrill Lynch
Convertible Securities (an
established index of stock
market performance) and
reduces FMR's fee when the
fund underperforms this
index.
(checkmark)
THE PERFORMANCE ADJUSTMENT RATE is calculated monthly by comparing the
fund's performance to that of the Merrill Lynch Convertible Securities over
the most recent 36-month period. The difference is translated into a dollar
amount that is added to or subtracted from the basic fee. The maximum
annualized performance adjustment rate is ".20%.
The total management fee for fiscal 1993 was .7 6 %.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers provide FMR with investment research and advice on companies
based outside the United States. FMR pays FMR U.K. and FMR Far East fees
equal to 110% and 105%, respectively, of the costs of providing these
services.
The sub-advisers may also provide investment management services if FMR
believes it would be beneficial to the fund. For these services, FMR pays
50% of its management fee rate, with respect to the fund's investments that
the sub-adviser manages on a discretionary basis.
OTHER EXPENSES
While the management fee is a significant component of the fund's annual
operating costs, the fund has other expenses as well.
The fund contracts with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing the fund's investments, and handling securities loans. In fiscal
1993, the fund paid FSC fees equal to .27 % of its average net
assets, on an annualized basis.
The fund also pays other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
The fund has adopted a Distribution and Service Plan. This plan recognizes
that FMR may use its resources, including management fees, to pay expenses
associated with the sale of fund shares. This may include payments to third
parties, such as banks or broker-dealers, that provide shareholder support
services or engage in the sale of the fund's shares. It is important to
note, however, that the fund does not pay FMR any separate fees for this
service.
The fund's portfolio turnover rate for fiscal 1993 was 101 %. This
rate varies from year to year. High turnover rates increase transaction
costs and may increase taxable capital gains. FMR considers these effects
when evaluating the anticipated benefits of short-term investing.
INVESTMENT PRINCIPLES
THE FUND SEEKS CAPITAL APPRECIATION by investing substantially in
common stocks, although it may invest in other types of instruments as
well. FMR considers economic, financial, and security trends when
choosing the types of securities the fund will buy. In pursuit of its
goal, the fund has the flexibility to invest in large or small domestic or
foreign companies.
The fund may buy securities that provide income. However, it does not place
any emphasis on the income, except when FMR believes this income will have
a favorable influence on the securities' market value. Because the fund
is designed for those in tax-qualified retirement plans and non-profit
organizations, it may realize capital gains without regard to shareholders'
current tax liability.
THE FUND WILL SPREAD INVESTMENT RISK by limiting its holdings in any one
company or industry. FMR may use various investment techniques to hedge the
fund's risks, but there is no guarantee that these strategies will work as
FMR intends. When you sell your shares, they may be worth more or less than
what you paid for them.
FMR normally invests the fund's assets according to its investment
strategy. When FMR considers it appropriate, however, it may temporarily
invest substantially in investment-grade, fixed-income securities of all
types.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, and strategies FMR may employ in
pursuit of the fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
fund achieve its goal. As a shareholder, you will receive financial reports
every six months detailing fund holdings and describing recent investment
activities.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. This ownership interest
often gives the fund the right to vote on measures affecting the company's
organization and operations. Although common stocks have a history of
long-term growth in value, their prices tend to fluctuate in the short
term, particularly those of smaller companies.
RESTRICTIONS: With respect to 75% of total assets, the fund may not own
more than 10% of the outstanding voting securities of a single issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities, loans, and other direct debt have varying degrees of quality
and varying levels of sensitivity to changes in interest rates. Longer-term
bonds are generally more sensitive to interest rate changes than short-term
bonds.
RESTRICTIONS: The fund does not currently intend to invest more than
5% of its assets in lower-quality debt securities , commonly
called "junk bonds" (those rated below Baa by Moody's or BBB by
S&P, and unrated securities judged by FMR to be of equivalent
quality).
FOREIGN SECURITIES and foreign currencies may involve additional risks.
These include currency fluctuations, risks relating to political or
economic conditions in the foreign country, and the potentially less
stringent investor protection and disclosure standards of foreign markets.
In addition to the political and economic factors that can affect
foreign securities, a governmental issuer may be unwilling to repay
principal and interest when due, and may require that the conditions for
payment be renegotiated. These factors could make foreign investments,
especially those in developing countries, more volatile.
ADJUSTING INVESTMENT EXPOSURE. The fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, and
purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of the fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to
the fund.
RESTRICTIONS: The fund may not purchase a security if, as a result, more
than 10% of its assets would be invested in illiquid securities.
OTHER INSTRUMENTS may include closed-end investment companies and real
estate investment trusts.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of total assets, the fund may not invest
more than 5% of its total assets in any one issuer. The fund also may not
invest more than 25% of its total assets in any one industry. These
limitations do not apply to U.S. government securities.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If the fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: The fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering the fund's securities. The
fund may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of the fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
The fund seeks capital appreciation. FMR will usually invest the fund's
assets substantially in common stock. However, investments are not
restricted to any one type of securities. The fund does not place any
emphasis on dividend or interest income, except when FMR believes this
income will have a favorable influence on the market value of a security.
It is the fund's policy to invest in the securities o f both
well-known and established companies and in securities of smaller, less
well-known and established companies. The emphasis placed on a particular
type of security will depend on FMR's interpretation of underlying
economic, financial, and security trends. When, in FMR's judgment, economic
or market conditions warrant a more conservative approach to investment,
the fund may be temporarily adjusted to favor more defensive securities,
including investment-grade, fixed-income securities of all types. With
respect to 75% of total assets, the fund may not invest more than 5% of its
total assets in any one issuer and may not own more than 10% of the
outstanding voting securities of a single issuer. The fund may not invest
more than 25% of its total assets in any one industry. The fund may borrow
only for temporary or emergency purposes, but not in an amount exceeding
33% of its total assets. Loans, in the aggregate, may not exceed 33% of
the fund's total assets.

This prospectus is printed on recycled paper using soy-based inks.

225FIDELITY RETIREMENT GROWTH FUND
226A FUND OF FIDELITY FINANCIAL TRUST
227STATEMENT OF ADDITIONAL INFORMATION
228JANUARY 19, 1994
229This Statement is not a prospectus but should be read in conjunction
with the fund's current Prospectus (dated January 19, 1994). Please retain
this document for future reference. The Annual Report for the fiscal year
ended November 30, 1993 is incorporated herein by reference. To obtain an
additional copy of the Prospectus or the Annual Report, please call
Fidelity Distributors Corporation at 1-800-544-8888.
511TABLE OF CONTENTS 512PAGE

513Investment Policies and Limitations

514Portfolio Transactions

515Valuation of Portfolio Securities

516Performance

517Additional Purchase and Redemption Information

518Distributions and Taxes

519FMR

520Trustees and Officers

521Management Contract

522Distribution and Service Plan

523Contracts with Companies Affiliated with FMR

524Description of the Trust

525Financial Statements

230Investment Adviser
231Fidelity Management & Research Company (FMR)
232Investment Sub-Advisers
233Fidelity Management & Research Company (U.K.) Inc. (FMR U.K.)
234Fidelity Management & Research Company (Far East) Inc. (FMR Far
East)
235Distributor
236Fidelity Distributors Corporation (FDC)
237Transfer Agent
238Fidelity Service Co. (FSC)
239
240INVESTMENT POLICIES AND LIMITATIONS
241 The following policies and limitations supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the fund's investment
policies and limitations.
242 The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
243 (1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities) if, as a
result, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10% of
the outstanding voting securities of that issuer;
244 (2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
245 (3) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
246 (4) underwrite any issue of securities (except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
247 (5) purchase the securities of any issuer (other than obligations
issued or guaranteed by the government of the United States or its agencies
or instrumentalities) if, as a result thereof, more than 25% of the fund's
total assets (taken at current value) would be invested in the securities
of one or more issuers having their principal business activities in the
same industry;
248 (6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business);
249 (7) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures contracts
or from investing in securities or other instruments backed by physical
commodities); or
250 (8) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
251THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
252 (i) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
253 (ii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
254 (iii) The fund may borrow money only (a) from a bank or from a
registered investment company or fund for which FMR or an affiliate serves
as investment adviser or (b) by engaging in reverse repurchase agreements
with any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
255 (iv) The fund does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to legal
or contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
256 (v) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or fund for which FMR
or an affiliate serves as investment adviser or (b) acquiring loans, loan
participations, or other forms of direct debt instruments and, in
connection therewith, assuming any associated unfunded commitments of the
sellers. (This limitation does not apply to purchases of debt securities
or to repurchase agreements.)
257 (vi) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
258 (vii) The fund does not currently intend to purchase warrants, valued
at the lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or
attached to securities are not subject to these restrictions.
259 (viii) The fund does not currently intend to purchase the securities
of any issuer (other than securities issued or guaranteed by domestic or
foreign governments or political subdivisions thereof) if, as a result,
more than 5% of its total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of less
than three years of continuous operation.
260 (ix) The fund does not currently intend to invest in oil, gas, or
other mineral exploration or development programs or leases.
261 (x) The fund does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the trust and those officers
and directors of FMR who individually own more than 1/2 of 1% of the
securities of such issuer together own more than 5% of such issuer's
securities.
262 (xi) The fund does not currently intend to invest in securities of
real estate investment trusts that are not readily marketable, or to invest
in securities of real estate limited partnerships that are not listed on
the New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
263 For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page 6 .
264 AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by
the Securities and Exchange Commission (SEC), the fund may engage in
certain transactions with banks that are, or may be considered to be,
"affiliated persons" of the fund under the Investment Company Act of 1940.
Such transactions may be entered into only pursuant to procedures
established and periodically reviewed by the Board of Trustees. These
transactions may include repurchase agreements with custodian banks;
purchases, as principal, of short-term obligations of, and repurchase
agreements with, the 50 largest U.S. banks (measured by deposits);
transactions in municipal securities; and transactions in U.S. government
securities with affiliated banks that are primary dealers in these
securities.
265 FUND'S RIGHTS AS A SHAREHOLDER. The fund does not intend to direct or
administer the day-to-day operations of any company. The fund, however,
may exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of the fund's investment in the company.
The activities that the fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
a company's direction or policies; seeking the sale or reorganization of
the company or a portion of its assets; or supporting or opposing third
party takeover efforts. This area of corporate activity is increasingly
prone to litigation and it is possible that the fund could be involved in
lawsuits related to such activities. FMR will monitor such activities with
a view to mitigating, to the extent possible, the risk of litigation
against the fund and the risk of actual liability if the fund is involved
in litigation. No guarantee can be made, however, that litigation against
the fund will not be undertaken or liabilities incurred.
266 LOANS AND OTHER DIRECT DEBT INSTRUMENTS are interests in amounts owed
by a corporate, governmental, or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments involve the
risk of loss in case if default or insolvency of the borrower. Direct debt
instruments may involve a risk of loss in case of default or insolvency of
the borrower and may offer less legal protection to the fund in the event
of fraud or misrepresentation. In addition, loan participations involve a
risk of insolvency of the lending bank or other financial intermediary.
Direct debt instruments may also include standby financing commitments that
obligate the fund to supply additional cash to the borrower on demand.
267 ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of
in the ordinary course of business at approximately the prices at which
they are valued. Under the supervision of the Board of Trustees, FMR
determines the liquidity of the fund's investments and, through reports
from FMR, the Board monitors investments in illiquid instruments. In
determining the liquidity of the fund's investments, FMR may consider
various factors, including (1) the frequency of trades and quotations, (2)
the number of dealers and prospective purchasers in the marketplace, (3)
dealer undertakings to make a market, (4) the nature of the security
(including any demand or tender features), and (5) the nature of the
marketplace for trades (including the ability to assign or offset the
fund's rights and obligations relating to the investment). Investments
currently considered by the fund to be illiquid include repurchase
agreements not entitling the holder to payment of principal and interest
within seven days, over the counter options, and non-government stripped
fixed-rate mortgage-backed securities. Also, FMR may determine some
restricted securities, government-stripped fixed-rate mortgage-backed
securities, loans and other direct debt instruments, and swap agreements to
be illiquid. However, with respect to over-the-counter options the fund
writes, all or a portion of the value of the underlying instrument may be
illiquid depending on the assets held to cover the option and the nature
and terms of any agreement the fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
priced at fair value as determined in good faith by a committee appointed
by the Board of Trustees. If through a change in values, net assets, or
other circumstances, the fund were in a position where more than 10% of its
net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
268 RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
269 REPURCHASE AGREEMENTS. In a repurchase agreement, the fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed upon price on an agreed upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is
in effect secured by the value (at least equal to the amount of the agreed
upon resale price and marked to market daily) of the underlying security.
The fund may engage in a repurchase agreement with respect to any security
in which it is authorized to invest. While it does not presently appear
possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities,
as well as delays and costs to the fund in connection with bankruptcy
proceedings), it is the fund's current policy to limit repurchase agreement
transactions to those parties whose creditworthiness has been reviewed and
found satisfactory by FMR.
270 REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the
fund sells a fund instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The fund will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the fund's
assets and may be viewed as a form of leverage.
271 INTERFUND BORROWING PROGRAM. The fund has received permission from the
SEC to lend money to and borrow money from other funds advised by FMR or
its affiliates. Interfund loans and borrowings normally will extend
overnight, but can have a maximum duration of seven days. Loans may be
called on one day's notice. The fund will lend through the program only
when the returns are higher than those available at the same time from
other short-term instruments (such as repurchase agreements), and will
borrow through the program only when the costs are equal to or lower than
the cost of bank loans. The fund may have to borrow from a bank at a
higher interest rate if an interfund loan is called or not renewed. Any
delay in repayment to a lending fund could result in a lost investment
opportunity or additional borrowing costs.
272 SECURITIES LENDING. The fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange
(NYSE) and a subsidiary of FMR Corp.
273 Securities lending allows the fund to retain ownership of the
securities loaned and, at the same time, to earn additional income. Since
there may be delays in the recovery of loaned securities, or even a loss of
rights in collateral supplied should the borrower fail financially, loans
will be made only to parties deemed by FMR to be of good standing.
Furthermore, they will only be made if, in FMR's judgment, the
consideration to be earned from such loans would justify the risk.
274 FMR understands that it is the current view of the SEC Staff that the
fund may engage in loan transactions only under the following conditions:
(1) the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
275 Cash received through loan transactions may be invested in any security
in which the fund is authorized to invest. Investing this cash subjects
that investment, as well as the security loaned, to market forces (i.e.,
capital appreciation or depreciation).
276 FOREIGN INVESTMENTS. Foreign investments can involve significant risks
in addition to the risks inherent in U.S. investments. The value of
securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar.
Foreign securities markets generally have less trading volume and less
liquidity than U.S. markets, and prices on some foreign markets can be
highly volatile. Many foreign countries lack uniform accounting and
disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an
issuer's financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage commissions, and
custodial costs, are generally higher than for U.S. investments.
277 Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers, brokers, and securities markets may be subject
to less governmental supervision. Foreign security trading practices,
including those involving the release of assets in advance of payment, may
involve increased risks in the event of a failed trade or the insolvency of
a broker-dealer, and may involve substantial delays. It may also be
difficult to enforce legal rights in foreign countries.
278 Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention.
There may be a greater possibility of default by foreign governments or
foreign government-sponsored enterprises. Investments in foreign countries
also involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.
279 The considerations noted above generally are intensified for
investments in developing countries. Developing countries may have
relatively unstable governments, economies based on only a few industries,
and securities markets that trade a small number of securities.
280 The fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject
to transfer restrictions may be marketable abroad, they may be less liquid
than foreign securities of the same class that are not subject to such
restrictions.
281 American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs) are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.
282 FOREIGN CURRENCY TRANSACTIONS. The fund may hold foreign currency
deposits from time to time, and may convert dollars and foreign currencies
in the foreign exchange markets. Currency conversion involves dealer
spreads and other costs, although commissions usually are not charged.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering
into forward contracts to purchase or sell foreign currencies at a future
date and price. Forward contracts generally are traded in an interbank
market conducted directly between currency traders (usually large
commercial banks) and their customers. The parties to a forward contract
may agree to offset or terminate the contract before its maturity, or may
hold the contract to maturity and complete the contemplated currency
exchange.
283 The fund may use currency forward contracts to manage currency risks
and to facilitate transactions in foreign securities. The following
discussion summarizes the principal currency management strategies
involving forward contracts that could be used by the fund.
284 In connection with purchases and sales of securities denominated in
foreign currencies, the fund may enter into currency forward contracts to
fix a definite price for the purchase or sale in advance of the trade's
settlement date. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge." FMR expects to enter into settlement hedges
in the normal course of managing the fund's foreign investments. The fund
could also enter into forward contracts to purchase or sell a foreign
currency in anticipation of future purchases or sales of securities
denominated in foreign currency, even if the specific investments have not
yet been selected by FMR.
285 The fund may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For
example, if the fund owned securities denominated in pounds sterling, it
could enter into a forward contract to sell pounds sterling in return for
U.S. dollars to hedge against possible declines in the pound's value. Such
a hedge, sometimes referred to as a "position hedge," would tend to offset
both positive and negative currency fluctuations, but would not offset
changes in security values caused by other factors. The fund could also
hedge the position by selling another currency expected to perform
similarly to the pound sterling - for example, by entering into a
forward contract to sell Deutschemarks or European Currency Units in return
for U.S. dollars. This type of hedge, sometimes referred to as a "proxy
hedge," could offer advantages in terms of cost, yield, or efficiency, but
generally would not hedge currency exposure as effectively as a simple
hedge into U.S. dollars. Proxy hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.
286 Under certain conditions, SEC guidelines require mutual funds to set
aside appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
287 Successful use of forward currency contracts will depend on FMR's skill
in analyzing and predicting currency values. Forward contracts may
substantially change the fund's investment exposure to changes in currency
exchange rates, and could result in losses to the fund if currencies do not
perform as FMR anticipates. For example, if a currency's value rose at a
time when FMR had hedged the fund by selling that currency in exchange for
dollars, the fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, the
fund could realize currency losses from the hedge and the security position
at the same time if the two currencies do not move in tandem. Similarly,
if FMR increases the fund's exposure to a foreign currency, and that
currency's value declines, the fund will realize a loss. There is no
assurance that FMR's use of forward currency contracts will be advantageous
to the fund or that it will hedge at an appropriate time. The policies
described in this section are non-fundamental policies of the fund.
288 SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease the fund's exposure to long- or
short-term interest rates (in the U.S. or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such as
security prices or inflation rates. Swap agreements can take many
different forms and are known by a variety of names. The fund is not
limited to any particular form of swap agreement if FMR determines it is
consistent with the fund's investment objective and policies.
289 In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a fee
by the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
290 Swap agreements will tend to shift the fund's investment exposure from
one type of investment to another. For example, if the fund agreed to
exchange payments in dollars for payments in foreign currency, the swap
agreement would tend to decrease the fund's exposure to U.S. interest rates
and increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of the fund's investments and its share price.
291 The most significant factor in the performance of swap agreements is
the change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from the fund. If a swap
agreement calls for payments by the fund, the fund must be prepared to make
such payments when due. In addition, if the counterparty's
creditworthiness declined, the value of a swap agreement would be likely to
decline, potentially resulting in losses. The fund expects to be able to
eliminate its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
292 The fund will maintain appropriate liquid assets in a segregated
custodial account to cover its current obligations under swap agreements.
If the fund enters into a swap agreement on a net basis, it will segregate
assets with a daily value at least equal to the excess, if any, of the
fund's accrued obligations under the swap agreement over the accrued amount
the fund is entitled to receive under the agreement. If the fund enters
into a swap agreement on other than a net basis, it will segregate assets
with a value equal to the full amount of the fund's accrued obligations
under the agreement.
293 INDEXED SECURITIES. The fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
294 The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more volatile
than the underlying instruments.
295 LOWER-RATED DEBT SECURITIES. The fund may purchase lower-rated debt
securities (those rated Ba or lower by Moody's Investors Service, Inc.
(Moody's) or BB or lower by Standard & Poor's Corporation (S&P))
that have poor protection with respect to the payment of interest and
repayment of principal. These securities are often considered to be
speculative and involve greater risk of loss or price changes due to
changes in the issuer's capacity to pay. The market prices of lower-rated
debt securities may fluctuate more than those of higher-rated debt
securities and may decline significantly in periods of general economic
difficulty, which may follow periods of rising interest rates.
296 While the market for high-yield corporate debt securities has been in
existence for many years and has weathered previous economic downturns, the
1980s brought a dramatic increase in the use of such securities to fund
highly leveraged corporate acquisitions and restructurings. Past
experience may not provide an accurate indication of the future performance
of the high-yield bond market, especially during periods of economic
recession. In fact, from 1989 to 1991, the percentage of lower-rated
securities that defaulted rose significantly above prior levels.
297 The market for lower-rated debt securities may be thinner and less
active than that for higher-rated debt securities, which can adversely
affect the prices at which the former are sold. If market quotations are
not available, lower-rated debt securities will be valued in accordance
with procedures established by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing
high-yield corporate debt securities than is the case for securities for
which more external sources for quotations and last-sale information are
available. Adverse publicity and changing investor perceptions may affect
the ability of outside pricing services to value lower-rated debt
securities and the fund's ability to dispose of these securities.
298 Since the risk of default is higher for lower-rated debt securities,
FMR's research and credit analysis are an especially important part of
managing securities of this type held by the fund. In considering
investments for the fund, FMR will attempt to identify those issuers of
high-yielding securities whose financial condition is adequate to meet
future obligations, has improved, or is expected to improve in the future.
FMR's analysis focuses on relative values based on such factors as interest
or dividend coverage, asset coverage, earnings prospects, and the
experience and managerial strength of the issuer.
299 The fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder
to seek to protect the interests of security holders if it determines this
to be in the best interest of the fund's shareholders.
300 SHORT SALES "AGAINST THE BOX". If the fund enters into a short sale
against the box, it will be required to set aside securities equivalent in
kind and amount to the securities sold short (or securities convertible or
exchangeable into such securities) and will be required to continue to hold
such securities while the short sale is outstanding. The fund will incur
transaction costs, including interest expense, in connection with opening,
maintaining, and closing short sales against the box.
301 LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund intends to
file a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets, before engaging in any purchases or sales of futures
contracts or options on futures contracts. The fund intends to comply with
Section 4.5 of the regulations under the Commodity Exchange Act, which
limits the extent to which the fund can commit assets to initial margin
deposits and option premiums.
302 In addition, the fund will not: (a) sell futures contracts, purchase
put options, or write call options if, as a result, more than 25% of the
fund's total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
303 The above limitations on the fund's investments in futures contracts
and options, and the fund's policies regarding futures contracts and
options discussed elsewhere in this Statement of Additional Information
are not fundamental and may be changed as regulatory agencies permit.
304 FUTURES CONTRACTS. When the fund purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified future
date. When the fund sells a futures contract, it agrees to sell the
underlying instrument at a specified future date. The price at which the
purchase and sale will take place is fixed when the fund enters into the
contract. Some currently available futures contracts are based on specific
securities, such as U.S. Treasury bonds or notes, and some are based on
indices of securities prices, such as the S&P 500 Composite Stock Price
Index (S&P 500). Futures can be held until their delivery dates, or
can be closed out before then if a liquid secondary market is available.
305 The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore, purchasing
futures contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the fund sells a
futures contract, by contrast, the value of its futures position will tend
to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
306 FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the fund, the fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
307 PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
308 The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of purchasing
the option, a put buyer can expect to suffer a loss (limited to the amount
of the premium paid, plus related transaction costs).
309 The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
310 WRITING PUT AND CALL OPTIONS. When the fund writes a put option, it
takes the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract, the fund will be required to make margin payments to an FCM as
described above for futures contracts. The fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
311 If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
312 Writing a call option obligates the fund to sell or deliver the
option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options are
similar to those of writing put options, except that writing calls
generally is a profitable strategy if prices remain the same or fall.
Through receipt of the option premium, a call writer mitigates the effects
of a price decline. At the same time, because a call writer must be
prepared to deliver the underlying instrument in return for the strike
price, even if its current value is greater, a call writer gives up some
ability to participate in security price increases.
313 COMBINED POSITIONS. The fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the fund may purchase a put option and write a call
option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a
futures contract. Another possible combined position would involve writing
a call option at one strike price and buying a call option at a lower
price, in order to reduce the risk of the written call option in the event
of a substantial price increase. Because combined options positions
involve multiple trades, they result in higher transaction costs and may be
more difficult to open and close out.
314 CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely that
the standardized contracts available will not match the fund's current or
anticipated investments exactly. The fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests
with futures contracts on a broad-based stock index such as the S&P
500, which involves a risk that the options or futures position will not
track the performance of the fund's other investments.
315 Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
316 LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the fund's access to other assets held to cover its options or
futures positions could also be impaired.
317 OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract size,
and strike price, the terms of over-the-counter options (options not traded
on exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
318 OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
319 The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed above.
The fund may purchase and sell currency futures and may purchase and write
currency options to increase or decrease its exposure to different foreign
currencies. The fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
the fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect
the fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of the fund's
foreign-denominated investments changes in response to many factors other
than exchange rates, it may not be possible to match the amount of currency
options and futures to the value of the fund's investments exactly over
time.
320 ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The fund will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require, will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in
a segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of
the portfolio's assets could impede fund management or the fund's ability
to meet redemption requests or other current obligations.
321PORTFOLIO TRANSACTIONS
322 All orders for the purchase or sale of portfolio securities are placed
on behalf of the fund by FMR pursuant to authority contained in the
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. In selecting broker-dealers,
subject to applicable limitations of the federal securities laws, FMR
considers various relevant factors, including, but not limited to, the
size and type of the transaction; the nature and character of the markets
for the security to be purchased or sold; the execution efficiency,
settlement capability, and financial condition of the broker-dealer firm;
the broker-dealer's execution services rendered on a continuing basis; and
the reasonableness of any commissions; and arrangements for payment of
fund expenses. Commissions for foreign investments traded on foreign
exchanges generally will be higher than for U.S. investments and may not be
subject to negotiation.
323 The fund may execute portfolio transactions with broker-dealers who
provide research and execution services to the fund or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers
generally is made by FMR (to the extent possible consistent with execution
considerations) in accordance with a ranking of broker-dealers determined
periodically by FMR's investment staff based upon the quality of research
and execution services provided.
324 The receipt of research from broker-dealers that execute transactions
on behalf of the fund may be useful to FMR in rendering investment
management services to the fund or its other clients, and conversely, such
information provided by broker-dealers who have executed transaction orders
on behalf of other FMR clients may be useful to FMR in carrying out its
obligations to the fund. The receipt of such research has not reduced
FMR's normal independent research activities; however, it enables FMR to
avoid the additional expenses that could be incurred if FMR tried to
develop comparable information through its own efforts.
325 Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the fund and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
326 FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund or shares of other Fidelity funds
to the extent permitted by law. FMR may use research services provided by
and place agency transactions with Fidelity Brokerage Services, Inc.
(FSBI), and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. Prior to September 4, 1992, FBSL operated under the name
Fidelity Portfolio Services, Ltd. (FPSL), as a wholly owned subsidiary of
Fidelity International Limited (FIL). Edward C. Johnson 3d is Chairman of
FIL. Mr. Johnson 3d, Johnson family members, and various trusts for the
benefit of the Johnson family own, directly or indirectly, more than 25% of
the voting common stock of FIL.
327 FMR may allocate brokerage transactions to broker-dealers who have
entered into arrangements with FMR under which the broker-dealer allocates
a portion of the commissions paid by the fund toward payment of the fund's
expenses, such as transfer agent fees of FSC or custodian fees. The
transaction quality must, however, be comparable to those of other
qualified broker-dealers. Section 11(a) of the Securities Exchange Act of
1934 prohibits members of national securities exchanges from executing
exchange transactions for accounts which they or their affiliates manage,
except in accordance with regulations of the SEC. Pursuant to such
regulations, the Board of Trustees has approved a written agreement that
permits FBSI to effect portfolio transactions on national securities
exchanges and to retain compensation in connection with such transactions.
328 The Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the fund and review the commissions paid by the fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund.
329 For the fiscal years ended November 30, 1993 and 1992, the portfolio
turnover rates were 101 % and 138%, respectively.
330 For the fiscal years ended November 30, 1993, 1992, and 1991, the fund
paid brokerage commissions of $4,779,000, $4,123,000, and
$3,444,000 , respectively. During fiscal 1993, $3,255,000 , or
68.1 %, of these commissions were paid to brokerage firms that provided
research services, although the provision of such services was not
necessarily a factor in the placement of all of this business with such
firms. The fund pays both commissions and spreads in connection with the
placement of portfolio transactions; FBSI is paid on a commission basis.
During fiscal 1993, 1992, and 1991, the fund paid brokerage commissions of
$1,179,000, $1,142,000, and $751,000 , respectively, to FBSI. During
fiscal 1993, this amounted to 24.7 % of the aggregate brokerage
commissions paid by the fund for transactions involving 45.4 % of the
aggregate dollar amount of transactions in which the fund paid brokerage
commissions. The difference between the percentage of brokerage
commissions paid to and the percentage of the dollar amount of transactions
effected through FBSI is a result of the low commission rates charged by
FBSI.
331 During fiscal 1993, 1992, and 1991, the fund paid $ 0 , $1,000,
and $15,000 , respectively, in brokerage commissions to FBSL.
332 From time to time the Trustees will review whether the recapture for
the benefit of the fund of some portion of the brokerage commissions or
similar fees paid by the fund on portfolio transactions is legally
permissible and advisable. The fund seeks to recapture soliciting
broker-dealer fees on the tender of fund securities, but at present no
other recapture arrangements are in effect. The Trustees intend to
continue to review whether recapture opportunities are available and are
legally permissible and, if so, to determine in the exercise of their
business judgment whether it would be advisable for the fund to seek such
recapture.
333 Although the Trustees and officers of the fund are substantially the
same as those of other funds managed by FMR, investment decisions for the
fund are made independently from those of other funds managed by FMR or
accounts managed by FMR affiliates. It sometimes happens that the same
security is held in the portfolio of more than one of these funds or
accounts. Simultaneous transactions are inevitable when several funds are
managed by the same investment adviser, particularly when the same security
is suitable for the investment objective of more than one fund.
334 When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with a formula considered by the officers of the funds involved
to be equitable to each fund. In some cases this system could have a
detrimental effect on the price or value of a security as far as the fund
is concerned. In other cases, however, the ability of the fund to
participate in volume transactions will produce better executions and
prices for the fund. It is the current opinion of the Trustees that the
desirability of retaining FMR as investment adviser to the fund outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
335VALUATION OF PORTFOLIO SECURITIES
336 Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Equity securities for
which the primary market is the U.S. are valued at last sale price or, if
no sale has occurred, at the closing bid price. Equity securities for
which the primary market is outside the U.S. are valued using the official
closing price or the last sale price in the principal market where they are
traded. If the last sale price (on the local exchange) is unavailable, the
last evaluated quote or last bid price is normally used. Short-term
securities valued either at amortized cost or at original cost plus accrued
interest, both of which approximate current value. Fixed-income securities
are valued primarily by a pricing service that uses a vendor security
valuation matrix which incorporated both dealer-supplied valuations and
electronic data processing techniques. This twofold approach is believed
to more accurately reflect fair value because it takes into account
appropriate factors such as institutional trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data, without exclusive reliance upon
quoted, exchange, or over-the-counter prices. Use of pricing services has
been approved by the Board of Trustees.
337 Securities and other assets for which there is no readily available
market are valued in good faith by a committee appointed by the Board of
Trustees. The procedures set forth above need not be used to determine the
value of the securities owned by the fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
338 Generally, the valuation of foreign and domestic equity securities, as
well as corporate bonds, U.S. government securities, money market
instruments, and repurchase agreements, is substantially completed each day
at the close of the NYSE. The values of any such securities held by the
fund are determined as of such time for the purpose of computing the fund's
net asset value. Foreign security prices are furnished by independent
brokers or quotation services which express the value of securities in
their local currency. FSC gathers all exchange rates daily at the close of
the NYSE using the last quoted price on the local currency and then
translates the value of foreign securities from their local currency into
U.S. dollars. Any changes in the value of forward contracts due to
exchange rate fluctuations and days to maturity are included in the
calculation of net asset value. If an extraordinary event that is expected
to materially affect the value of a portfolio security occurs after the
close of an exchange on which that security is traded, then the security
will be valued as determined in good faith by a committee appointed by the
Board of Trustees.
339PERFORMANCE
340 The fund may quote its performance in various ways. All performance
information supplied by the fund in advertising is historical and is not
intended to indicate future returns. The fund's share price and total
returns fluctuate in response to market conditions and other factors, and
the value of fund shares when redeemed may be more or less than their
original cost.
341 TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of the fund's returns, including the effect of reinvesting
dividends and capital gain distributions, and any change in the fund's NAV
over the period. Average annual total returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment in the fund over a stated period, and then calculating the
annually compounded percentage rate that would have produced the same
result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative return of 100% over ten years would
produce an average annual return of 7.18%, which is the steady annual rate
of return that would equal 100% growth on a compounded basis in ten years.
While average annual returns are a convenient means of comparing investment
alternatives, investors should realize that the fund's performance is not
constant over time, but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the fund.
342 In addition to average annual returns, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given below. Total returns and other performance
information may be quoted numerically or in a table, graph, or similar
illustration. Total returns also may be quoted on a before-tax or
after-tax basis.
343 NET ASSET VALUE. Charts and graphs using the fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
344 MOVING AVERAGES. The fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's
adjusted closing NAV for a specified period. A short-term moving average
is the average of each day's adjusted closing NAV for a specified period.
Moving Average Activity Indicators combine adjusted closing NAVs from the
last business day of each week with moving averages for a specified period
to produce indicators showing when an NAV has crossed,stayed above, or
stayed below its moving average. On November 26 , 1993, the 13-week
and 39-week moving averages were 19.14 and 17.93 ,
respectively.
345 HISTORICAL FUND RESULTS. The table below shows the income and capital
elements of the fund's total return for the period November 30, 1 984
through November 30 , 1993. The table compares the fund's return to
the record of the S&P 500, the Dow Jones Industrial Average (DJIA), and
the cost of living (as measured by the Consumer Price Index, or CPI) over
the same period. The S&P 500 and DJIA comparisons are provided to show
how the fund's total return compared to the record of a broad average of
common stock prices and a narrower set of stocks of major industrial
companies, respectively, over the same period. The fund has the ability to
invest in securities not included in either index, and its investment
portfolio may or may not be similar in composition to the indices. Figures
for the S&P 500 and DJIA are based on the prices of unmanaged groups of
stocks and, unlike the fund's returns, their returns do not include the
effect of paying brokerage commissions and other costs of investing.
346 During the period from November 30 , 1984 through November
30, 1993, a hypothetical $10,000 investment in Fidelity Retirement Growth
Fund would have grown to $ 42,040 , assuming all distributions were
reinvested. This was a period of widely fluctuating stock prices and the
following table should not be considered representative of the dividend
income or capital gain or loss that could be realized from an investment in
the fund today.
643FIDELITY RETIREMENT GROWTH FUND 644INDIC
ES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
645 646Value of 647Value of 648Value of 649 650 651 652

653 Fiscal 654Initial 655Reinvested 656Reinvested 657 658 659 660

661 Year Ended 662$10,000 663Income 664Capital 665Total 666S&am 667 668Cost of
Gain p;P

669November 30 670Investmen 671Distributions 672Distribution 673Value 674500 675DJIA 676
t s Living*

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
198 4 9,582 31 322 9,935 9,786 $10,
405 10,300

198 5 11,735 281 546 12, 563 1 2,688 $10,
13,286
771

198 6 1 3,352 673 1,610 15, 634 1 7,103
1 6,963 10,909

198 7 10,205 632 4,180 1 5,017 1 6,888
1 6,170 11,403

198 8 9,897 916 8,249 1 9,063 20,186
1 9,942 11,887

198 9 12,319 1, 551 10,267 24,136 2 6,811
26,094 12,441

19 90 10,355 1, 814 9,411 21,579 26,362
25,185 13,221

199 1 1 3,573 2, 610 12,335 2 8,518 30,834
30,311 13,617

199 2 1 5,591 3,3 90 1 6,206 3 5,188 36,260
3 5,919 14,032

199 3 15,189 3,639 2 3,212 42,040 41,602
39,547 14,407

</TABLE>

347* From month-end closest to initial investment date.
348 Explanatory Notes: With an initial investment of $10,000 made on
November 30, 1984 , the net amount invested in fund shares was
$10,000. The cost of the initial investment ($10,000), together with the
aggregate cost of reinvested dividends and capital gain distributions for
the period covered (their cash value at the time they were reinvested),
amounted to $ 29,735 . If distributions had not been reinvested, the
amount of distributions earned from the fund over time would have been
smaller, and cash payments for the period would have amounted to
$ 1,625 for income dividends and $ 10,544 for capital gain
distributions. Tax consequences of different investments have not been
factored into the above figures.
349 The fund's performance may be compared to the performance of other
mutual funds in general, or to the performance of particular types of
mutual funds. These comparisons may be expressed as mutual fund rankings
prepared by Lipper Analytical Services, Inc. (Lipper), an independent
service located in Summit, New Jersey that monitors the performance of
mutual funds. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the fund's
performance may be compared to mutual fund performance indices prepared by
Lipper.
350 From time to time, the fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
351 Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial strategies.
For example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and Portfolio Advisory Services.
352 Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the Consumer Price Index), and
combinations of various capital markets. The performance of these capital
markets is based on the returns of different indices.
353 Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to
those of the funds. Ibbotson calculates total returns in the same method
as the funds. The funds may also compare performance to that of other
compilations or indices that may be developed and made available in the
future.
354 In advertising materials, Fidelity may reference or discuss its
products and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders
355 The fund may present its fund number, Quotron(registered trademark)
number, and CUSIP number, and discuss or quote its current portfolio
manager.
356 VOLATILITY. The fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may compare
these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns to
those of a benchmark. Measures of benchmark correlation indicate how valid
a comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data.
357 MOMENTUM INDICATORS indicate the fund's price movements over specific
periods of time. Each point on the momentum indicator represents the
fund's percentage change in price movements over that period.
358 The fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a
program, an investor invests a fixed dollar amount in a fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more
shares when prices are low. While such a strategy does not assure a profit
or guard against loss in a declining market, the investor's average cost
per share can be lower than if fixed numbers of shares are purchased at the
same intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
359 The fund may be available for purchase through retirement plans or
other programs offering deferral of, or exemption from, income taxes, which
may produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
360 As of November 30, 1993, FMR managed approximately $125 billion in
equity fund assets as defined and tracked by Lipper. This figure
represents the largest amount of equity fund assets under management by a
mutual fund investment adviser in the United States, making FMR America's
leading equity (stock) fund manager.
361ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
362 The fund is open for business and its net asset value per share (NAV)
is calculated each day the New York Stock Exchange (NYSE) is open for
trading. The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule , with
the addition of New Year's Day, to be observed in the future, the NYSE
may modify its holiday schedule at any time.
363 FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the fund's NAV may be affected on days when investors
do not have access to the fund to purchase or redeem shares.
364 If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
365 Pursuant to Rule 11a-3 under the 1940 Act, the fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may
be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) the fund suspends
the redemption of the shares to be exchanged as permitted under the 1940
Act or the rules and regulations thereunder, or the fund to be acquired
suspends the sale of its shares because it is unable to invest amounts
effectively in accordance with its investment objective and policies.
366 In the Prospectus, the fund has notified shareholders that it reserves
the right at any time, without prior notice, to refuse exchange purchases
by any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
367DISTRIBUTIONS AND TAXES
368 DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, Fidelity may reinvest your distributions at
the then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
369 DIVIDENDS. A portion of the fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that the fund's income is derived from qualifying dividends.
Because the fund may earn other types of income, such as interest income
from securities loans, non-qualifying dividends, and short-term capital
gains, the percentage of dividends from the fund that qualify for the
deduction generally will be less than 100%. The fund will notify corporate
shareholders annually of the percentage of Fund dividends that qualify for
the dividends-received deduction. A portion of the fund's dividends
derived from certain U.S. government obligations may be exempt from state
and local taxation. Gains (losses) attributable to foreign currency
fluctuations are generally taxable as ordinary income, and therefore will
increase (decrease) dividend distributions. The fund will send each
shareholder a notice in January describing the tax status of dividends and
capital gain distributions for the prior year. If the fund purchases
shares in certain foreign entities, defined as passive foreign investment
companies (PFIC's) in the Internal Revenue Code, it may be subject to U.S.
federal income tax on a portion of any excess distribution or gain from the
disposition of such shares. Interest charges may also be imposed on the
fund with respect to deferred taxes arising from such distributions or
gains.
370 CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the fund
on the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of the fund and such shares are held
six months or less and are sold at a loss, the portion of the loss equal to
the amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
371 Short-term capital gains distributed by the fund are taxable to
shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction.
372 FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Because the fund does
not currently anticipate that securities of foreign issuers will constitute
more than 50% of its total assets at the end of its fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction
on their federal income tax returns with respect to foreign taxes withheld.
373 TAX STATUS OF THE FUND. The fund has qualified and intends to continue
to qualify each year as a "regulated investment company" for tax purposes
so that it will not be liable for federal tax at the fund level on income
and capital gains distributed to shareholders. In order to qualify as a
regulated investment company and avoid being subject to federal income or
excise taxes, the fund intends to distribute substantially all of its net
investment income and net realized capital gains within each calendar year
as well as on a fiscal year basis. The fund also intends to comply with
other tax rules applicable to regulated investment companies, including a
requirement that capital gains from the sale of securities held less than
three months constitute less than 30% of the fund's gross income for each
fiscal year. Gains from some forward currency contracts, futures
contracts, and options are included in this 30% calculation, which may
limit the fund's investments in such instruments. The fund is treated as a
separate entity from the other funds of Fidelity Financial Trust for tax
purposes.
374 OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting the fund and its shareholders;
no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on distributions received from the fund. Investors should
consult their tax advisers to determine whether the fund is suitable to
their particular tax situation.
375FMR
376 FMR is a wholly owned subsidiary of FMR Corp., a parent company
organized in 1972. At present, the principal operating activities of FMR
Corp. are those conducted by three of its divisions as follows: FSC, which
is the transfer and shareholder servicing agent for certain of the funds
advised by FMR; Fidelity Investments Institutional Operations Company,
which performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
377 Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides Trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research, and may
supply portfolio management services, to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FMR Texas Inc., a wholly owned subsidiary of FMR formed in 1989, supplies
portfolio management and research services in connection with certain money
market funds advised by FMR.
378TRUSTEES AND OFFICERS
379 The Trustees and executive officers of the trust are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. All persons named as
Trustees also serve in similar capacities for other funds advised by FMR.
Unless otherwise noted, the business address of each Trustee and officer is
82 Devonshire Street, Boston, Massachusetts 02109, which is also the
address of FMR. Those Trustees who are "interested persons" (as defined in
the 1940 Act) by virtue of their affiliation with either the trust or FMR
are indicated by an asterisk (*).
380*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief
Executive Officer 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
FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
381*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc. and Fidelity Management &
Research (Far East) Inc.
382RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
383PHYLLIS BURKE DAVIS, 340 E. 64th Street #22C, New York, NY, Trustee
(1992). Prior to her retirement in September 1991, Mrs. Davis was the
Senior Vice President of Corporate Affairs of Avon Products, Inc. She is
currently a Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores, 1990), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she serves as a Director
of the New York City Chapter of the National Multiple Sclerosis Society,
and is a member of the Advisory Council of the International Executive
Service Corps. and the President's Advisory Council of The University of
Vermont School of Business Administration (1988).
384RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
385E. BRADLEY JONES, 3 881-2 Lander Road, Chagrin Falls, OH, Trustee
(1990). Prior to his retirement in 1984, Mr. Jones was Chairman and Chief
Executive Officer of LTV Steel Company. Prior to May 1990, he was Director
of National City Corporation (a bank holding company) and National City
Bank of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he
serves as a Trustee of First Union Real Estate Investments; Chairman of the
Board of Trustees and a member of the Executive Committee of the Cleveland
Clinic Foundation, a Trustee and a member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic Florida.
386DONALD J. KIRK, 680 Steamboat Road, Apartment #1 - North,
Greenwich, CT, Trustee, is a Professor at Columbia University Graduate
School of Business and a financial consultant. Prior to 1987, he was
Chairman of the Financial Accounting Standards Board. Mr. Kirk is a
Director of General Re Corporation (reinsurance), the National Arts
Stabilization Fund, Greenwich Hospital Association (1989), and Valuation
Research Corp. (appraisals and valuations, 1993).
387*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior
to his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction, 1988). In addition, he serves as a Trustee
of Boston College, Massachusetts Eye & Ear Infirmary, Historic
Deerfield (1989) and Society for the Preservation of New England
Antiquities, and as an Overseer of the Museum of Fine Arts of Boston
(1990).
388GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989),
is Chairman of G.M. Management Group (strategic advisory services). Prior
to his retirement in July 1988, he was Chairman and Chief Executive Officer
of Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), and Commercial Intertech Corp. (water treatment equipment, 1992) ,
and Associated Estates Realty Corporation (a real estate investment trust,
1993).
389EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee
(1988). Prior to his retirement in 1985, Mr. Malone was Chairman, General
Electric Investment Corporation and a Vice President of General Electric
Company. He is a Director of Allegheny Power Systems, Inc. (electric
utility), General Re Corporation (reinsurance) and Mattel Inc. (toy
manufacturer). He is also a Trustee of Rensselaer Polytechnic Institute
and of Corporate Property Investors and a member of the Advisory Boards of
Butler Capital Corporation Funds and Warburg, Pincus Partnership Funds.
390MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
391THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee (1988), is President of The Wales Group, Inc. (management and
financial advisory services). Prior to retiring in 1987, Mr. Williams
served as Chairman of the Board of First Wachovia Corporation (bank holding
company), and Chairman and Chief Executive Officer of The First National
Bank of Atlanta and First Atlanta Corporation (bank holding company). He
is currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software, 1988), Georgia Power Company (electric utility), Gerber
Alley & Associates, Inc. (computer software), National Life Insurance
Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
392GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
393HARRIS LEVITON, is Vice President of Fidelity Retirement Growth Fund
(1992) and is an employee of FMR.
394ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President-Legal of FMR Corp., and Clerk of FDC.
395ROBERT H. MORRISON, Manager, Security Transactions, is an employee of
FMR.
396Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
397 As of November 30, 1993, the Trustees and officers of the fund owned in
the aggregate less than 1% of the fund's outstanding shares.
398MANAGEMENT CONTRACT
399 The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or FMR
performing services relating to research, statistical, and investment
activities.
400 In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of the fund. These services include providing
facilities for maintaining the fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
401 In addition to the management fee payable to FMR and the fees payable
to FSC, the fund pays all of its expenses, without limitation, that are not
assumed by those parties. The fund pays for typesetting, printing, and
mailing proxy material to shareholders, legal expenses, and the fees of the
custodian, auditor, and non-interested Trustees. Although the fund's
management contract provides that the fund will pay for typesetting,
printing, and mailing prospectuses, statements of additional information,
notices, and reports to existing shareholders, the trust has entered into a
revised transfer agent agreement with FSC, pursuant to which FSC bears the
cost of providing these services to existing shareholders. Other expenses
paid by the fund include interest, taxes, brokerage commissions, the fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. The fund is also liable for such nonrecurring expenses as
may arise, including costs of any litigation to which the fund may be a
party and any obligation it may have to indemnify the trust's officers and
Trustees with respect to litigation.
402FMR is the fund's manager pursuant to a management contract dated
December 1, 1993, which was approved by shareholders on November 17, 1993.
For the services of FMR under the contract, the fund pays FMR a monthly
management fee composed of the sum of two elements: a basic fee and a
performance adjustment based on a comparison of the fund's performance to
that of the S&P 500.
403COMPUTING THE BASIC FEE. The fund's basic fee rate is composed of two
elements: a group fee rate and individual fund fee rate.
404The group fee rate is based on the monthly average net assets of all of
the registered investment companies with which FMR has management contracts
and is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left. On the right, the effective fee rate schedule
shows the results of cumulatively applying the annualized rates at varying
asset levels. Also shown is the effective annual group fee rate at various
levels of group net assets. For example, the effective annual fee rate at
$ 226 billion of group net assets - their approximate level for
November 1993 - was . 3250 % .
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES
0 - $ 3 billion .520% $ 0.5 billion .5200%

3 - 6 .490 25 .4238

6 - 9 .460 50 .3823

9 - 12 .430 75 .3626

12 - 15 .400 100 .3512

15 - 18 .385 125 .3430

18 - 21 .370 150 .3371

21 - 24 .360 175 .3325

24 - 30 .350 200 .3284

30 - 36 .345 225 .3253

36 - 42 .340 250 .3223

42 - 48 .335 275 .3198

48 - 66 .325 300 .3175

66 - 84 .320 325 .3153

84 - 102 .315 350 .3133

102 - 138 .310

138 - 174 .305

174 - 228 .300

228 - 282 .295

282 - 336 .290

Over 336 .285

405* The rates shown for average group assets in excess of $174 billion
were adopted by FMR on a voluntary basis on November 1, 1993 pending
shareholder approval of a new management contract reflecting the extended
schedule. The extended schedule provides for lower management fees as total
assets under management increase.
406The individual fund fee rate is .30%. Based on the average net assets
of funds advised by FMR for November 1993, the annual basic fee rate would
be calculated as follows:
817Group Fee Rate 818Individual Fund Fee Rate 819Basic Fee Rate

820 .3250 % 821+ 822.30% 823= 824. 6250
%

407One twelfth (1/12) of this annual management fee rate is then applied to
the fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
408COMPUTING THE PERFORMANCE ADJUSTMENT. The basic fee is subject to upward
or downward adjustment, depending upon whether, and to what extent, the
fund's investment performance for the performance periods exceeds, or is
exceeded by, the record of the S & P 500 over the same period. The
performance period consists of the most recent month plus the previous 35
months. Each percentage point difference (up t o a maximum difference
of ( + 10) is multiplied by a performance adjustment rate of .02%. Thus,
the maximum annualized adjustment rate is + .20%. This performance
comparison is made at the end of each month. One twelfth (1/12) of this
rate is then applied to the fund's average net assets for the entire
performance period, giving a dollar amount which is added to (or subtracted
from) the basic fee.
409The fund's performance is calculated based on change in net asset value.
For purposes of calculating the performance adjustment, any dividends or
capital gain distributions paid by the fund are treated as if reinvested in
fund shares at the net asset value as of the record date for payment. The
record of the S&P 500 is based on change in value and is adjusted for
any cash distributions from the companies whose securities compose the
S&P 500.
410Because the adjustment to the basic fee is based on the fund's
performance compared to the investment record of the S&P 500, the
controlling factor is not whether the fund's performance is up or down per
se, but whether it is up or down more or less than the record of the S
& P 500. Moreover, the comparative investment performance of the fund
is based solely on the relevant performance period without regard to the
cumulative performance over a longer or shorter period of time.
411During the fiscal years ended November 30, 1993, 1992, and 1991, FMR
received $18,206,000, $13,566,000, and $7,176,000 , respectively,
for its services as investment adviser to the fund. These fees which
include both the basic fee and the performance adjustment, were equivalent
to .76 %, .71%, and .48%, respectively, of the fund's average net
assets for each of these years. For fiscal 1993, 1992, and 1991, the upward
performance adjustments were $3,094,000, $1,372,000, and $2,465,000 .
412To comply with the California Code of Regulations, FMR will reimburse
the fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating the fund's expenses for purposes of this regulation, the
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
413SUB-ADVISERS. FMR has entered into sub-advisory agreements with FMR
U.K., and FMR Far East, wholly owned subsidiaries of FMR. Pursuant to the
sub-advisory agreements, FMR may receive investment advice and research
services with respect to companies based outside the U.S. from the
sub-advisers and may grant the sub-advisers investment management authority
as well as the authority to buy and sell securities if FMR believes it
would be beneficial to the fund.
414The sub-advisory agreements provide that FMR will pay fees to FMR U.K.
and FMR Far East equal to 110% and 105%, respectively, of FMR U.K.'s and
FMR Far East's costs incurred in connection with providing investment
advice and research services. FMR also will pay fees equal to 50% of its
monthly management fee (including performance adjustment) with respect to
the fund's average net assets managed by the sub-advisers on a
discretionary basis.
415Prior to December 1, 1993, FMR had sub-advisory agreements with FMR U.K.
and FMR Far East on behalf of the fund, pursuant to which each sub-adviser
provided FMR with investment advice and research services. Under those
agreements, FMR U.K. and FMR Far East were compensated for their services
according to the same formulas as they are compensated currently for
providing investment advice and research services.
416The fees paid to FMR U.K. and FMR Far East for fiscal 1993, 1992, and
1991 are shown in the following tables.
417Fiscal Year Ended
83611/30/93 83711/30/92 83811/30/91

839FMR U.K. 840$ 57,421 841$37,657 842$191,000

843FMR Far East 844$ 89,095 845$34,514 846$178,000

418DISTRIBUTION AND SERVICE PLAN
419 The fund has adopted a distribution and service plan (the Plan) under
Rule 12b-1 of the 1940 Act (the Rule). The Rule provides in substance that
a mutual fund may not engage directly or indirectly in financing any
activity that is primarily intended to result in the sale of shares of the
fund except pursuant to a plan adopted by the fund under the Rule. The
Board of Trustees has adopted the Plan to allow the fund and FMR to incur
certain expenses that might be considered to constitute indirect payment by
the fund of distribution expenses. Under the Plan, if the payment by the
fund to FMR of management fees should be deemed to be indirect financing by
the fund of the distribution of its shares, such payment is authorized by
the Plan.
420 The Plan specifically recognizes that FMR, either directly or through
FDC, may use its management fee revenue, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the fund. In addition, the
Plan provides that FMR may use its resources, including its management fee
revenues, to make payments to third parties that provide assistance in
selling shares of the fund, or to third parties, including banks, that
render shareholder support services. For the fiscal year ended November
30, 1993, payments to third parties amounted to $ 31,000 .
421 As required by the Rule, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan prior to its
approval, and have determined that there is a reasonable likelihood that
the Plan will benefit the fund and its shareholders. In particular, the
Trustees noted that the Plan does not authorize payments by the fund other
than those made to FMR under its management contract with the fund. To the
extent that the Plan gives FMR and FDC greater flexibility in connection
with the distribution of shares of the fund, additional sales of the fund's
shares may result. Additionally, certain shareholder support services may
be provided more effectively under the Plan by local entities with whom
shareholders have other relationships. The fund's Plan was approved by
shareholders on September 24, 1986.
422 The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling, or distributing securities. Although the scope of
this prohibition under the Glass-Steagall Act has not been clearly defined
by the courts or appropriate regulatory agencies, FDC believes that the
Glass-Steagall Act should not preclude a bank from performing shareholder
support services or servicing and recordkeeping functions. FDC intends to
engage banks only to perform such functions. However, changes in federal or
state statutes and regulations pertaining to the permissible activities of
banks and their affiliates or subsidiaries, as well as further judicial or
administrative decisions or interpretations, could prevent a bank from
continuing to perform all or a part of the contemplated services. If a
bank were prohibited from so acting, the Trustees would consider what
actions, if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the operation of
the fund might occur, including possible termination of any automatic
investment or redemption or other services then provided by the bank. It
is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences. The fund may execute
fund transactions with and purchase securities issued by depository
institutions that receive payments under the Plan. No preference will be
shown in the selection of investments for the instruments of such
depository institutions. In addition, state securities laws on this issue
may differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to register as
dealers pursuant to state law.
423CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
424 Fidelity Service Co. (FSC) is transfer, dividend disbursing, and
shareholders' servicing agent for the funds. Under each fund's contract
with FSC, the fund pays an annual fee of $25.50 per basic retail account
with a balance of $5,000 or more, $15.00 per basic retail account with a
balance of less than $5,000, and a supplemental activity charge of $5.61
for monetary transactions. These fees and charges are subject to annual
cost escalation based on postal rate changes and changes in wage and price
levels as measured by the National Consumer Price Index for Urban Areas.
With respect to certain institutional client master accounts, each fund
pays FSC a per-account fee of $95.00 and monetary transaction charges of
$20.00 and $17.50, depending on the nature of services provided. Fees for
certain institutional retirement plan accounts are based on the net assets
of all such accounts in the fund.
425 Under the funds contract, FSC pays out-of-pocket expenses associated
with providing transfer agent services. In addition, FSC bears the expense
of typesetting, printing, and mailing prospectuses, statements of
additional information, and all other reports, notices, and statements to
shareholders, with the exception of proxy statements.
426 The transfer agent fees paid to FSC by the fund for the fiscal periods
ended November 30, 1993, 1992, and 1991 were $ 5,655,000 , $4,748,000,
and $4,059,000, respectively. If a portion of the fund's brokerage
commissions had not resulted in payment of certain of these fees, the fund
would have paid transfer agent fees of $5,706,000, $4,748,000, and
$4,059,000, respectively.
427 The trust's contract with FSC also provides that FSC will perform the
calculations necessary to determine each fund's net asset value per share
and dividends and maintain each fund's accounting records. Prior to July 1,
1991, the annual fee for these pricing and bookkeeping services was based
on two schedules: one pertaining to the fund's average net assets, and one
pertaining to the type and number of transactions the fund made. The fee
rates in effect as of July 1, 1991 are based on each fund's average net
assets, specifically, .06% for the first $500 million of average net assets
and .03% for average net assets in excess of $500 million. The fee is
limited to a minimum of $45,000 and a maximum of $750,000 per year. For
fiscal 1993, 1992, and 1991, the fees paid by each fund to FSC for pricing
and bookkeeping services (including related out-of-pocket expenses) were
$620,000, $655,000, and $345,000.
428 FSC also receives fees for administering the fund's securities lending
program. Securities lending fees are based on the number and duration of
individual securities loans. The brokerage securities lending fees paid by
the fund for fiscal years ended November 30, 1993, 1992, and 1991
were $159,000, $94,000, and $89,000.
429 The fund has a distribution agreement with Fidelity Distributors
Corporation (FDC), a Massachusetts corporation organized on July 18, 1960.
FDC is a broker-dealer registered under the Securities Exchange Act of 1934
and is a member of the National Association of Securities Dealers, Inc. The
distribution agreement calls for FDC to use all reasonable efforts,
consistent with its other business, to secure purchasers for shares of the
fund, which are continuously offered at net asset value. Promotional and
administrative expenses in connection with the offer and sale of shares are
paid by FMR.
430DESCRIPTION OF THE TRUST
431 TRUST ORGANIZATION. Fidelity Retirement Growth Fund is a fund of
Fidelity Financial Trust (the trust), an open-end management investment
company organized as a Massachusetts business trust on October 20, 1982.
On December 17, 1982, the Declaration of Trust was amended to change the
name of the trust from Fidelity Tax-Qualified Equity Fund to Fidelity
Freedom Fund and on January 1, 1987, the Declaration of Trust was further
amended to change the name of the trust to Fidelity Financial Trust.
Currently, there are three funds of the trust: Fidelity Convertible
Securities Fund, Fidelity Retirement Growth Fund, and Fidelity
Equity-Income II Fund. The Declaration of Trust permits the Trustees to
create additional funds.
432 In the event that FMR ceases to be the investment adviser to the trust
or a fund, the right of the trust or fund to use the identifying name
"Fidelity" may be withdrawn.
433 The assets of the trust received for the issue or sale of shares of
each fund and all income, earnings, profits, and proceeds thereof, subject
only to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to
be allocated in proportion to the asset value of the respective funds,
except where allocations of direct expense can otherwise be fairly made.
The officers of the trust, subject to the general supervision of the Board
of Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
434 SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or the Trustees include a provision limiting the obligations created
thereby to the trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholder held
personally liable for the obligations of the fund. The Declaration of
Trust also provides that each fund shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which a fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
435 The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects a Trustee
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of their office.
436 VOTING RIGHTS. The fund's capital consists of shares of beneficial
interest . As a shareholder, you receive one vote for each dollar of net
asset value per share you own. The shares have no preemptive or
conversion rights; the voting and dividend rights, the right of redemption,
and the privilege of exchange are described in the Prospectus. Shares are
fully paid and nonassessable, except as set forth under the heading
"Shareholder and Trustee Liability" above. Shareholders representing 10%
or more of the trust or a fund may, as set forth in the Declaration of
Trust, call meetings of the trust or a fund for any purpose related to
trust or fund, as the case may be, including, in the case of a meeting of
the entire trust, the purpose of voting on removal of one or more Trustees.
The trust or any fund may be terminated upon the sale of its assets to
another open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a
majority of the outstanding shares of the trust or the fund. If not so
terminated, the trust and its funds will continue indefinitely.
437 CUSTODIAN. Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts, is custodian of the assets of the fund. The custodian is
responsible for the safekeeping of the fund's assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the fund or in deciding which
securities are purchased or sold by the fund. The fund may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
438 FMR, its officers and directors, its affiliated companies, and the
trust's Trustees from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. The Boston branch of the fund's custodian leases its office space
from an affiliate of FMR at a lease payment which, when entered into, was
consistent with prevailing market rates. Transactions that have occurred
to date include mortgages and personal and general business loans. In the
judgment of FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund relationships.
439 AUDITOR. Price Waterhouse, 160 Federal Street, Boston, Massachusetts
serves as the trust's independent accountant. The auditor examines
financial statements for the fund and provides other audit, tax, and
related services.
440FINANCIAL STATEMENTS
441 The fund's Annual Report for the fiscal year ended November 30, 1993 is
a separate report supplied with this Statement of Additional Information
and is incorporated herein by reference.
FIDELITY EQUITY-INCOME II FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION

<TABLE>
<CAPTION>
<S> <C>
1................................... Cover Page
...

2a.................................. Expenses
..

b, Contents; The Fund at a Glance; Who May Want to
c................................ Invest

3a.................................. Financial Highlights
..

*
b...................................
.

Performance
c....................................

4a Charter
i.................................

The Fund at a Glance; Investment Principles;
ii............................... Securities & Investment Practices, Fundamental
Investment Policies and Restrictions.

b................................... Securities & Investment Practices
..

Who May Want to Invest; Investment Principles;
c.................................... Securities & Investment Practices

5a.................................. Charter
..

b(i)................................ Doing Business with Fidelity; Charter

Charter
(ii)..............................

..(iii)........................... Expenses; Breakdown of Expenses

c, Charter; FMR and Its Affiliates; Breakdown of
d................................ Expenses, Cover Page

FMR and Its Affiliates
e....................................

Expenses
f....................................

g(i)................................ FMR and its Affiliates
..

(ii)................................. *
..

5A................................. Performance
.

6a Charter
i.................................

How to Buy Shares; How to Sell Shares; Transaction
ii................................ Details; Exchange Restrictions

*
iii...............................

*
b...................................
.

Exchange Restrictions
c....................................

*
d...................................
.

Doing Business with Fidelity; How to Buy Shares;
e.................................... How to Sell Shares; Investor Services

f,g................................. Dividends, Capital Gains, and Taxes
..

7a.................................. Cover Page; Charter
..

How to Buy Shares; Transaction Details
b...................................
.

*
c....................................

How to Buy Shares
d...................................
.

e.................................... *

f, ................................ *

8................................... How to Sell Shares; Investor Services; Transaction
... Details; Exchange Restrictions

9................................... *
...

</TABLE>

* Not Applicable
FIDELITY EQUITY-INCOME II FUND
CROSS REFERENCE SHEET
(continued)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION

<TABLE>
<CAPTION>
<S> <C>
10, 11.......................... Cover Page

12.................................. *
..

13a - Investment Policies and Limitations
c............................

*
d..................................

14a - Trustees and Officers
c............................

15a, *
b..............................

Trustees and Officers
c..................................

16a FMR, Portfolio Transactions
i................................

Trustees and Officers
ii..............................

Management Contract
iii.............................

Management Contract
b.................................

c, Contracts with Companies Affiliated with FMR
d.............................

e - *
g...........................

Description of the Trust
h.................................

Contracts with Companies Affiliated with FMR
i.................................

17a - Portfolio Transactions
c............................

*
d,e..............................

18a................................ Description of the Trust
..

*
b.................................

19a................................ Additional Purchase and Redemption Information
..

Additional Purchase and Redemption Information;
b.................................. Valuation of Portfolio Securities

*
c..................................

20.................................. Distributions and Taxes
..

21a, Contracts with Companies Affiliated with FMR
b..............................

*
c.................................

22.................................. Performance
..

23.................................. Financial Statements
..

</TABLE>

* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how the fund
invests and the services available to shareholders.
A Statement of Additional Information dated January 19, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, nor are they federally insured or otherwise
protected by the FDIC, the Federal Reserve Board, or any other agency.
Equity-Income II seeks reasonable income by investing primarily in
income-producing equity securities. In selecting investments, the fund
also considers the potential for capital appreciation.
FIDELITY
EQUITY-INCOME II
FUND
PROSPECTUS
JANUARY 19, 1994
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
CVS-pro-194
(Registered trademark)
82 Devonshire Street, Boston, MA 02109
CONTENTS

KEY FACTS 3 THE FUND AT A GLANCE

3 WHO MAY WANT TO INVEST

EXPENSES AND PERFORMANCE 4 EXPENSES The fund's yearly
operating expenses.

5 FINANCIAL HIGHLIGHTS A summary
of the fund's financial data.

6 PERFORMANCE How the fund has
done over time.

YOUR ACCOUNT 8 DOING BUSINESS WITH FIDELITY

8 TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.

10 HOW TO BUY SHARES Opening an
account and making additional
investments.

12 HOW TO SELL SHARES Taking money
out and closing your account.

14 INVESTOR SERVICES Services to
help you manage your account.

16 DIVIDENDS, CAPITAL GAINS, AND
TAXES

SHAREHOLDER AND 18 TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.

20 EXCHANGE RESTRICTIONS

THE FUND IN DETAIL 21 CHARTER How the fund is
organized.

21 BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.

23 INVESTMENT PRINCIPLES The fund's
overall approach to investing.

23 SECURITIES AND INVESTMENT
PRACTICES

<r>KEY FACTS</r>

THE FUND AT A GLANCE
GOAL: Reasonable income and the potential for capital appreciation. As
with any mutual fund, there is no assurance that the fund will achieve its
goal.
STRATEGY: Invests mainly in income-producing equity securities.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. Foreign affiliates of FMR
help choose investments for the fund.
SIZE: As of November 30, 1993, the fund had over $ 5 billion in
assets.
WHO MAY WANT TO INVEST
The fund may be appropriate for investors who are willing to ride out stock
market fluctuations in pursuit of potentially high long-term returns. The
fund is designed for those who want some income from equity and bond
investments, but also want to be invested in the stock market for its
long-term growth potential. The fund is not in itself a balanced investment
plan.
Over time, stocks have shown greater growth potential than other types of
securities. In the short term, however, stock prices can fluctuate
dramatically in response to company, market, or economic news. The value
of the fund's investments and the income they generate will vary. When you
sell your fund shares, they may be worth more or less than what you paid
for them.

EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of the fund's assets. The fund
pays a management fee to FMR. It also incurs other expenses for services
such as maintaining shareholder records and furnishing shareholder
statements and fund reports. The fund's expenses are factored into its
share price or dividends and are not charged directly to shareholder
accounts (see page 21 ).
The following are projections based on historical expenses and are
calculated as a percentage of average net assets. A portion of the
brokerage commissions that the fund paid were used to reduce fund
expenses. Without this reduction, the total fund operating expenses would
have been .89%.
Management fee .53 %
12b-1 fee None
Other expenses .35 %
Total fund operating expenses .88 %
EXAMPLES: Let's say, hypothetically, that the fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 year $ 9
After 3 years $ 28
After 5 years $ 49
After 10 years $ 108
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.

UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)
FINANCIAL HIGHLIGHTS
The table that follows has been audited by Price Waterhouse, independent
accountants. Their unqualified report is included in the fund's Annual
Report. The Annual Report is incorporated by reference into (is legally a
part of) the Statement of Additional Information.
SELECTED PER-SHARE DATA

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
35.Years ended November 30, 1990E 1991 1992 1993

36.Net asset value, beginning of period $ 10.00 $ 10.18 $ 13.87 $ 16.57

37.Income from Investment Operations

38. Net investment income .03 .45C .40 .44

39. Net realized and unrealized gain (loss) .15 3.76 2.75 2.62
on investments

40. Total from investment operations .18 4.21 3.15 3.06

41.Less Distributions

42. From net investment income - (.44) (.32) (.41)

43. From net realized gain - (.08) (.13) (.37)

44. Total distributions - (.52) (.45) (.78)

45.Net asset value, end of period $ 10.18 $ 13.87 $ 16.57 $ 18.85

46.Total return B 1.80% 42.01 23.18 19.08%
D % %

47.RATIOS AND SUPPLEMENTAL DATA

48.Net assets, end of period (in millions) $ 3 $ 292 $ 1,942 $ 4,815

49.Ratio of expenses to average net assets 2.50%A 1.52 1.01 .88%
, D % % F

50.Ratio of expenses to average net assets 2.50%A 1.52 1.01 .89%
before expense reductions ,D % % F

51.Ratio of net investment income to 3.89%A 3.83 3.09 2.69%
average net assets % %

52.Portfolio turnover rate 167%A 206 89 55%
% %

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INVESTMENT INCOME PER SHARE REFLECTS $.12 PER SHARE RELATING TO A
NONRECURRING INITIATIVE TO INVEST IN DIVIDEND INCOME PRODUCING SECURITIES
WHICH WAS IN EFFECT FOR A PORTION OF 1991.
D DURING THE PERIOD AUGUST 21, 1990 (COMMENCEMENT OF OPERATIONS) TO
NOVEMBER 30, 1990, EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE
LIMITATION. TOTAL RETURN WOULD HAVE BEEN LOWER HAD THIS LIMITATION NOT BEEN
IN EFFECT.
E FROM AUGUST 21, 1990 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1990
F FMR HAS DIRECTED CERTAIN PORTFOLIO TRADES TO BROKERS WHO PAID A
PORTION OF THE FUND'S EXPENSES.
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN. The total
returns that follow are based on historical fund results and do not reflect
the effect of taxes.
The fund's fiscal year runs from December 1 through November 30. The tables
below show the fund's performance over past fiscal years compared to two
measures: investing in a broad selection of stocks (S&P 500), and not
investing at all (inflation, or CPI). To help you compare this fund to
other funds, the chart on page 7 displays calendar-year performance.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Life of
November 30, 1993 year fundA
Convertible Securities 19.08% 25.74%
Merrill Lynch Convertible Securities S&P 500 10.10% 14.45%
Consumer Price
Index 2.68% 3.20%
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Life of
November 30, 1993 year fundA
Convertible Securities 19.08% 112.04%
Merrill Lynch Convertible Securities S&P 500 10.10% 55.72%
Consumer Price
Index 2.68% 10.79%
A FROM JANUARY 5, 1987
EXAMPLE: Let's say, hypothetically, that an investor put $10,000 in the
fund on January 5, 1987. From that date through November 30, 199 3 ,
the fund's total return was 112.04 %. That $10,000 would have grown
to $ 21,204 (the initial investment plus 112.04 % of $10,000).
$10,000 OVER LIFE OF FUND

Fiscal years 19 90 1991 1992 1993
Row: 1, Col: 1, Value: 10000.0
Row: 2, Col: 1, Value: 10090.0
Row: 3, Col: 1, Value: 9790.0
Row: 4, Col: 1, Value: 9790.0
Row: 5, Col: 1, Value: 10180.0
Row: 6, Col: 1, Value: 10451.06
Row: 7, Col: 1, Value: 10954.0
Row: 8, Col: 1, Value: 11929.7
Row: 9, Col: 1, Value: 12425.0
Row: 10, Col: 1, Value: 12770.42
Row: 11, Col: 1, Value: 13420.62
Row: 12, Col: 1, Value: 13105.68
Row: 13, Col: 1, Value: 13833.74
Row: 14, Col: 1, Value: 14361.43
Row: 15, Col: 1, Value: 14456.52
Row: 16, Col: 1, Value: 14904.7
Row: 17, Col: 1, Value: 14456.52
Row: 18, Col: 1, Value: 15320.98
Row: 19, Col: 1, Value: 15754.68
Row: 20, Col: 1, Value: 16262.55
Row: 21, Col: 1, Value: 16199.85
Row: 22, Col: 1, Value: 16550.86
Row: 23, Col: 1, Value: 16731.69
Row: 24, Col: 1, Value: 16626.26
Row: 25, Col: 1, Value: 17139.48
Row: 26, Col: 1, Value: 16786.64
Row: 27, Col: 1, Value: 17001.03
Row: 28, Col: 1, Value: 17140.73
Row: 29, Col: 1, Value: 17807.02
Row: 30, Col: 1, Value: 18240.5
Row: 31, Col: 1, Value: 18739.34
Row: 32, Col: 1, Value: 19071.8
Row: 33, Col: 1, Value: 19793.83
Row: 34, Col: 1, Value: 19849.52
Row: 35, Col: 1, Value: 20150.27
Row: 36, Col: 1, Value: 20341.48
Row: 37, Col: 1, Value: 20542.99
Row: 38, Col: 1, Value: 21214.7
Row: 39, Col: 1, Value: 21136.44
Row: 40, Col: 1, Value: 21530.15
Row: 41, Col: 1, Value: 21203.93
$
$21,204
UNDERSTANDING
PERFORMANCE
Because this fund invests in
stocks, its performance is
related to that of the overall
stock market. Historically,
stock market performance
has been characterized by
volatility in the short run and
growth in the long run. You
can see these two
characteristics reflected in the
fund's performance; the
year-by-year total returns on
page 7 show that short-term
returns can vary widely, while
the returns at left show
long-term growth.
(checkmark)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in the fund over a
given period of time, expressed as an annual percentage rate. Yields are
calculated according to a standard that is required for all stock and bond
funds. Because this differs from other accounting methods, the quoted yield
may not equal the income actually paid to shareholders.
THE S&P 500(Registered trademark) is the Standard & Poor's 500
Composite Stock Price Index, a widely recognized, unmanaged index of common
stock prices. The S&P 500 figures assume reinvestment of all dividends
paid by stocks included in the index. They do not, however, include any
allowance for the brokerage commissions or other fees you would pay if you
actually invested in those stocks.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGE is the Lipper Equity Income Funds Average,
which currently reflects the performance of over 88 mutual funds with
similar objectives. This average, which assumes reinvestment of
distributions, is published by Lipper Analytical Services, Inc.
Other illustrations of fund performance may show moving averages over
specified periods.
The fund's recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
YEAR-BY-YEAR TOTAL RETURNS
Calendar years 1991 1992
Convertible Securities 46.60% 19.0
6%
Competitive funds average 28.42
% 9.66%
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: nil
Row: 9, Col: 1, Value: 46.6
Row: 9, Col: 2, Value: 28.42
Row: 10, Col: 1, Value: 19.06
Row: 10, Col: 2, Value: 9.66
Convertible
Securities
Competitive
funds
average
YOUR ACCOUNT

FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 200 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANTS
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age
and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(bullet) 401(K) PROGRAMS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
THE FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. The fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page 11 . If there is no application
accompanying this prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500

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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT

</TABLE>

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MAIL (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to "Fidelity
check payable to Equity-Income II Fund."
"Fidelity Equity-Income Indicate your fund
II Fund." Mail to the account number on
address indicated on your check and mail to
the application. the address printed on
your account statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.

</TABLE>

WIRE (bullet) Call 1-800-544-7777 to (bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify "Fidelity
Bank Routing Equity-Income II Fund"
#021001033, and include your
Account #00163053. account number and
Specify "Fidelity your name.
Equity-Income II Fund"
and include your new
account number and
your name.

</TABLE>

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TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118

</TABLE>

HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open ($500 for retirement
accounts).
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
ACCOUNT TYPE SPECIAL REQUIREMENTS

</TABLE>

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TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118

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24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of the fund are limited to four per calendar year,
and that they may have tax consequences for you. For complete policies and
restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page 20.
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions
from your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for
retirement, a home, educational expenses, and other long-term financial
goals. Certain restrictions apply for retirement accounts. Call
1-800-544-6666 for more information.
REGULAR INVESTMENT PLANS

FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND

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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA

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<CAPTION>
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FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND

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A BECAUSE ITS SHARE PRICE FLUCTUATES, THE FUND MAY NOT BE AN APPROPRIATE
CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.

</TABLE>

DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distributes substantially all of its net income and capital gains
to shareholders each year. Normally, dividends are distributed in March,
June, September, and December. Capital gains are distributed in January and
December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. The fund offers four
options:
9. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
10. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
11. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions.
12. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
When the fund deducts a distribution from its share price, the reinvestment
price is the fund's NAV at the close of business that day. Cash
distribution checks will be mailed within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
The fund earns dividends
from stocks and interest from
bond, money market, and
other investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund
realizes capital gains
whenever it sells securities
for a higher price than it paid
for them. These are passed
along as CAPITAL GAIN
DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how your investment in the fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, the fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions
are taxed as long-term capital gains. Every January, Fidelity will send you
and the IRS a statement showing the taxable distributions paid to you in
the previous year.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of the fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before the fund deducts a
distribution from its NAV, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, the fund
may have to limit its investment activity in some types of instruments.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>

TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates the fund's NAV as of the close
of the NYSE, normally 4 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The fund's assets are valued primarily on the basis of market quotations.
If quotations are not readily available, assets are valued by a method that
the Board of Trustees believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates.
THE FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page 20 . Purchase orders may be refused if, in FMR's opinion,
they are of a size that would disrupt management of the fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) The fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees the fund or its transfer agent
has incurred.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUND THROUGH A BROKER, who may charge you
a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders
on behalf of customers by phone, with payment to follow no later than the
time when the fund is priced on the following business day. If payment is
not received by that time, the financial institution could be held liable
for resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect the
fund, it may take up to seven days to pay you.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) The fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the fund without reimbursement
from the fund. Qualified recipients are securities dealers who have sold
fund shares or others, including banks and other financial institutions,
under special arrangements in connection with FDC's sales activities. In
some instances, these incentives may be offered only to certain
institutions whose representatives provide services in connection with the
sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of the fund
for shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, the fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The exchange limit may be modified for accounts in certain
institutional retirement plans to conform to plan exchange limits and
Department of Labor regulations. See your plan materials for further
information.
(bullet) The fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if the fund receives
or anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves the right to terminate or modify the exchange privilege in
the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
<
r>THE FUND IN DETAIL</r>

CHARTER
CONVERTIBLE SECURITIES IS A MUTUAL FUND: an investment that pools
shareholders' money and invests it toward a specified goal. In technical
terms, the fund is currently a diversified fund of Fidelity Financial
Trust, an open-end management investment company organized as a
Massachusetts business trust on October 20, 1982.
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the fund's activities,
review contractual arrangements with companies that provide services to the
fund, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUND MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These meetings
may be called to elect or remove trustees, change fundamental policies,
approve a management contract, or for other purposes. Shareholders not
attending these meetings are encouraged to vote by proxy. Fidelity will
mail proxy materials in advance, including a voting card and information
about the proposals to be voted on. The number of votes you are entitled to
is based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
The fund is managed by FMR, which chooses the fund's investments and
handles its business affairs. Fidelity Management & Research (U.K.)
Inc. (FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR
Far East) assist FMR with foreign investments.
Brian Posner is vice president and manager of Equity-Income II, which he
has managed since April 1992. Previously, he managed Value as well
as Select Energy, Life Insurance, and Property-Casualty Insurance. He
joined Fidelity in 1987 as an equity analyst.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the fund.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trust), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
A broker-dealer may use a portion of the commissions paid by the fund to
reduce the fund's custodian or transfer agent fees. FMR may use its
broker-dealer affiliates and other firms that sell fund shares to carry out
the fund's transactions, provided that the fund receives brokerage services
and commission rates comparable to those of other broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily operations.
Expenses paid out of the fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.
The fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to affiliates who provide
assistance with these services. The fund also pays OTHER EXPENSES, which
are explained at right .
FMR may, from time to time, agree to reimburse the fund for management fees
and other expenses above a specified limit. FMR retains the ability to be
repaid by the fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease the fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .52%, and it drops as
total assets under management increase.
For November 1993, the group fee rate was .33 %. The individual fund
fee rate is .20 %. The total management fee rate for fiscal 1993 was
.53 %.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR U.K. and FMR Far East. These
sub-advisers provide FMR with investment research and advice on companies
based outside the United States. Under the sub-advisory agreements,
FMR pays FMR U.K. and FMR Far East fees equal to 110% and 105%,
respectively, of the costs of providing these services .
The sub-advisers may also provide investment management services .
In return , FMR pays 50% of its management fee rate with
respect to the fund's investments that the sub-adviser manages on a
discretionary basis.
UNDERSTANDING THE
MANAGEMENT FEE
The management fee FMR
receives is designed to be
responsive to changes in
FMR's total assets under
management. Building this
variable into the fee
calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
(checkmark)
OTHER EXPENSES
While the management fee is a significant component of the fund's annual
operating costs, the fund has other expenses as well.
The fund contracts with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing the fund's investments, and handling securities loans. In fiscal
1993, the fund paid FSC fees equal to .31 % of its average net
assets .
The fund also pays other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
The fund has adopted a Distribution and Service Plan. This plan recognizes
that FMR may use its resources, including management fees, to pay expenses
associated with the sale of fund shares. This may include payments to third
parties, such as banks or broker-dealers, that provide shareholder support
services or engage in the sale of the fund's shares. It is important to
note, however, that the fund does not pay FMR any separate fees for this
service.
The fund's portfolio turnover rate for fiscal 1993 was 55 %. This
rate varies from year to year .
INVESTMENT PRINCIPLES
THE FUND SEEKS REASONABLE INCOME by investing primarily in
income-producing equity securities. FMR normally invests at least 65% of
the fund's total assets in these securities , but has broad flexibility
to invest in all types of domestic and foreign instruments, including bonds
and convertible securities. The fund tries to achieve a yield that beats
that of the S&P 500. When choosing the fund's investments, FMR also
considers the potential for capital appreciation.
THE FUND WILL SPREAD INVESTMENT RISK by limiting its holdings in any one
company or industry. FMR may use various investment techniques to hedge the
fund's risks, but there is no guarantee that these strategies will work as
FMR intends. When you sell your shares, they may be worth more or less than
what you paid for them.
FMR normally invests the fund's assets according to its investment
strategy. When FMR considers it appropriate, however, it may temporarily
invest substantially in investment-grade bonds, short-term money market
instruments, and obligations of banks and the U.S. government.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, and strategies FMR may employ in
pursuit of the fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
fund achieve its goal. As a shareholder, you will receive financial reports
every six months detailing fund holdings and describing recent investment
activities.
EQUITY SECURITIES may include common stocks, preferred stocks, convertible
securities, and warrants. Common stocks, the most familiar type, represent
an equity (ownership) interest in a corporation. This ownership interest
often gives the fund the right to vote on measures affecting the company's
organization and operations. Although common stocks have a history of
long-term growth in value, their prices tend to fluctuate in the short
term, particularly those of smaller companies.
RESTRICTIONS: With respect to 75% of total assets, the fund may not own
more than 10% of the outstanding voting securities of a single issuer.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities (commonly called "junk bonds") are often
considered to be speculative and involve greater risk of default or price
changes due to changes in the issuer's creditworthiness. The market prices
of these securities may fluctuate more than higher-quality securities and
may decline significantly in periods of general economic difficulty.
The table on page 2 5 provides a summary of ratings assigned to debt
holdings (not including money market instruments) in the fund's portfolio.
These figures are dollar-weighted averages of month-end portfolio holdings
during fiscal 1993, and are presented as a percentage of total investments.
These percentages are historical and do not necessarily indicate the fund's
current or future debt holdings.
FISCAL 1993 DEBT HOLDINGS, BY RATING
MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 1.8 % AA 2.0 %
Upper-medium grade A A
Medium grade Baa 1.2 % BBB 0.7 %
LOWER QUALITY
Moderately speculative Ba 1.1 % BB 0.9 %
Speculative B 0.6 % B 1.0 %
Highly speculative Caa 0.0 % CCC 0.0 %
Poor quality Ca 0.0 % CC 0.0 %
Lowest quality, no interest C C
In default, in arrears --- D 0.0 %
4.7 % 4.6 %
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY
MOODY'S OR
S&P AMOUNTED TO 0.5 %. THIS MAY INCLUDE SECURITIES RATED BY OTHER
NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES.
UNRATED SECURITIES ARE NOT NECESSARILY LOWER-QUALITY SECURITIES. REFER TO
THE
FUND'S STATEMENT OF ADDITIONAL INFORMATION FOR A MORE COMPLETE DISCUSSION
OF THESE RATINGS.

RESTRICTIONS: The fund does not currently intend to invest
more than 35% of its assets in lower-quality debt securities (those
rated below Baa by Moody's or BBB by S&P, and unrated securities judged
by FMR to be of equivalent quality).
FOREIGN SECURITIES and foreign currencies may involve additional risks.
These include currency fluctuations, risks relating to political or
economic conditions in the foreign country, and the potentially less
stringent investor protection and disclosure standards of foreign markets.
In addition to the political and economic factors that can affect
foreign securities, a governmental issuer may be unwilling to repay
principal and interest when due, and may require that the conditions for
payment be renegotiated. These factors could make foreign investments,
especially those in developing countries, more volatile.
ADJUSTING INVESTMENT EXPOSURE. The fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, currency exchange rates, commodity prices, or other factors that
affect security values. These techniques may involve derivative
transactions such as buying and selling options and futures contracts,
entering into currency exchange contracts or swap agreements, purchasing
indexed securities, and selling securities short.
FMR can use these practices to adjust the risk and return characteristics
of the fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
DIRECT DEBT. Loans and other direct debt instruments are interests in
amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they
may entail less legal protection for the fund, or there may be a
requirement that the fund supply additional cash to a borrower on demand.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to
the fund.
RESTRICTIONS: The fund may not purchase a security if, as a result, more
than 10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry.
RESTRICTIONS: With respect to 75% of total assets, the fund may not invest
more than 5% of its total assets in any one issuer. The fund may not invest
more than 25% of its total assets in any one industry. These limitations do
not apply to U.S. government securities.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If the fund borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: The fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering the fund's securities. The
fund may also lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 33% of the fund's
total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
The fund seeks reasonable income by investing primarily in income-producing
equity securities. In choosing these securities, the fund also considers
the potential for capital appreciation. The fund looks for a yield that
exceeds the composite yield of the securities comprising the S&P
500. With respect to 75% of total assets, the fund may not invest more
than 5% of its total assets in any one issuer and may not own more than 10%
of the outstanding voting securities of a single issuer. The fund may not
invest more than 25% of its total assets in any one industry. The fund may
borrow only for temporary or emergency purposes, but not in an amount
exceeding 33% of its total assets. Loans, in the aggregate, may not exceed
33% of the fund's total assets.

This prospectus is printed on recycled paper using soy-based inks.

FIDELITY EQUITY-INCOME II FUND
A FUND OF FIDELITY FINANCIAL TRUST
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 19, 1994
This Statement is not a prospectus but should be read in conjunction with
the fund's current Prospectus (dated January 19, 1994). Please retain this
document for future reference. The Annual Report for the fiscal year ended
November 30, 1993 is incorporated herein by reference. To obtain an
additional copy of the Prospectus or the Annual Report, please call
Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contract
Distribution and Service Plan
Contracts With Companies Affiliated With FMR
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
Fidelity Management & Research (Far East) Inc. (FMR Far East)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)

EII-ptb-194

INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with the fund's investment policies and
limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, except for the fundamental investment limitations set forth below,
the investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed without
shareholder approval. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than obligations issued or guaranteed by the
government of the United States, or any of its agencies or
instrumentalities) if, as a result thereof, (a) more than 5% of the fund's
total assets would be invested in the securities of such issuer, or (b) the
fund would hold more than 10% of the voting securities of such issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings that
come to exceed 33 1/3% of the value of the fund's total assets by reason of
a decline in net assets will be reduced within three days (exclusive of
Sundays and holidays) to the extent necessary to comply with the 33 1/3%
limitation;
(4) underwrite securities issued by others (except to the extent that the
fund may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than obligations issued or
guaranteed by the government of the United States or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets (taken at current value) would be invested in the securities of
issuers having their principal business activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties (for this purpose,
purchasing debt securities and engaging in repurchase agreements do not
constitute lending).

THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation ( 3 )). The fund will
not purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser or (b) acquiring
loans, loan participations, or other forms of direct debt instruments and,
in connection therewith, assuming any associated unfunded commitments of
the sellers. (This limitation does not apply to purchases of debt
securities or to repurchase agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 5% of the fund's net assets.
Included in that amount, but not to exceed 2% of the fund's net assets, may
be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the fund in units or attached
to securities are not subject to these restrictions.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page 7. For the fund's limitations on short sales, see
the section entitled "Short Sales" on page 9 .
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the fund may engage in
transactions with banks that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940. Such
transactions may be entered into only pursuant to procedures established
and periodically reviewed by the Board of Trustees. These transactions may
include repurchase agreements with custodian banks; purchases, as
principal, of short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); transactions in municipal
securities; and transactions in U.S. government securities with affiliated
banks that are primary dealers in these securities.
FUND'S RIGHTS AS A SHAREHOLDER. The fund does not intend to direct or
administer the day-to-day operations of any company. The fund, however, may
exercise its rights as a shareholder and may communicate its views on
important matters of policy to management, the Board of Directors, and
shareholders of a company when FMR determines that such matters could have
a significant effect on the value of the fund's investment in the company.
The activities that the fund may engage in, either individually or in
conjunction with others, may include, among others, supporting or opposing
proposed changes in a company's corporate structure or business activities;
seeking changes in a company's directors or management; seeking changes in
company's direction or policies; seeking the sale or reorganization of the
company or a portion of its assets; or supporting or opposing third party
takeover efforts. This area of corporate activity is increasingly prone to
litigation and it is possible that the fund could be involved in lawsuits
related to such activities. FMR will monitor such activities with a view to
mitigating, to the extent possible, the risk of litigation against the fund
and the risk of actual liability if the fund is involved in litigation. No
guarantee can be made, however, that litigation against the fund will not
be undertaken or liabilities incurred.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features) and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). Investments currently considered
by the fund to be illiquid include repurchase agreements not entitling the
holder to payment of principal and interest within seven days,
over-the-counter options, and non-government stripped fixed-rate mortgage
backed securities. Also, FMR may determine some restricted securities,
government stripped fixed-rate mortgage-backed securities, loans and other
direct debt instruments, and swap agreements to be illiquid. However, with
respect to over-the-counter options the fund writes, all or a portion of
the value of the underlying instrument may be illiquid depending on the
assets held to cover the option and the nature and terms of any agreement
the fund may have to close out the option before expiration. In the absence
of market quotations, illiquid investments are priced at fair value as
determined in good faith by a committee appointed by the Board of Trustees.
If through a change in values, net assets, or other circumstances, the fund
were in a position where more than 10% of its net assets were invested in
illiquid securities, it would seek to take appropriate steps to protect
liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant an exemption from registration under the Securities
Act of 1933, or in a registered public offering. Where registration is
required, the fund may be obligated to pay all or part of the registration
expense and a considerable period may elapse between the time it decides to
seek registration and the time the fund may be permitted to sell a security
under an effective registration statement. If, during such a period,
adverse market conditions were to develop, the fund might obtain a less
favorable price than prevailed when it decided to seek registration of the
security.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed upon price on an agreed upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is
in effect secured by the value (at least equal to the amount of the agreed
upon resale price and marked to market daily) of the underlying security.
The fund may engage in a repurchase agreement with respect to any security
in which it is authorized to invest. While it does not presently appear
possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities,
as well as delays and costs to the fund in connection with bankruptcy
proceedings), it is the fund's current policy to limit repurchase agreement
transactions to parties whose creditworthiness has been reviewed and found
satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The fund will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the fund's
assets and may be viewed as a form of leverage.
INTERFUND BORROWING PROGRAM. The fund has received permission f r om
the SEC to lend money to and borrow money fr o m other funds advised
by FMR or its affiliates. Interfund loans and borrowings normally will
extend overnight, but can have a maximum duration of seven days. Loans may
be called on one day's notice. The fund will lend through the program only
when the returns are higher than those available at the same time from
other short-term instruments (such as repurchase agreements), and will
borrow through the program only when the costs are equal to or lower than
the cost of bank loans. The fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any delay in
repayment to a lending fund could result in a lost investment opportunity
or additional borrowing costs.
SECURITIES LENDING. The fund may lend securities to parties such as
broker-dealers or institutional investors, including Fidelity Brokerage
Services, Inc. (FBSI). FBSI is a member of the New York Stock Exchange and
a subsidiary of FMR Corp.
Securities lending allows the fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may be
delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be
made only to parties deemed by FMR to be of good standing. Furthermore,
they will only be made if, in FMR's judgment, the consideration to be
earned from such loans would justify the risk.
FMR understands that it is the current view of the SEC Staff that the fund
may engage in loan transactions only under the following conditions: (1)
the fund must receive 100% collateral in the form of cash or cash
equivalents (e.g., U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of
the collateral; (3) after giving notice, the fund must be able to terminate
the loan at any time; (4) the fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to
any increase in market value; (5) the fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Board of Trustees
must be able to vote proxies on the securities loaned, either by
terminating the loan or by entering into an alternative arrangement with
the borrower.
Cash received through loan transactions may be invested in any security in
which the fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
LOWER-RATED DEBT SECURITIES. While the market for high-yield corporate debt
securities has been in existence for many years and has weathered previous
economic downturns, the 1980s brought a dramatic increase in the use of
such securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not provide an accurate indication of
future performance of the high-yield bond market, especially during periods
of economic recession. In fact, from 1989 to 1991, the percentage of
lower-rated debt securities that defaulted rose significantly above prior
levels , although the default rate decreased in 1992 .
The market for lower-rated debt securities may be thinner and less active
than that for higher-rated debt securities, which can adversely affect the
prices at which the former are sold. If market quotations are not
available, lower-rated debt securities will be valued in accordance with
procedures established by the Board of Trustees, including the use of
outside pricing services. Judgment plays a greater role in valuing
high - yield corporate debt securities than is the case for securities
for which more external sources for quotations and last-sale information
are available. Adverse publicity and changing investor perceptions may
affect the ability of outside pricing services to value lower-rated debt
securities and the fund's ability to dispose of these securities.
Since the risk of default is higher for lower-rated debt securities, FMR's
research and credit analysis are an especially important part of managing
securities of this type held by the fund. In considering investments for
the fund, FMR will attempt to identify those issuers of high-yielding debt
securities whose financial condition is adequate to meet future
obligations, has improved, or is expected to improve in the future. FMR's
analysis focuses on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects, and the experience
and managerial strength of the issuer.
The fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as a security holder to
seek to protect the interests of security holders if it determines this to
be in the best interest of the fund's shareholders.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Direct debt instruments are
interests in amounts owed by a corporate, governmenta l, or other
borrower to lenders or lending syndicates (loans and loan participations),
to suppliers of goods or services (trade claims or other receivables), or
to other parties. Direct debt instruments are subject to the fund's
policies regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally
recognized rating service. If the fund does not receive scheduled interest
or principal payments on such indebtedness, the fund's share price and
yield could be adversely affected. Loans that are fully secured offer the
fund more protections than an unsecured loan in the event of non-payment of
scheduled interest or principal. However, there is no assurance that the
liquidation of collateral from a secured loan would satisfy the borrower's
obligation, or that the collateral can be liquidated. Indebtedness of
borrowers whose creditworthiness is poor involves substantially greater
risks, and may be highly speculative. Borrowers that are in bankruptcy or
restructuring may never pay off their indebtedness, or may pay only
a small fraction of the amount owed. Direct indebtedness of developing
countries also involve s a risk that the governmental entities
responsible for the repayment of the debt may be unable, or unwilling, to
pay interest and principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to the fund.
For example, if a loan is foreclosed, the fund could become part owner of
any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In addition, it is
conceivable that under emerging legal theories of lender liability, the
fund could be held liable as a co-lender. Direct debt instruments may also
involve a risk of insolvency of the lending bank or other intermediary.
Direct debt instruments that are not in the form of securities may offer
less legal protection to the fund in the event of fraud or
misrepresentation. In the absence of definitive regulatory guidance, the
fund relies on FMR's research in an attempt to avoid situations where fraud
or misrepresentation could adversely affect the fund.
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or
other indebtedness, the fund has direct recourse against the borrower, it
may have to rely on the agent to apply appropriate credit remedies against
a borrower. If assets held by the agent for the benefit of the fund were
determined to be subject to the claims of the agent's general creditors,
the fund might incur certain costs and delays in realizing payment on the
loan or loan participation and could suffer a loss of principal or
interest.
Direct indebtedness purchased by the fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the fund to pay additional cash on demand. These commitments may
have the effect of requiring the fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower 's condition makes it unlikely that the amount will ever be
repaid. The fund will set aside appropriate liquid assets in a segregated
custodial account to cover its potential obligations under standby
financing commitments.
The fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see limitations 1 and 5).
For purposes of these limitations, the fund generally will treat the
borrower as the "issuer" of indebtedness held by the fund. In the case of
loan participations where a bank or other lending institution serves as
financial intermediary between the fund and the borrower, if the
participation does not shift to the fund the direct debtor-creditor
relationship with the borrower, SEC interpretations require the fund, in
appropriate circumstances, to treat both the lending bank or other lending
institution and the borrower as "issuers" for these purposes. Treating a
financial intermediary as an issuer of indebtedness may restrict the fund's
ability to invest in indebtedness related to a single financial
intermediary or a group of intermediaries engaged in the same industry,
even if the underlying borrowers represent many different companies and
industries.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on their structure, swap
agreements may increase or decrease the fund's exposure to long- or
short-term interest rates (in the U.S. or abroad), foreign currency values,
mortgage securities, corporate borrowing rates, or other factors such as
security prices or inflation rates. Swap agreements can take many different
forms and are known by a variety of names. The fund is not limited to any
particular form of swap agreement if FMR determines it is consistent with
the fund's investment objective and policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate
falls below an agreed-upon level. An interest rate collar combines elements
of buying a cap and selling a floor.
Swap agreements will tend to shift the fund's investment exposure from one
type of investment to another. For example, if the fund agreed to exchange
payments in dollars for payments in foreign currency, the swap agreement
would tend to decrease the fund's exposure to U.S. interest rates and
increase its exposure to foreign currency and interest rates. Caps and
floors have an effect similar to buying or writing options. Depending on
how they are used, swap agreements may increase or decrease the overall
volatility of the fund's investments and its share price and yield .
The most significant factor in the performance of swap agreements is the
change in the specific interest rate, currency, or other factors that
determine the amounts of payments due to and from the fund. If a swap
agreement calls for payments by the fund, the fund must be prepared to make
such payments when due. In addition, if the counterparty's creditworthiness
declined, the value of a swap agreement would be likely to decline,
potentially resulting in losses. The fund expects to be able to eliminate
its exposure under swap agreements either by assignment or other
disposition, or by entering into an offsetting swap agreement with the same
party or a similarly creditworthy party.
The fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If the fund
enters into a swap agreement on a net basis, it will segregate assets with
a daily value at least equal to the excess, if any, of the fund's accrued
obligations under the swap agreement over the accrued amount the fund is
entitled to receive under the agreement. If the fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value
equal to the full amount of the fund's accrued obligations under the
agreement.
INDEXED SECURITIES. The fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators.
Indexed securities typically, but not always, are debt securities or
deposits whose value at maturity or coupon rate is determined by reference
to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price
of gold, resulting in a security whose price tends to rise and fall
together with gold prices. Currency-indexed securities typically are
short-term to intermediate-term debt securities whose maturity values or
interest rates are determined by reference to the values of one or more
specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting
in a security that performs similarly to a foreign-denominated instrument,
or their maturity value may decline when foreign currencies increase,
resulting in a security whose price characteristics are similar to a put on
the underlying currency. Currency-indexed securities may also have prices
that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they
are indexed, and may also be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values
may decline substantially if the issuer's creditworthiness deteriorates.
Recent issuers of indexed securities have included banks, corporations, and
certain U.S. government agencies. Indexed securities may be more
volatile than the underlying instruments.
FOREIGN INVESTMENTS. Foreign investments can involve significant risks in
addition to the risks inherent in U.S. investments. The value of securities
denominated in or indexed to foreign currencies, and of dividends and
interest from such securities, can change significantly when foreign
currencies strengthen or weaken relative to the U.S. dollar. Foreign
securities markets generally have less trading volume and less liquidity
than U.S. markets, and prices on some foreign markets can be highly
volatile. Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be
more difficult to obtain reliable information regarding an issuer's
financial condition and operations. In addition, the costs of foreign
investing, including withholding taxes, brokerage commissions, and
custodial costs, are generally higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It may also be difficult
to enforce legal rights in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments
adverse to the interests of U.S. investors, including the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
may be a greater possibility of default by foreign governments or foreign
government-sponsored enterprises. Investments in foreign countries also
involve a risk of local political, economic, or social instability,
military action or unrest, or adverse diplomatic developments. There is no
assurance that FMR will be able to anticipate these potential events or
counter their effects.
The considerations noted above generally are intensified for investments in
developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
The fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject to
such transfer restrictions may be marketable abroad, they may be less
liquid than foreign securities of the same class that are not subject to
such restrictions.
American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs), are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed
for use in the U.S. and European securities markets, respectively, ADRs and
EDRs are alternatives to the purchase of the underlying securities in their
national markets and currencies.
FOREIGN CURRENCY TRANSACTIONS. The fund may hold foreign currency deposits
from time to time, and may convert dollars and foreign currencies in the
foreign exchange markets. Currency conversion involves dealer spreads and
other costs, although commissions usually are not charged. Currencies may
be exchanged on a spot (i.e., cash) basis, or by entering into forward
contracts to purchase or sell foreign currencies at a future date and
price. Forward contracts generally are traded in an interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated currency exchange.
The fund may use currency forward contracts to manage currency risks and to
facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the fund.
In connection with purchases and sales of securities denominated in foreign
currencies, the fund may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's
settlement date. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge." FMR expects to enter into settlement hedges
in the normal course of managing the fund's foreign investments. The fund
could also enter into forward contracts to purchase or sell a foreign
currency in anticipation of future purchases or sales of securities
denominated in foreign currency, even if the specific investments have not
yet been selected by FMR.
The fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example,
if the fund owned securities denominated in pounds sterling, it could enter
into a forward contract to sell pounds sterling in return for U.S. dollars
to hedge against possible declines in the pound's value. Such a hedge,
sometimes referred to as a "position hedge," would tend to offset both
positive and negative currency fluctuations, but would not offset changes
in security values caused by other factors. The fund could also hedge the
position by selling another currency expected to perform similarly to the
pound sterling - for example, by entering into a forward contract to sell
Deutschemarks or European Currency Units in return for U.S. dollars. This
type of hedge, sometimes referred to as a "proxy hedge," could offer
advantages in terms of cost, yield, or efficiency, but generally would not
hedge currency exposure as effectively as a simple hedge into U.S. dollars.
Proxy hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which the hedged securities are
denominated.
Under certain conditions, SEC guidelines require mutual funds to set aside
appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the fund will
segregate assets to cover currency forward contracts, if any, whose purpose
is essentially speculative. The fund will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on FMR's skill in
analyzing and predicting currency values. Forward contracts may
substantially change the fund's investment exposure to changes in currency
exchange rates, and could result in losses to the fund if currencies do not
perform as FMR anticipates. For example, if a currency's value rose at a
time when FMR had hedged the fund by selling that currency in exchange for
dollars, the fund would be unable to participate in the currency's
appreciation. If FMR hedges currency exposure through proxy hedges, the
fund could realize currency losses from the hedge and the security position
at the same time if the two currencies do not move in tandem. Similarly, if
FMR increases the fund's exposure to a foreign currency, and that
currency's value declines, the fund will realize a loss. There is no
assurance that FMR's use of forward currency contracts will be advantageous
to the fund or that it will hedge at an appropriate time. The policies
described in this section are non-fundamental policies of the fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The fund intends to file a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets, before engaging in any purchases or sales of futures
contracts or options on futures contracts. The fund intends to comply with
Section 4.5 of the regulations under the Commodity Exchange Act which
limits the extent to which the fund can commit assets to initial margin
deposits and option premiums.
In addition, the fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the fund's investments in futures contracts and
options, and the fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, may be
changed as regulatory agencies permit.
FUTURES CONTRACTS. When the fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When
the fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Standard & Poor's 500 Composite Stock
Price Index (S&P 500). Futures can be held until their delivery dates,
or can be closed out before then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the fund, the fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In return
for receipt of the premium, the fund assumes the obligation to pay the
strike price for the option's underlying instrument if the other party to
the option chooses to exercise it. When writing an option on a futures
contract the fund will be required to make margin payments to an FCM as
described above for futures contracts. The fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates the fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. The fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, the fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the fund's current or
anticipated investments exactly. The fund may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular option or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the fund's access to other assets held to cover its options or
futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that
they are traded on exchanges (and have margin requirements) and are
standardized as to contract size and delivery date. Most currency futures
contracts call for payment or delivery in U.S. dollars. The underlying
instrument of a currency option may be a foreign currency, which generally
is purchased or delivered in exchange for U.S. dollars, or may be a futures
contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the
right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The fund
may purchase and sell currency futures and may purchase and write currency
options to increase or decrease its exposure to different foreign
currencies. The fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with
exchange rates, but may not reflect other factors that affect the value of
the fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect
the fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of the fund's
foreign-denominated investments changes in response to many factors other
than exchange rates, it may not be possible to match the amount of currency
options and futures to the value of the fund's investments exactly over
time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The fund will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require, will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of
the fund's assets could impede portfolio management or the fund's ability
to meet redemption requests or other current obligations.
SHORT SALES. The fund may enter into short sales with respect to stocks
underlying its convertible security holdings. For example, if FMR
anticipates a decline in the price of the stock underlying a convertible
security the fund holds, it may sell the stock short. If the stock price
subsequently declines, the proceeds of the short sale could be expected to
offset all or a portion of the effect of the stock's decline on the value
of the convertible security. The fund currently intends to hedge no more
than 15% of its total assets with short sales on equity securities
underlying its convertible security holdings under normal circumstances.
When the fund enters into a short sale, it will be required to set aside
securities equivalent in kind and amount to those sold short (or securities
convertible or exchangeable into such securities) and will be required to
hold them aside while the short sale is outstanding. The fund will incur
transaction costs, including interest expense, in connection with opening,
maintaining, and closing short sales.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund by FMR pursuant to authority contained in the management
contract. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its affiliates
act as investment adviser. In selecting broker-dealers, subject to
applicable limitations of the federal securities laws, FMR considers
various relevant factors, including, but not limited to, the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis;
the reasonableness of any commissions ; and arrangements for payment
of fund expenses. Commissions for foreign investments traded on foreign
exchanges generally will be higher than for U.S. investments and may not be
subject to negotiation.
The fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the fund or other accounts over which
FMR or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers
generally is made by FMR (to the extent possible consistent with execution
considerations) in accordance with a ranking of broker-dealers determined
periodically by FMR's investment staff based upon the quality of research
and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the fund may be useful to FMR in rendering investment management
services to the fund or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
fund to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities to the
fund and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided , or to determine what portion of the compensation
should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund or shares of other Fidelity funds
to the extent permitted by law. FMR may use research services provided by
and place agency transactions with Fidelity Brokerage Services, Inc. (FBSI)
and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of FMR Corp., if
the commissions are fair, reasonable, and comparable to commissions charged
by non-affiliated, qualified brokerage firms for similar services. Prior to
September 4, 1992, FBSL operated under the name Fidelity Portfolio
Services, Ltd. (FPSL) as a wholly owned subsidiary of Fidelity
International Limited (FIL). Edward C. Johnson 3d is Chairman of FIL. Mr.
Johnson 3d, Johnson family members, and various trusts for the benefit of
the Johnson family own , directly or
indirectly , more than 25% of the voting common stock of FIL.
FMR may allocate brokerage transactions to broker-dealers who have
entered into arrangements with FMR under which the broker-dealer allocates
a portion of the commissions paid by the fund toward payment of the fund's
expenses, such as transfer agent fees of FSC or custodian fees. The
transaction quality must, however, be comparable to those of other
qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the SEC. Pursuant to such regulations, the Board of Trustees
has approved a written agreement that permits FBSI to effect portfolio
transactions on national securities exchanges and to retain compensation in
connection with such transactions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
fund and review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund. For the fiscal years ended November 30, 1993 and
1992, the fund's portfolio turnove r rates were 55%, and
89%, respectively.
For the fiscal years ended November 30, 1993, 1992 and 1991, the fund paid
brokerage commissions of $ 5,114,988 , $2,851,164, and $509,578,
respectively. During fiscal 1993, approximately $ 2,955,994 or
57.8 % of these commissions were paid to brokerage firms that
provided research services, although the provision of such services
was not necessarily a factor in the placement of all of this business with
such firms. The fund pays both commissions and spreads in connection with
the placement of portfolio transactions; FBSI is paid on a commission
basis. During the 1993, 1992 and 1991 fiscal years, the fund paid brokerage
commissions of $ 1,811,635 , $693,521, and $143,153, respectively, to
FBSI. During fiscal 1993, this amounted to 35.4 % of the aggregate
brokerage commissions paid by the fund for transactions involving
47.5 % of the aggregate dollar amount of transactions in which the
fund paid brokerage commissions. The difference in the percentage of the
brokerage commissions paid to and the percentage of the dollar amount of
transactions effected through FBSI is a result of the low commission
rates charged by FBSI.
During fiscal 1993, 1992 and 1991, the fund paid FBSL brokerage commissions
of $ 0 , $6,715, and $201, respectively.
From time to time the Trustees will review whether the recapture for the
benefit of the fund of some portion of the brokerage commissions or similar
fees paid by the fund on portfolio transactions is legally permissible and
advisable. The fund seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture
arrangements are in effect. The Trustees intend to continue to review
whether recapture opportunities are available and are legally permissible
and, if so, to determine in the exercise of their business judgment,
whether it would be advisable for the fund to seek such recapture.
Although the Trustees and officers of the fund are substantially the same
as those of other funds managed by FMR, investment decisions for the fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as the fund is
concerned. In other cases, however, the ability of the fund to participate
in volume transactions will produce better executions and prices for the
fund. It is the current opinion of the Trustees that the desirability of
retaining FMR as investment adviser to the fund outweighs any disadvantages
that may be said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Portfolio securities are valued by various methods depending on the primary
market or exchange on which they trade. Equity securities for which the
primary market is the U.S. are valued at last sale price or, if no sale has
occurred, at the closing bid price. Equity securities for which the primary
market is outside the U.S. are valued using the official closing price or
the last sale price in the principal market where they are traded. If the
last sale price (on the local exchange) is unavailable, the last evaluated
quote or last bid price is normally used. Short-term securities are valued
either at amortized cost or at original cost plus accrued interest, both of
which approximate current value. F ixed-income securities are valued
primarily by a pricing service that uses a vendor security valuation matrix
which incorporates both dealer-supplied valuations and electronic data
processing techniques. This twofold approach is believed to more accurately
reflect fair value because it takes into account appropriate factors such
as institutional trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics, and other
market data, without exclusive reliance upon quoted, exchange, or over-the
counter prices. Use of pricing services has been approved by the Board of
Trustees.
Securities and other assets for which there is no readily available market
are valued in good faith by a committee appointed by the Board of Trustees.
The procedures set forth above need not be used to determine the value of
the securities owned by the fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method (e.g., closing
over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.
Generally, the valuation of foreign and domestic equity securities, as well
as corporate bonds, U.S. government securities, money market instruments,
and repurchase agreements, is substantially completed each day at the close
of the NYSE. The values of any such securities held by the fund are
determined as of such time for the purpose of computing the fund's net
asset value. Foreign security prices are furnished by independent brokers
or quotation services which express the value of securities in their local
currency. FSC gathers all exchange rates daily at the close of the NYSE
using the last quoted price on the local currency and then translates the
value of foreign securities from their local currency into U.S. dollars.
Any changes in the value of forward contracts due to exchange rate
fluctuations and days to maturity are included in the calculation of net
asset value. If an extraordinary event that is expected to materially
affect the value of a portfolio security occurs after the close of an
exchange on which that security is traded, then the security will be valued
as determined in good faith by a committee appointed by the Board of
Trustees.
PERFORMANCE
The fund may quote its performance in various ways. All performance
information supplied by the fund in advertising is historical and is not
intended to indicate future returns. The fund's share price, yield, and
total returns fluctuate in response to market conditions and other factors,
and the value of fund shares, when redeemed, may be more or less than their
original cost.
YIELD CALCULATIONS. Yields for the fund used in advertising are computed by
dividing the fund's interest and dividend income for a given 30-day or one
month period, net of expenses, by the average number of shares entitled to
receive distributions during the period, dividing this figure by the fund's
NAV at the end of the period, and annualizing the result (assuming
compounding of income) in order to arrive at an annual percentage rate.
Income is calculated for purposes of yield quotations in accordance with
standardized methods applicable to all stock and bond funds. Dividends from
equity investments are treated as if they were accrued on a daily basis,
solely for the purposes of yield calculations. In general, interest income
is reduced with respect to bonds trading at a premium over their par value
by subtracting a portion of the premium from income on a daily basis, and
is increased with respect to bonds trading at a discount by adding a
portion of the discount to daily income. Capital gains and losses generally
are excluded from the calculation.
Income calculated for the purposes of calculating the fund's yield differs
from income as determined for other accounting purposes. Because of the
different accounting methods used, and because of the compounding of income
assumed in yield calculations, the yield quoted for the fund may differ
from the rate of distributions the fund paid over the same period or the
rate of income reported in the fund's financial statements.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of the fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the fund's NAV over the
period. Average annual returns are calculated by determining the growth or
decline in value of a hypothetical historical investment in the fund over a
stated period, and then calculating the annually compounded percentage rate
that would have produced the same result if the rate of growth or decline
in value had been constant over the period. For example, a cumulative
return of 100% over ten years would produce an average annual return of
7.18%, which is the steady annual rate of return that would equal 100%
growth on a compounded basis in ten years. While average annual returns are
a convenient means of comparing investment alternatives, investors should
realize that the fund's performance is not constant over time, but changes
from year to year, and that average annual returns represent averaged
figures as opposed to the actual year-to-year performance of the fund.
In addition to average annual returns, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given on page 12 . Total returns, yields, and other
performance information may be quoted numerically or in a table, graph, or
similar illustration.
NET ASSET VALUE. Charts and graphs using the fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
MOVING AVERAGES. The fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's adjusted
closing NAV for a specified period. A short-term moving average is the
average of each day's adjusted closing NAV for a specified period. Moving
Average Activity Indicators combine adjusted closing NAVs from the last
business day of each week with moving averages for a specified period to
produce indicators showing when an NAV has crossed, stayed above, or stayed
below its moving average. On November 26, 1993 , the 13-week and
39-week long-term moving averages were 18.92 and 18.22 ,
respectively.
HISTORICAL FUND RESULTS. The table on page 12 shows the income and
capital elements of the fund's total return for the period August 21, 1990
(commencement of operations) to November 30, 1993. The table compares the
fund's return to the record of the S&P 500, the Dow Jones Industrial
Average (DJIA), and the cost of living (measured by the Consumer Price
Index, or CPI) over the same period. The S&P 500 and DJIA comparisons
are provided to show how the fund's total return compared to the record of
a broad average of common stock prices and a narrower set of stocks of
major industrial companies, respectively, over the same period. The fund
has the ability to invest in securities not included in either index, and
its investment portfolio may or may not be similar in composition to the
indices. The S&P 500 and DJIA are based on the prices of unmanaged
groups of stocks, and unlike the fund's returns, their returns do not
include the effect of paying brokerage commissions and other costs of
investing.
During the period from August 21, 1990 (commencement of operations) through
November 30, 1993, a hypothetical $10,000 investment in Fidelity
Equity-Income II Fund would have grown to $ 21,204 , assuming all
distributions were reinvested. This was a period of widely fluctuating
stock prices and should not be considered representative of the dividend
income or capital gain or loss that could be realized from an investment in
the fund today.
FIDELITY EQUITY-INCOME II FUND
INDICES
Value of Value of Value of
Initial Reinvested Reinvested
Years Ended $10,000 Income Capital Gain Total Cost of
November 30 Investment Distributions Distributions Value S&P DJIA
Living**
1990* $10,180 $ 0 $ 0 $10,180 $ 9,917 $ 9,744 $10,167
1991 13,870 500 87 14,457 11,935 11,397 10,471
1992 16,570 972 265 17,807 14,143 13,40 3 10,790
1993 18,850 1,594 760 21,204 15,572 15,377 11,079
* From August 21, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on August 21,
1990, the net amount invested in fund shares was $10,000. The cost of the
initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested), amounted to
$ 11,853 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
the cash payments for the period would have amounted to $ 1,170 for
income dividends and $ 580 for capital gain distributions. Tax
consequences of different investments have not been factored into the above
figures.
The yield of the S&P 500 for the year ended November 30, 1993 was
2.7 %, calculated by dividing the dollar value of dividends paid by
the S&P 500 stocks during the period by the average value of the
S&P 500 on November 30, 1993. The S&P 500 yield is calculated
differently from the fund's yield; among other things, the fund's yield
calculation treats dividends as accrued in anticipation of payment, rather
than recording them when paid.
The fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. In addition to the mutual fund rankings, the fund's
performance may be compared to mutual fund performance indices prepared by
Lipper.
From time to time, the fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
The fund may present its fund number, Quotron(registered trademark)
number, and CUSIP number, and discuss or quote its current portfolio
manager.
VOLATILITY. The fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the fund may compare
these measures to those of other funds. Measures of volatility seek to
compare the fund's historical share price fluctuations or total returns to
those of a benchmark. Measures of benchmark correlation indicate how valid
a comparative benchmark may be. All measures of volatility and correlation
are calculated using averages of historical data.
MOMENTUM INDICATORS indicate the fund's price movements over specific
periods of time. Each point on the momentum indicator represents the fund's
percentage change in price movements over that period.
The fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program,
an investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
The fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
Fidelity is a pioneer in the equity-income or income-driven investment
discipline. This strategy seeks to modify stock market risk by seeking
stocks that have above average dividends, are undervalued, and have been
steadily increasing their dividends. Weisenberger Financial Services
(Weisenberger) annually publishes a survey of information about mutual
funds. According to Weisenberger's 1992 edition of Weisenberger Investment
Companies Services, in 1947, there were only two funds which employed the
equity-income discipline, one of which was Fidelity Puritan Fund. In 1958,
when Lipper began recording equity-income fund performance, it recorded
five funds employing the equity-income discipline, one of which was
Fidelity Puritan Fund. In 1966, when Fidelity Equity-Income Fund was
launched, Lipper recorded twelve funds utilizing this approach.
As of November 30, 1993, FMR managed approximately $125 billion in
equity fund assets as defined and tracked by Lipper. This figure represents
the largest amount of equity fund assets under management by a mutual fund
investment adviser in the United States, making FMR America's leading
equity (stock) fund manager. From time to time, the fund may use any of the
above information in its advertising and sales literature.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day (observed), Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule , with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time.
FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated
earlier if trading on the NYSE is restricted or as permitted by the SEC. To
the extent that portfolio securities are traded in other markets on days
when the NYSE is closed, the fund's NAV may be affected on days when
investors do not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), the fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, the fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. A portion of the fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the
extent that the fund's income is derived from qualifying dividends. Because
the fund may earn other types of income, such as interest, income from
securities loans, non-qualifying dividends, and short-term capital gains,
the percentage of dividends from the fund that qualifies for the deduction
generally will be less than 100%. The fund will notify corporate
shareholders annually of the percentage of fund dividends that qualifies
for the dividends-received deduction. A portion of the fund's dividends
derived from certain U.S. government obligations may be exempt from state
and local taxation. Gains (losses) attributable to foreign currency
fluctuations are generally taxable as ordinary income, and therefore will
increase (decrease) dividend distributions. The fund will send each
shareholder a notice in January describing the tax status of dividends and
capital gain distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the fund on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains regardless of the length of time
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of the fund and such shares are held
six months or less and are sold at a loss, the portion of the loss equal to
the amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
Short-term capital gains distributed by the fund are taxable to
shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Because the fund does not
currently anticipate that securities of foreign issuers will constitute
more than 50% of its total assets at the end of its fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction
on their federal income tax returns with respect to foreign taxes withheld.
TAX STATUS OF THE FUND. The fund has qualified and intends to continue to
qualify each year as a "regulated investment company" for tax purposes so
that it will not be liable for federal tax on income and capital gains
distributed to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at the
fund level, the fund intends to distribute substantially all of its net
investment income and net realized capital gains within each calendar year
as well as on a fiscal year basis. The fund intends to comply with other
tax rules applicable to regulated investment companies, including a
requirement that capital gains from the sale of securities held less than
three months constitute less than 30% of the fund's gross income for each
fiscal year. Gains from some forward currency contracts, futures contracts,
and options are included in this 30% calculation, which may limit the
fund's investments in such instruments. The fund is treated as a separate
entity from the other funds of Fidelity Financial Trust for tax purposes.
If the fund purchases shares in certain foreign investment entities,
defined as passive foreign investment companies (PFICs) in the Internal
Revenue Code, it may be subject to U.S. federal income tax on a portion of
any excess distribution or gain from the disposition of such shares.
Interest charges may also be imposed on the fund with respect to deferred
taxes arising from such distributions or gains.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on distributions received from the fund. Investors should
consult their tax advisers to determine whether the fund is suitable to
their particular tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research, and may
supply portfolio management services, to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FMR Texas Inc., a wholly owned subsidiary of FMR formed in 1989, supplies
portfolio management and research services in connection with certain money
market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. Unless
otherwise noted, the business address of each Trustee and officer is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. Those Trustees who are "interested persons" (as defined in the 1940
Act) by virtue of their affiliation with either the Trust or FMR are
indicated by an asterisk (*).

*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief
Executive Officer 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
FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, 340 E. 64th Street #22C, New York, NY, Trustee
(1992). Prior to her retirement in September 1991, Mrs. Davis was the
Senior Vice President of Corporate Affairs of Avon Products, Inc. She is
currently a Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores, 1990), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she serves as a Director
of the New York City Chapter of the National Multiple Sclerosis Society,
and is a member of the Advisory Council of the International Executive
Service Corps. and the President's Advisory Council of The University of
Vermont School of Business Administration (1988).
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he
serves as a Trustee of First Union Real Estate Investments, Chairman of the
Board of Trustees and a member of the Executive Committee of the Cleveland
Clinic Foundation, a Trustee and a member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwhich Hospital Association (1989).
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior
to his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction, 1988). In addition, he serves as a Trustee
of Boston College, Massachusetts Eye & Ear Infirmary, Historic
Deerfield (1989) and Society for the Preservation of New England
Antiquities, and as an Overseer of the Museum of Fine Arts of Boston
(1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989),
is Chairman of G.M. Management Group (strategic advisory services). Prior
to his retirement in July 1988, he was Chairman and Chief Executive Officer
of Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee
(1988). Prior to his retirement in 1985, Mr. Malone was Chairman, General
Electric Investment Corporation and a Vice President of General Electric
Company. He is a Director of Allegheny Power Systems, Inc. (electric
utility), General Re Corporation (reinsurance) and Mattel Inc. (toy
manufacturer). He is also a Trustee of Rensselaer Polytechnic Institute
and of Corporate Property Investors and a member of the Advisory Boards of
Butler Capital Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee (1988), is President of The Wales Group, Inc. (management and
financial advisory services). Prior to retiring in 1987, Mr. Williams
served as Chairman of the Board of First Wachovia Corporation (bank holding
company), and Chairman and Chief Executive Officer of The First National
Bank of Atlanta and First Atlanta Corporation (bank holding company). He
is currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software, 1988), Georgia Power Company (electric utility), Gerber
Alley & Associates, Inc. (computer software), National Life Insurance
Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President-Legal of FMR Corp., and Vice President and
Clerk of FDC.
ROBERT H. MORRISON, Manager, Security Transactions, is an employee of
FMR.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of November 30, 1993 the Trustees and officers of the fund owned, in
the aggregate, less than 1% of the outstanding shares of the fund.
MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of the fund. These services include providing facilities
for maintaining the fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, the fund pays all of its expenses, without limitation, that are not
assumed by those parties. The fund pays for typesetting, printing, and
mailing proxy material to shareholders, legal expenses, and the fees of the
custodian, auditor, and non-interested Trustees. Although the fund's
management contract provides that the fund will pay for typesetting,
printing, and mailing of prospectuses, statements of additional
information, notices, and reports to existing shareholders, the trust has
entered into a revised transfer agent agreement with FSC, pursuant to which
FSC bears the cost of providing these services to existing shareholders.
Other expenses paid by the fund include interest, taxes, brokerage
commissions, the fund's proportionate share of insurance premiums and
Investment Company Institute dues, and the costs of registering shares
under federal and state securities laws. The fund is also liable for such
nonrecurring expenses as may arise, including costs of any litigation to
which the fund may be a party and any obligation it may have to indemnify
the trust's officers and Trustees with respect to litigation.
FMR is the fund's manager pursuant to an amended management contract dated
December 1, 1993 which was approved by shareholders on November 17, 1993.
For the services of FMR under the contract, the fund pays FMR a monthly
management fee composed of the sum of two elements: a group fee rate and an
individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on page 17 . Also shown on page 17 , the
effective rate schedule shows the results of cumulatively applying the
annualized rates at varying asset levels. For example, the effective annual
fee rate at $ 227 billion of group assets--their approximate level
for November 1993--was .3250 %, which is the weighted average of the
respective fee rates for each level of group net assets up to $227
billion.

GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Average Group
Annualized
Group Net
Effective Annual

Assets Rate Assets Fee Rate

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
0 - $ 3 billion .520% $ 0.5 billion .5200%

3 - 6 .490 25 .4238

6 - 9 .460 50 .3823

9 - 12 .430 75 .3626

12 - 15 .400 100 .3512

15 - 18 .385 125 .3430

18 - 21 .370 150 .3371

21 - 24 .360 175 .3325

24 - 30 .350 200 .3284

30 - 36 .345 225 .3253

36 - 42 .340 250 .3223

42 - 48 .335 275 .3198

48 - 66 .325 300 .3175

66 - 84 .320 325 .3153

84 - 102 .315 350 .3133

102 - 138 .310

138 - 174 .305

174 - 228 .300

228 - 282 .295

282 - 336 .290

Over 336 .285

</TABLE>

* Prior to January 1, 1992, the group fee rate was based on a schedule
with breakpoints ending at .310% for average group assets in excess of $102
billion. The group fee breakpoints shown for average group assets between
$102 billion and $228 billion were voluntarily adopted by FMR on January 1,
1992. The fund's management contract dated December 1, 1993 includes these
group fee rate breakpoints. Additional breakpoints for average group assets
in excess of $228 billion were voluntarily added to the group fee rate
schedule by FMR on November 1, 1993, pending shareholder approval of a new
management contract reflecting the extended schedule. The extended schedule
provides for lower management fees as FMR's total assets under management
increase.
The individual fund fee rate is .20%. Based on the average net assets of
funds advised by FMR for November 1993, the annual management fee rate
would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
.3250% + .20% = .5250%
One twelfth (1/12) of this annual management fee rate is then applied to
the fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
During the fiscal years ended November 30, 1993, 1992, and 1991, FMR
received $18,696,389, $5,588,255, and $449,903, respectively, for its
services as investment adviser to the fund. These fees were equivalent to
.53%, .53%, and .54%, respectively, of the average net assets of the fund
for each of these periods.
To comply with the California Code of Regulations, FMR will reimburse
the fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating the fund's expenses for purposes of this regulation, the
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
SUB-ADVISERS. FMR has entered into sub-advisory agreements with FMR U.K.
and FMR Far East. Pursuant to the sub-advisory agreements, FMR may receive
investment advice and research services with respect to companies based
outside the U.S. from the sub-advisers and may grant them investment
management authority as well as the authority to b u y and sell
securities if FMR believed it would be beneficial to the fund.
Currently, FMR U.K. focuses primarily on companies based in Europe; FMR Far
East focuses primarily on companies based in Asia and the Pacific Basin.
FMR U.K. and FMR Far East are wholly owned subsidiaries of FMR.
Under the sub-advisory agreements FMR, and not the fund, pays the fees of
FMR U.K. and FMR Far East. For providing investment advice and research
services, FMR pays FMR U.K. and FMR Far East fees equal to 110% and
105%, respectively, of FMR U.K.'s and FMR Far East's cost incurred in
connection with providing such services.
For providing investment management and portfolio execution services,
FMR pays FMR U.K. and FMR Far East 50% of its monthly management fee
with respect to the average net assets managed by the sub-adviser on a
discretionary basis.
FMR entered into the sub-advisory agreements described above with respect
to the fund on December 1, 1993 following shareholder approval of the
agreements on November 17, 1993.
Prior to December 1, 1993, FMR had sub-advisory agreements with FMR U.K.
and FMR Far East on behalf of the fund, pursuant to which, FMR U.K. and FMR
Far East provided FMR with investment advice and research services. Under
those agreements, FMR U.K. and FMR Far East were compensated for their
services according to the same formulas as they are compensated currently
for providing investment advice and research services. The following table
shows the fees paid by FMR to FMR U.K. and FMR Far East on behalf of the
fund over the periods indicated.
Fiscal Year
Ended November 30 FMR U.K. FMR Far East
1993 $96,016 $156,327
1992 $37,763 $41,591
1991 $4,900 $5,000
DISTRIBUTION AND SERVICE PLAN
The fund has adopted a distribution and service plan (the Plan) under Rule
12b-1 of the 1940 Act (the Rule). The Rule provides in substance that a
mutual fund may not engage directly or indirectly in financing any activity
that is primarily intended to result in the sale of shares of the fund
except pursuant to a plan adopted by the fund under the Rule. The Board of
Trustees has adopted the Plan to allow the fund and FMR to incur certain
expenses that might be considered to constitute indirect payment by the
fund of distribution expenses. Under the Plan, if the payment by the fund
to FMR of management fees should be deemed to be indirect financing by the
fund of the distribution of its shares, such payment is authorized by the
Plan.
The Plan specifically recognizes that FMR, either directly or through FDC,
may use its management fee revenue, past profits or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the fund. In addition, the
Plan provides that FMR may use its resources, including management fee
revenues, to make payments to third parties that provide assistance in
selling shares of the fund or to third parties, including banks, that
render shareholder support services.
As required by the Rule, the Trustees carefully considered all pertinent
factors relating to the implementation of the Plan prior to its approval,
and have determined that there is a reasonable likelihood that the Plan
will benefit the fund and its shareholders. In particular, the Trustees
noted that the Plan does not authorize payments by the fund other than
those made to FMR under its management contract with the fund. To the
extent that the Plan gives FMR and FDC greater flexibility in connection
with the distribution of shares of the fund, additional sales of the fund's
shares may result. Additionally, certain shareholder support services may
be provided more effectively under the Plan by local entities with whom
shareholders have other relationships. The fund's Plan was approved by the
fund's Trustees on July 19, 1990 and by shareholders on September 18, 1991.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services or
servicing and recordkeeping functions. FDC intends to engage banks, only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the fund
might occur, including possible termination of any automatic investment or
redemption or any other services then provided by the bank. It is not
expected that shareholders would suffer any adverse financial consequences
as a result of any of these occurrences. The fund may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the Plan. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers
pursuant to state law.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FSC is transfer, dividend disbursing, and shareholders' servicing agent for
the fund. Under the Trust's contract with FSC, the fund pays an annual fee
of $25.50 per basic retail account with a balance of $5,000 or more, $15.00
per basic retail account with a balance of less than $5,000 and a
supplemental activity charge of $5.61 for monetary transactions. These fees
and charges are subject to annual cost escalation based on changes in
postal rates and changes in wage and price levels as measured by the
National Consumer Price Index for Urban Areas. With respect to certain
institutional client master accounts, the fund pays FSC a per account fee
of $95, and monetary transaction charges of $20 and $17.50 depending on the
nature of services provided. With respect to certain broker-dealer master
accounts, the fund pays FSC a per-account fee of $30, and a charge of $6
for monetary transactions. Fees for certain institutional retirement plan
accounts are based on the net asset of all such accounts in the fund.
Under the contract, FSC pays out-of-pocket expenses associated with
providing transfer agent services. In addition, FSC bears the expense of
typesetting, printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
shareholders, with the exception of proxy statements.
Transfer agent fees, including reimbursement for out-of-pocket expenses,
paid FSC for the fiscal years ended November 30, 1993, 1992 and 1991, were
$ 10,021,790 , $3,591,126, and $348,639, respectively.
During fiscal 1993, if a portion of the fund's brokerage commissions had
not resulted in payment of certain of these fees, the fund would have paid
transfer agent fees of $10,129,363.
The trust's contract with FSC also provides that FSC will perform the
calculations necessary to determine the fund's net asset value per share
and dividends, and maintain the fund's accounting records. Prior to July 1,
1991, the annual fee for these pricing and bookkeeping services was based
on two schedules, one pertaining to the fund's average net assets, and one
pertaining to the type and number of transactions the fund made. The fee
rates in effect as of July 1, 1991 are based on the fund's average net
assets, specifically, .06% for the first $500 million of average net assets
and .03% for average net assets in excess of $500 million. The fee is
limited to a minimum of $45,000 and a maximum of $750,000 per year.
Pricing and bookkeeping fees, including related out-of-pocket expenses,
paid to FSC for fiscal 1993, 1992, and 1991 were $ 761,673 , $462,383,
and $122,037, respectively.
The fund has a distribution agreement with FDC, a Massachusetts corporation
organized on July 18, 1960. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. The distribution agreement calls for FDC to use
all reasonable efforts, consistent with its other business, to secure
purchasers for shares of the fund, which are continuously offered at net
asset value. Promotional and administrative expenses in connection with the
offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Equity-Income II Fund is a fund of Fidelity
Financial Trust (the trust), an open-end management investment company
organized as a Massachusetts business trust on October 20, 1982. On
December 17, 1982, the Declaration of Trust was amended to change the name
of the trust from Fidelity Tax-Qualified Equity Fund to Fidelity Freedom
Fund and on January 1, 1987, the Declaration of Trust was further amended
to change the name of the trust to Fidelity Financial Trust. Currently,
there are three funds of the trust: Fidelity Convertible Securities Fund,
Fidelity Retirement Growth Fund, and Fidelity Equity-Income II Fund. The
Declaration of Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying name "Fidelity"
may be withdrawn.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against
shareholders, except for the payment of the purchase price of shares, and
requires that each agreement, obligation, or instrument entered into or
executed by the trust or the Trustees include a provision limiting the
obligations created thereby to the trust and its assets. The Declaration of
Trust provides for indemnification out of each fund's property of any
shareholder held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which a fund itself would be unable to meet
its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects a Trustee
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar of net
asset value per share you own. The shares have no preemptive or conversion
rights; the voting and dividend rights, the right of redemption, and the
privilege of exchange are described in the Prospectus. Shares are fully
paid and nonassessable, except as set forth under the heading "Shareholder
and Trustee Liability" above. Shareholders representing 10% or more of the
trust or a fund may, as set forth in the Declaration of Trust, call
meetings of the trust or a fund for any purpose related to the trust or
fund, as the case may be, including, in the case of a meeting of the entire
trust, the purpose of voting on removal of one or more Trustees. The trust
or any fund may be terminated upon the sale of its assets to another
open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a
majority of the trust or the fund, as determined by the value of each
shareholder's investment in the fund or trust. If not so terminated,
the trust and its funds will continue indefinitely.
CUSTODIAN. Chase Manhattan Bank N.A., 1211 Avenue of the Americas, New
York, New York, is custodian of the fund's assets. The custodian is
responsible for the safekeeping of the fund's assets and the appointment of
sub-custodian banks and clearin g agencies. Prior to May, 1992 the
fund's custodian was Brown Brothers Harriman & Co., 40 Water Street,
Boston, Massachusetts. The custodian takes no part in determining the
fund's investment policies, or in deciding which securities are purchased
or sold by the fund. The fund, however, may invest in obligations of the
custodian and may purchase securities from or sell securities to the
custodian.
FMR, its officers and directors, its affiliated companies, and the trust's
Trustees from time to time have transactions with various banks, including
custodian and sub-custodian banks for certain of the funds advised by FMR.
The Boston branch of Brown Brothers Harriman & Co. leases its office
space from an affiliate of FMR at a lease payment which, when entered into,
was consistent with prevailing market rates. Other transactions that have
occurred to date include mortgages and personal and general business loans.
In the judgment of FMR, the terms and conditions of those transactions were
not influenced by existing or potential custodial or other fund
relationships.
AUDITOR. Price Waterhouse, 160 Federal Street, Boston, Massachusetts serves
as the trust's independent accountant. The auditor examines financial
statements for the fund and provides other audit, tax, and related
services.
FINANCIAL STATEMENTS
The fund's Annual Report for the fiscal year ended November 30, 1993 is a
separate report supplied with this Statement of Additional Information and
is incorporated herein by reference.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of
other terms of the contract over any long period of time may be small.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
CA - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issued so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rate BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC - Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC - debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The D rating will
also be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.

PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(i) The financial statements for Fidelity Convertible Securities Fund
for the fiscal year ended November 30, 1993, are incorporated by reference
into the fund's Statement of Additional Information and are filed herein as
Exhibit 24(a)(i).
(ii) The financial statements for Fidelity Retirement Growth Fund for
the fiscal year ended November 30, 1993, are incorporated by reference into
the fund's Statement of Additional Information and are filed herein as
Exhibit 24(a)(ii).
(iii) The financial statements for Fidelity Equity-Income II Fund for
the fiscal year ended November 30, 1993, are incorporated by reference into
the fund's Statement of Additional Information and are filed herein as
Exhibit 24(a)(iii).
(b) Exhibits
1. (a) Declaration of Trust dated October 20, 1982 is incorporated herein
by reference to Exhibit 1 to Registration Statement No. 2-52772.
(b) Supplement to Declaration of Trust dated December 17, 1982 is
incorporated herein by reference to Exhibit 1(b) to Pre-Effective Amendment
No. 2.
(c) Amended and restated Declaration of Trust dated April 27, 1987, is
incorporated herein by reference to Exhibit 1(c) to Post-Effective
Amendment No. 8.
(d) Supplement to the Declaration of Trust dated January 16, 1987 is
incorporated herein by reference to Exhibit 1(d) to Post-Effective
Amendment No. 8.
(e) Supplement to the Declaration of Trust dated December 19, 1989 is
incorporated herein by reference to Exhibit 1(e) to Post-Effective
Amendment No. 15.
2. (a) By-laws of the Trust are incorporated herein by reference to
Exhibit 2 to Registration Statement No. 2-52772.
(b) Supplement to the Bylaws of the Trust dated November 15, 1989 is
incorporated herein by reference to Exhibit 2(b) to Post-Effective
Amendment No. 15.
3. Not Applicable.
4. Not Applicable.
5. (a) Management Contract between Fidelity Freedom Fund and Fidelity
Management & Research Company dated January 29, 1990 is incorporated
herein by reference to Exhibit 5(a) to Post-Effective Amendment No. 15.
(b) Management Contract between Fidelity Convertible Securities Fund and
Fidelity Management & Research Company dated January 29, 1990 is
incorporated herein by reference to Exhibit 5(b) to Post-Effective
Amendment No. 15.
(c) Sub-Advisory Agreement for Fidelity Freedom Fund between Fidelity
Management & Research (U.K.) Inc. and Fidelity Management &
Research Company dated December 1, 1989 is incorporated herein by reference
to Exhibit 5(c) to Post-Effective Amendment No. 15.
(d) Sub-Advisory Agreement for Fidelity Freedom Fund between Fidelity
Management & Research (Far East) Inc. and Fidelity Management &
Research Company dated December 1, 1989 is incorporated herein by reference
to Exhibit 5(d) to Post-Effective Amendment No. 15.
(e) Sub-Advisory Agreement for Fidelity Convertible Securities Fund
between Fidelity Management & Research (U.K.) Inc. and Fidelity
Management & Research Company dated December 1, 1989 is incorporated
herein by reference to Exhibit 5(e) to Post-Effective Amendment No. 15.
(f) Sub-Advisory Agreement for Fidelity Convertible Securities Fund
between Fidelity Management & Research (Far East) Inc. and Fidelity
Management & Research Company dated December 1, 1989 is incorporated
herein by reference to Exhibit 5(f) to Post-Effective Amendment No. 15.
(g) Management Contract between Fidelity Equity-Income II Fund and
Fidelity Management & Research Company dated August 20, 1990 is
incorporated herein by reference to Exhibit 5(g) to Post-Effective
Amendment No. 18.
(h) Sub-Advisory Agreement for Fidelity Equity-Income II Fund between
Fidelity Management & Research (Far East) Inc. and Fidelity Management
& Research Company dated August 20, 1990 is incorporated herein by
reference to Exhibit 5(h) to Post-Effective Amendment No. 18.
(i) Sub-Advisory Agreement for Fidelity Equity-Income II Fund between
Fidelity Management & Research (U.K.) Inc. and Fidelity Management
& Research Company, dated August 20, 1990 is incorporated herein by
reference to Exhibit 5(i) to Post-Effective Amendment No. 18
(j) Form of Management Contract between Fidelity Equity-Income II Fund
and Fidelity Management & Research Company dated December 1, 1993 is
filed herein as Exhibit 5(j).
(k) Form of Management Contract between Fidelity Convertible Securities
Fund and Fidelity Management & Research Company dated December 1, 1993
is filed herein as Exhibit 5(k).
(l) Form of Management Contract between Fidelity Retirement Growth Fund
and Fidelity Management & Research Company dated December 1, 1993 is
filed herein as Exhibit 5(l).
(m) Form of Sub-Advisory Agreement for Fidelity Equity-Income II Fund
between Fidelity Management & Research (Far East) Inc. and Fidelity
Management & Research Company dated December 1, 1993 is filed herein as
Exhibit 5(m).
(n) Form of Sub-Advisory Agreement for Fidelity Equity-Income II Fund
between Fidelity Management & Research (U.K.) Inc. and Fidelity
Management & Research Company, dated December 1, 1993 is filed herein
as Exhibit 5(n).
(o) Form of Sub-Advisory Agreement for Fidelity Convertible Securities
Fund between Fidelity Management & Research (Far East) Inc. and
Fidelity Management & Research Company dated December 1, 1993 is filed
herein as Exhibit 5(o).
(p) Form of Sub-Advisory Agreement for Fidelity Convertible Securities
Fund between Fidelity Management & Research (U.K.) Inc. and Fidelity
Management & Research Company, dated December 1, 1993 is filed herein
as Exhibit 5(p).
(q) Form of Sub-Advisory Agreement for Fidelity Retirement Growth Fund
between Fidelity Management & Research (Far East) Inc. and Fidelity
Management & Research Company dated December 1, 1993 is filed herein as
Exhibit 5(q).
(r) Form of Sub-Advisory Agreement for Fidelity Retirement Growth Fund
between Fidelity Management & Research (U.K.) Inc. and Fidelity
Management & Research Company, dated December 1, 1993 is filed herein
as Exhibit 5(r).
6. (a) General Distribution Agreement between Fidelity Freedom Fund and
Fidelity Distributors Corporation, dated April 1, 1987 is incorporated
herein by reference to Exhibit 6(a) to Post-Effective Amendment No. 10.
(b) General Distribution Agreement between Fidelity Convertible
Securities Fund and Fidelity Distributors Corporation dated December 29,
1986 is incorporated herein by reference to Exhibit 6(b) to Post-Effective
Amendment No. 9.
(c) Amendment to the General Distribution Agreement between Fidelity
Freedom Fund and Fidelity Distributors Corporation dated January 1, 1988 is
incorporated herein by reference to Exhibit 6(c) to Post-Effective
Amendment No. 11.
(d) Amendment to the General Distribution Agreement between Fidelity
Convertible Securities Fund and Fidelity Distributors Corporation dated
January 1, 1988 is incorporated herein by reference to Exhibit 6(d) to
Post-Effective Amendment No. 11.
(e) General Distribution Agreement between Fidelity Equity-Income II Fund
and Fidelity Distributors Corporation dated August 20, 1990 is incorporated
herein by reference to Exhibit 6(e) to Post-Effective Amendment No. 18.
7. Retirement Plan for Non-Interested Trustees, Directors or General
Partners, effective November 1, 1989 is incorporated herein by reference to
Exhibit 7 to Post-Effective Amendment No. 21.
8. (a) Custodian Agreement between Registrant and Brown Brothers Harriman
& Co. dated July 23, 1987 is incorporated herein by reference to
Exhibit 8 to Post-Effective Amendment No. 11.
(b) Appendix to Custodian Agreement between Registrant and Brown Brothers
Harriman & Co. dated August 17, 1990 is incorporated herein by
reference to Exhibit 8(b) to Post-Effective Amendment No. 18.
9. (a) Amended Master Service Agreement between Fidelity Financial Trust,
FMR Corp., and Fidelity Service Co. dated June 1, 1989 is incorporated
herein by reference to Exhibit 9(a) to Post-Effective Amendment No. 15.
(b) Schedules A (transfer, dividend disbursing, and shareholders'
service); B (pricing and bookkeeping); and C (securities lending
transactions) dated June 1, 1989, pertaining to Fidelity Freedom Fund, are
incorporated herein by reference to Exhibit 9(b) to Post-Effective
Amendment No. 15.
(c) Schedules A (transfer, dividend disbursing, and shareholders'
service); B (pricing and bookkeeping); and C (securities lending
transactions) dated June 1, 1989, pertaining to Fidelity Convertible
Securities Fund, are incorporated herein by reference to Exhibit 9(c) to
Post-Effective Amendment No. 15.
(d) Schedules A (transfer, dividend disbursing, and shareholders'
service); B (pricing and bookkeeping); and C (securities lending
transactions) dated August 20, 1990, pertaining to Fidelity Equity-Income
II Fund, are incorporated herein by reference to Exhibit 9(d) to
Post-Effective Amendment No. 18.
10. Not applicable.
11. Consent of Price Waterhouse is filed herein as Exhibit 11.
12. Not applicable.
13. Not applicable.
14. (a) Fidelity Individual Retirement Account Custodial Agreement and
Disclosure Statement, as currently in effect, is incorporated herein by
reference to Exhibit 14(a) to Post-Effective Amendment No. 18.
(b) Fidelity 403(b)(7) Custodial Account Agreement, as currently in
effect, is incorporated herein by reference to Exhibit 14(b) to
Post-Effective Amendment No. 20.
(c) Fidelity Defined Contribution Retirement Plan and Trust Agreement, as
currently in effect, is incorporated herein by reference to Exhibit 14(c)
to Post-Effective Amendment No. 18.
(d) Fidelity Defined Benefit Pension Plan and Trust, as currently in
effect, is incorporated herein by reference to Exhibit 14(d) to
Post-Effective Amendment No. 20.
(e) Fidelity 401(a) Prototype Plan for Tax-Exempt Employers, as currently
in effect, is incorporated herein by reference to Exhibit 14(e) to
Post-Effective Amendment No. 18.
(f) Fidelity Master Plan for Savings and Investments, as currently in
effect, is incorporated herein by reference to Exhibit 14(f) to
Post-Effective Amendment No. 20.
(g) Fidelity Group Individual Retirement Account Custodial Agreement and
Disclosure Statement, as currently in effect, is incorporated herein by
reference to Exhibit 14(g) to Post-Effective Amendment No. 18.
15. (a) Distribution and Service Plan between Fidelity Freedom Fund and
Fidelity Distributors Corporation is incorporated herein by reference to
Exhibit 15(a) to Post-Effective Amendment No. 8.
(b) Distribution and Service Plan between Fidelity Convertible Securities
Fund and Fidelity Distributors Corporation is incorporated herein by
reference to Exhibit 15(b) to Post-Effective Amendment No. 9.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Equity-Income II Fund is incorporated herein by reference to Exhibit 15(c)
to Post-Effective Amendment No. 17.
16. (a) A schedule for computation of performance quotations for Fidelity
Freedom Fund is incorporated herein by reference to Exhibit 16(a) to
Post-Effective Amendment No. 12.
(b) A schedule for computation of performance quotations for Fidelity
Convertible Securities Fund is incorporated herein by reference to Exhibit
16(b) to Post-Effective Amendment No. 12.
(c) A schedule for computation of performance quotations for Fidelity
Equity-Income II Fund is incorporated herein by reference to Exhibit 16(c)
to Post-Effective Amendment No. 17.
(d) A schedule for computation of long-term moving averages for Fidelity
Convertible Securities Fund is filed herein as Exhibit 16(d).

Item 25. Persons Controlled By or Under Common Control With Registrant
The Board of Trustees of Fidelity Financial Trust is the same as the
boards of other funds advised by FMR, each of which has Fidelity Management
& Research Company as its investment adviser. In addition, the officers
of these funds are substantially identical. Nonetheless, the Registrant
takes the position that it is not under common control with these other
funds since the power residing in the respective boards and officers arises
as the result of an official position with the respective funds.
Item 26. Number of Holders of Securities November 30, 1993
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Fidelity Convertible Securities Fund 79,529
Fidelity Equity-Income II Fund 384,548
Fidelity Retirement Growth Fund 212,729
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.)
Inc. and Fidelity Management & Research (Far East)
Inc.; President and Trustee of funds advised by FMR;

J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.

Peter S. Lynch Vice Chairman of FMR (1992).

David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.

Stephan Campbell Vice President of FMR (1993).

Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.

Will Danof Vice President of FMR (1993) and of a fund advised by
FMR.

Scott DeSano Vice President of FMR (1993).

Penelope Dobkin Vice President of FMR (1990) and of a fund advised by
FMR.

Larry Domash Vice President of FMR (1993).

George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.

Charles F. Dornbush Senior Vice President of FMR (1991); Chief Financial
Officer of the Fidelity funds; Treasurer of FMR Texas Inc.
(1989), Fidelity Management & Research (U.K.) Inc.,
and Fidelity Management & Research (Far East) Inc.

Robert K. Duby Vice President of FMR.

Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.

Kathryn L. Eklund Vice President of FMR (1991).

Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.

Daniel R. Frank Vice President of FMR and of funds advised by FMR.

Gary L. French Vice President of FMR (1991) and Treasurer of the funds
advised by FMR (1991). Prior to assuming the position as
Treasurer he was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991)
(Vice President, 1990-1991); and Senior Vice President,
Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).

Michael S. Gray Vice President of FMR and of funds advised by FMR.

Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.

William J. Hayes Senior Vice President of FMR (1989); Income/Growth
Group Leader (1990) and International Group Leader
(1990).

Robert Haber Vice President of FMR (1991) and of funds advised by
FMR.

Daniel Harmetz Vice President of FMR (1991) and of a fund advised by
FMR.

Ellen S. Heller Vice President of FMR (1991).

</TABLE>

John Hickling Vice President of FMR (1993) and of funds advised by
FMR.

Robert F. Hill Vice President of FMR (1989); and Director of Technical
Research.

Stephan Jonas Vice President of FMR (1993).

David B. Jones Vice President of FMR (1993).

Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.

Frank Knox Vice President of FMR (1993).

Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.

Alan Leifer Vice President of FMR and of a fund advised by FMR.

Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.

Bradford E. Lewis Vice President of FMR (1991) and of funds advised by
FMR.

Robert H. Morrison Vice President of FMR and Director of Equity Trading.

David Murphy Vice President of FMR (1991) and of funds advised by
FMR.

Jacques Perold Vice President of FMR (1991).

Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.

Anne Punzak Vice President of FMR (1990) and of funds advised by
FMR.

Richard A. Spillane Vice President of FMR (1990) and of funds advised by
FMR; and Director of Equity Research (1989).

Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.

Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.

Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.

Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.

Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.

Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.

Robert Tucket Vice President of FMR (1993).

George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader (1990).

Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.

Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.

Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.

</TABLE>

(2) FIDELITY MANAGEMENT & RESEARCH (U.K.) INC. (FMR U.K.)
FMR U.K. provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR U.K.; Chairman of the
Executive Committee of FMR; Chief Executive Officer of FMR
Corp.; Chairman of the Board and a Director of FMR, FMR
Corp., FMR Texas Inc., and Fidelity Management &
Research (Far East) Inc.; President and Trustee of funds advised
by FMR.

J. Gary Burkhead President and Director of FMR U.K.; President of FMR;
Managing Director of FMR Corp.; President and a Director of
FMR Texas Inc. and Fidelity Management & Research (Far
East) Inc.; Senior Vice President and Trustee of funds advised
by FMR.

Richard C. Habermann Senior Vice President of FMR U.K. (1991); Senior Vice
President of Fidelity Management & Research (Far East)
Inc. (1991); Director of Worldwide Research of FMR.

Charles F. Dornbush Treasurer of FMR U.K.; Treasurer of Fidelity Management
& Research (Far East) Inc.; Treasurer of FMR Texas Inc.,
Senior Vice President and Chief Financial Officer of the Fidelity
funds.

David Weinstein Clerk of FMR U.K.; Clerk of Fidelity Management &
Research (Far East) Inc.; Secretary of FMR Texas Inc.

</TABLE>

(3) FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC. (FMR Far East)
FMR Far East provides investment advisory services to Fidelity Management
& Research Company and Fidelity Management Trust Company. The
directors and officers of the Sub-Adviser have held the following positions
of a substantial nature during the past two fiscal years.

<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Far East; Chairman of the
Executive Committee of FMR; Chief Executive Officer of
FMR Corp.; Chairman of the Board and a Director of
FMR, FMR Corp., FMR Texas Inc. and Fidelity
Management & Research (U.K.) Inc.; President and
Trustee of funds advised by FMR.

J. Gary Burkhead President and Director of FMR Far East; President of
FMR; Managing Director of FMR Corp.; President and a
Director of FMR Texas Inc. and Fidelity Management
& Research (U.K.) Inc.; Senior Vice President and
Trustee of funds advised by FMR.

Richard C. Habermann Senior Vice President of FMR Far East (1991); Senior
Vice President of Fidelity Management & Research
(U.K.) Inc. (1991); Director of Worldwide Research of
FMR.

William R. Ebsworth Vice President of FMR Far East.

Bill Wilder Vice President of FMR Far East (1993).

Charles F. Dornbush Treasurer of FMR Far East; Treasurer of Fidelity
Management & Research (U.K.) Inc.; Treasurer of
FMR Texas Inc.; Senior Vice President and Chief
Financial Officer of the Fidelity funds.

</TABLE>

David C. Weinstein Clerk of FMR Far East; Clerk of Fidelity Management
& Research (U.K.) Inc.; Secretary of FMR Texas
Inc. .

Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)

Name and Principal Positions and Offices Positions and Offices

Business Address* With Underwriter With Registrant

Edward C. Johnson 3d Director Trustee and President

Nita B. Kincaid Director None

W. Humphrey Bogart Director None

Kurt A. Lange President and Treasurer None

William L. Adair Senior Vice President None

Thomas W. Littauer Senior Vice President None

Arthur S. Loring Vice President and Clerk Secretary

* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the funds'
custodian: The Chase Manhattan Bank, 1211 Avenue of the Americas, New
York, N.Y.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant on behalf of Fidelity Convertible Securities Fund, Fidelity
Equity-Income II Fund, and Fidelity Retirement Growth Fund undertakes,
provided the information required by Item 5A is contained in the annual
report, to furnish each person to whom a prospectus has been delivered,
upon their request and without charge, a copy of the Registrant's latest
annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 26 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Commonwealth of Massachusetts, on the 13th day
of January 1994.
FIDELITY FINANCIAL TRUST
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)

<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee January 13, 1994

Edward C. Johnson 3d (Principal Executive Officer)

</TABLE>

/s/Gary L. French Treasurer January 13, 1994

Gary L. French

/s/J. Gary Burkhead Trustee January 13, 1994

J. Gary Burkhead

/s/Ralph F. Cox * Trustee January 13, 1994

Ralph F. Cox

/s/Phyllis Burke Davis * Trustee January 13, 1994

Phyllis Burke Davis

/s/Richard J. Flynn * Trustee January 13, 1994

Richard J. Flynn

/s/E. Bradley Jones * Trustee January 13, 1994

E. Bradley Jones

/s/Donald J. Kirk * Trustee January 13, 1994

Donald J. Kirk

/s/Peter S. Lynch * Trustee January 13, 1994

Peter S. Lynch

/s/Edward H. Malone * Trustee January 13, 1994

Edward H. Malone

/s/Marvin L. Mann * Trustee January 13, 1994

Marvin L. Mann

/s/Gerald C. McDonough* Trustee January 13, 1994

Gerald C. McDonough

/s/Thomas R. Williams * Trustee January 13, 1994

Thomas R. Williams

(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Cash Portfolios
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Series
Fidelity Advisor Series III Fidelity Investment Trust
Fidelity Advisor Series IV Fidelity Magellan Fund
Fidelity Advisor Series V Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series VI Fidelity Money Market Trust
Fidelity Advisor Series VII Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity Municipal Trust
Fidelity Beacon Street Trust Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Special Situations Fund
Fidelity Contrafund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Corporate Trust Fidelity Summer Street Trust
Fidelity Court Street Trust Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity Triad Fund, Inc.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Bond Fund, L.P.
Portfolio, L.P. Fidelity U.S. Investments-Government Securities
Fidelity Devonshire Trust Fund, L.P.
Fidelity Exchange Fund Fidelity Union Street Trust
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Spartan U.S. Treasury Money Market
Fidelity Government Securities Fund Fund
Fidelity Hastings Street Trust Variable Insurance Products Fund
Fidelity Income Fund Variable Insurance Products Fund II
Fidelity Income Trust

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.

/s/Edward C. Johnson 3d /s/Peter S. Lynch

Edward C. Johnson 3d Peter S. Lynch

/s/J. Gary Burkhead /s/Edward H. Malone

J. Gary Burkhead Edward H. Malone

/s/Richard J. Flynn /s/Gerald C. McDonough

Richard J. Flynn Gerald C. McDonough

/s/E. Bradley Jones /s/Thomas R. Williams

E. Bradley Jones Thomas R. Williams

/s/Donald J. Kirk

Donald J. Kirk

POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:

<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Cash Portfolios
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Series
Fidelity Advisor Series III Fidelity Investment Trust
Fidelity Advisor Series IV Fidelity Magellan Fund
Fidelity Advisor Series V Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series VI Fidelity Money Market Trust
Fidelity Advisor Series VII Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity Municipal Trust
Fidelity Beacon Street Trust Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Special Situations Fund
Fidelity Contrafund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Corporate Trust Fidelity Summer Street Trust
Fidelity Court Street Trust Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity Triad Fund, Inc.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments - Bond
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity U.S. Investments - Government
Fidelity Exchange Fund Securities Fund, L.P.
Fidelity Financial Trust Fidelity Union Street Trust
Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Government Securities Fund Spartan U.S. Treasury Money Market Fund
Fidelity Hastings Street Trust Variable Insurance Products Fund
Fidelity Income Fund Variable Insurance Products Fund II
Fidelity Income Trust

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity, all
Pre-Effective Amendments to any Registration Statements of the Funds, any
and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993

Edward C. Johnson 3d

POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment cmpanies:

<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Investment Trust
Fidelity Advisor Series I Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity Beacon Street Trust Fidelity Puritan Trust
Fidelity California Municipal Trust Fidelity School Street Trust
Fidelity Capital Trust Fidelity Select Portfolios
Fidelity Charles Street Trust Fidelity Special Situations Fund
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Deutsche Mark Performance Fidelity Triad Fund, Inc.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Financial Trust Fidelity U.S. Investments-Government Securities
Fidelity Fixed-Income Trust Fund, L.P.
Fidelity Government Securities Fund Fidelity Yen Performance Portfolio, L.P.
Fidelity Hastings Street Trust Spartan U.S. Treasury Money Market
Fidelity Income Fund Fund
Fidelity Income Trust Variable Insurance Products Fund
Fidelity Institutional Cash Portfolios Variable Insurance Products Fund II
Fidelity Institutional Trust

</TABLE>

plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Ralph F. Cox October 20, 1993

Ralph F. Cox

POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment cmpanies:

<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Cash Portfolios
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series IV Fidelity School Street Trust
Fidelity Advisor Series VI Fidelity Select Portfolios
Fidelity Advisor Series VIII Fidelity Special Situations Fund
Fidelity Beacon Street Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Capital Trust Fidelity Trend Fund
Fidelity Commonwealth Trust Fidelity Triad Fund, Inc.
Fidelity Contrafund Fidelity Union Street Trust
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Bond Fund, L.P.
Portfolio, L.P. Fidelity U.S. Investments-Government Securities
Fidelity Devonshire Trust Fund, L.P.
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Spartan U.S. Treasury Money Market
Fidelity Government Securities Fund Fund
Fidelity Hastings Street Trust Variable Insurance Products Fund
Fidelity Income Trust Variable Insurance Products Fund II

</TABLE>

Phyllis Burke Davis

EXHIBIT 24(A)(1)
(2_FIDELITY_LOGOS)FIDELITY

CONVERTIBLE SECURITIES
FUND
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.

INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the last six
months.

INVESTMENTS 10 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 23 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 27 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 31 The auditor's opinion.
ACCOUNTANTS

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. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE

DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in Federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider tax-free investments like municipal bonds and municipal
bond funds. Often these can provide higher after-tax yields than comparable
taxable investments. For example, if you're in the new 36% Federal income
tax bracket and invest $10,000 in a taxable investment yielding 7%, you'll
pay $252 in Federal taxes and receive $448 in income. That same $10,000
invested in a tax-free bond fund yielding 5.5% would allow you to keep $550
in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE

There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (income) and capital gains (the profits the
fund earns when it sells securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Convertible Securities 19.94% 145.22% 167.04%

Merrill Lynch Convertible Securities Index 20.82% 101.24% n/a

Average Convertible Securities Fund 16.14% 86.32% n/a

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - one year, five years, or since the fund started on
January 5, 1987. For comparison, you can look at the performance of the
Merrill Lynch Convertible Securities Index - a broad measure of the
performance of convertible securities. You can also look at the average
convertible securities fund, which reflects the performance of 23
convertible securities funds tracked by Lipper Analytical Services. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Convertible Securities 19.94% 19.65% 15.27%

Merrill Lynch Convertible Securities Index 20.82% 15.01% n/a

Average Convertible Securities Fund 16.14% 13.05% n/a

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.

$10,000 OVER LIFE OF FUND

Convertible Securities (308) First Boston Convert. Sec (FB002)
01/31/87 10,000.00 10,000.00
02/28/87 10,350.20 10,414.00
03/31/87 10,437.75 10,521.26
04/30/87 10,282.10 10,523.37
05/31/87 10,252.92 10,554.94
06/30/87 10,429.22 10,775.54
07/31/87 10,949.70 11,215.18
08/31/87 11,195.21 11,439.48
09/30/87 11,119.15 11,271.32
10/31/87 9,020.63 9,151.19
11/30/87 9,000.74 8,857.43
12/31/87 9,253.19 9,308.28
01/31/88 9,598.15 9,567.05
02/29/88 9,993.85 10,007.13
03/31/88 10,126.04 9,973.11
04/30/88 10,321.56 10,179.55
05/31/88 10,249.53 10,078.77
06/30/88 10,675.20 10,466.80
07/31/88 10,602.15 10,357.95
08/31/88 10,445.63 10,174.61
09/30/88 10,582.76 10,356.74
10/31/88 10,752.08 10,488.27
11/30/88 10,593.34 10,317.31
12/31/88 10,723.60 10,556.67
01/31/89 11,181.78 11,030.67
02/28/89 11,301.78 11,028.46
03/31/89 11,630.81 11,171.83
04/30/89 12,061.99 11,547.21
05/31/89 12,338.38 11,781.61
06/30/89 12,437.47 11,695.61
07/31/89 12,997.21 12,031.27
08/31/89 13,422.61 12,295.96
09/30/89 13,433.81 12,188.99
10/31/89 13,161.96 11,803.81
11/30/89 13,377.18 11,996.22
12/31/89 13,542.00 12,009.41
01/31/90 13,040.01 11,531.44
02/28/90 13,191.78 11,683.65
03/31/90 13,450.80 11,862.41
04/30/90 13,344.42 11,597.88
05/31/90 13,876.30 12,160.38
06/30/90 14,031.24 12,145.78
07/31/90 13,935.54 12,037.69
08/31/90 13,014.48 11,344.32
09/30/90 12,372.24 10,848.57
10/31/90 12,129.89 10,442.83
11/30/90 12,760.01 10,953.49
12/31/90 13,150.08 11,182.42
01/31/91 13,965.01 11,684.51
02/28/91 14,866.38 12,382.07
03/31/91 15,261.64 12,685.43
04/30/91 15,436.49 12,813.55
05/31/91 15,961.03 13,192.84
06/30/91 15,657.98 12,824.76
07/31/91 16,289.35 13,312.10
08/31/91 16,908.09 13,808.64
09/30/91 17,190.33 13,783.78
10/31/91 17,930.53 13,982.27
11/30/91 17,164.81 13,645.30
12/31/91 18,244.09 14,438.09
01/31/92 19,164.97 14,838.02
02/29/92 19,792.24 15,222.33
03/31/92 19,458.45 15,095.98
04/30/92 19,620.15 15,268.08
05/31/92 19,997.46 15,545.96
06/30/92 19,878.15 15,472.89
07/31/92 20,422.38 15,898.39
08/31/92 20,027.81 15,798.23
09/30/92 20,504.91 16,114.20
10/31/92 20,985.60 16,152.87
11/30/92 21,658.57 16,619.69
12/31/92 22,261.35 16,988.65
01/31/93 23,005.78 17,518.69
02/28/93 22,604.93 17,587.02
03/31/93 23,729.83 18,230.70
04/30/93 23,946.74 18,227.05
05/31/93 24,539.62 18,546.03
06/30/93 24,511.54 18,722.22
07/31/93 24,759.72 18,915.05
08/31/93 25,343.67 19,433.33
09/30/93 25,638.10 19,652.92
10/31/93 26,227.48 20,116.73
11/30/93 25,976.99 19,812.97

$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Convertible Securities Fund on January 31, 1987, shortly after the fund
started. As the chart shows, by November 30, 1993, the value of your
investment would have grown to $25,977 - a 159.77% increase on your initial
investment. For comparison, look at how the First Boston Convertible
Securities Index did over the same period. (The Merrill Lynch Convertible
Securities Index does not extend as far back as the fund's start date, and
therefore is not appropriate for this comparison.) With dividends
reinvested, the same $10,000 investment in the First Boston Convertible
Securities Index would have grown to $19,813 - a 98.13% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks or bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Low inflation, falling interest rates
and a gradually improving
economy boosted U.S. stocks
during the 12 months ended
November 30, 1993. The Standard
& Poor's 500 Composite
Stock Price Index - a broad
measure of U.S. stock
performance - rose 10.10%, in
line with the market's long-term
average annual return. Continued
poor performance by tobacco, drug
and brand-name consumer
products stocks was offset by
impressive results in other sectors,
including technology, although
semiconductors gave back part of
their gains in October and
November. Other market leaders
were finance, notably securities
brokers; autos; entertainment; and
precious metals. Communications
stocks soared as traditional
telephone utilities, cellular
communications companies and
entertainment companies
scrambled to form strategic
alliances. Mergers and acquisitions
activity resumed at a pace
reminiscent of the 1980s. The
NASDAQ Composite Index, which
tracks over-the counter stocks,
rose 15.57% for the year,
compared to 14.73% for the Dow
Jones Industrial Average, an index
of 30 blue-chip stocks. Both trailed
the Morgan Stanley EAFE
(Europe, Australia, Far East) index,
which rose 24.27%. Two widely
watched benchmarks broke
records during the period: Slow
growth and the prospect of higher
taxes helped push the yield on the
30-year Treasury below 6% in
early September; meanwhile, the
Dow closed above 3700 for the
first time in mid-November, and
finished the month at 3684.
An interview with Andrew Offit,
Portfolio Manager of Fidelity
Convertible Securities Fund
Q. HOW HAS THE FUND DONE?
A. Pretty well. It had a total return of 19.94% during the year ended
November 30, 1993. According to Lipper Analytical Services, the average
convertible securities fund had a return of 16.14% during the period. By
comparison, the Merrill Lynch Convertible Securities Index, which largely
reflects the performance of larger convertibles such as Ford and Chrysler,
returned 20.82%.
Q. SO WHAT HELPED THE FUND BEAT THE AVERAGE DURING THE PAST 12 MONTHS?
A. Overall the fund was helped most by successful individual stock picking.
I don't spend much time identifying economic trends or making specific
asset-allocation decisions. Instead, I look for individual securities that
offer the prospect of good returns. Once I find them, I make fairly big
bets - and this year, many of them paid off. For example, during the past
12 months I invested as much as 14% of the fund in convertibles issued by
the corporate parents of domestic airlines such as United, American and
Delta, which have been extremely strong performers. The airlines have come
through a period of losses, but they're starting to cut costs and boost
prices. That has pushed up their share prices, and helped the underlying
convertibles.
Q. SINCE TAKING OVER THE FUND IN MARCH 1992 YOU'VE REDUCED COMMON STOCK
FROM AROUND 25% OF THE FUND'S INVESTMENTS TO AROUND 11%. WHY?
A. I try to manage the fund so that it's somewhat less exposed to stock
market risk than it was in the recent past. By buying more convertibles I
try to boost the fund's yield, which helps reduce the fund's overall risk.
That allows me to take on other risks within the convertibles sector. For
example, I can make big bets on convertible issues that I like, and I can
buy potentially volatile convertibles whose prices closely reflect the
performance of their underlying stocks.
Q. MANY OF THE FUND'S CONVERTIBLES WERE ISSUED BY COMPANIES WHOSE STOCKS
WERE TRADING AT DEPRESSED LEVELS. DID THEY HELP PERFORMANCE?
A. Yes, considerably. About 5%-10% of the fund's investments were "busted
convertibles," which means that their underlying stocks had plummeted so
far in price that the convertibles traded almost like ordinary bonds.
Busted convertibles typically pay high yields, so they can boost the fund's
average yield. And if the underlying stock recovers strongly, the bonds can
deliver significant price gains. For example, I bought busted convertibles
of Centocor, the biotech firm, after its shares had declined from around
$19 to $6 per share. The bond was paying a very attractive current yield of
12.9%. The stock has since recovered, and the convertibles have climbed
from around $50 to $85.
Q. WHAT ABOUT THE DANGER THAT A FIRM'S DEPRESSED STOCK WILL CONTINUE TO
DECLINE, BRINGING THE PRICE OF THE CONVERTIBLE DOWN?
A. It happens. But usually I'll stick with the issue if I'm confident that
there have been no serious changes in the firm's prospects. Advanced
Medical is a good example and is one of several issues that make up the
fund's 14% stake in health care. I bought the convertibles at $70. They've
since declined sharply. But the firm is restructuring its debt, and its
core business continues to generate plenty of cash. Meanwhile, we're
currently earning a 15% or so yield on that investment.
Q. NONE OF THE FUND'S TOP 10 HOLDINGS FROM LAST YEAR MADE THE LIST THIS
YEAR. WHY NOT?
A. I sold most of them - for example, Maxicare and Greyhound - because
their prices rose to levels that met my expectations. I sold CBS
convertible preferreds because I underestimated the underlying stock's
potential. Since I sold the preferreds, the stock has gone from $200 to
$317. That was my biggest mistake during the period.
Q. WHAT'S YOUR OUTLOOK FOR THE FUND DURING THE COMING 12 MONTHS?
A. Convertibles have outperformed common stocks during the past five years.
As a result, it's getting more difficult to find bargains. But there are
still good opportunities among busted and other convertibles issued by
out-of-favor companies. I like the convertibles of firms like IBM, Kodak
and Bank of Boston that have had heavily publicized problems and are
working to correct them. As they address those problems, the stocks could
stage solid advances and boost the convertibles' prices. The major risk for
shareholders in the fund is the possibility of a sharp rise in interest
rates. I don't expect that to occur, but if it does, convertibles and other
high-yield investments will probably suffer greater losses than stocks.
FUND FACTS
GOAL: a high total return
(income plus changes in
share price) by investing at
least 65% of assets in
convertible
securities
START DATE: January 5, 1987
SIZE: as of November 30,
1993, over $1 billion
MANAGER: Andrew Offit, since
March 1992; manager, Select
Health Care, May 1990 -
March 1992, Select
Biotechnology, May 1989 -
May 1990; analyst, 1987 -
1989
(checkmark)
ANDREW OFFIT ON CHOOSING
CONVERTIBLE SECURITIES:
"Most of the convertibles in
the fund's portfolio carry no
credit ratings, or are rated
below investment grade by
agencies such as Standard &
Poor's. There are risks
associated with investing in
these securities, but also
opportunities. Many money
managers are forced to buy
only investment-grade
convertibles. As a result, I find
a lot of neglected issues
among the lower-rated bonds
that they can't touch. I also
believe that credit rating
agencies often
misunderstand a company's
financial position. For
example, I invested over 3%
of the fund's assets in Stone
Container convertibles earlier
this year at $85, when many
observers were convinced the
firm was headed for
bankruptcy. The bonds
recently traded at $120."
(bullet) Roughly 14% of the fund's
investments were in
health-related securities as of
November 30, 1993.
(bullet) The fund has about 25% of
its investments in small and
medium-size companies.
DISTRIBUTIONS
The Board of Trustees of
Convertible Securities Fund
voted to pay on December 13,
1993, to shareholders of
record at the opening of
business on December 10,
1993, a distribution of $1.09
derived from capital gains
realized from sales of portfolio
securities and a dividend of
$.25 from net investment
income.
INVESTMENT CHANGES

TOP TEN INVESTMENTS AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Time Warner, Inc. 8 3/4%,
1/10/15 5.1 0.0

UAL, Inc. (cumulative) 6 1/4% 3.6 4.2

Stone Container Corp. 8 7/8%,
7/15/00 3.4 0.0

AMR Corp. $3.00 2.3 2.9

Mentor Corp. euro 6 3/4%,
7/22/02 1.9 1.3

Centocor, Inc. 7 1/4%, 2/1/01 1.5 1.4

Bank of Boston Corp. 7 3/4%,
6/15/11 1.4 0.6

Price Co. 6 3/4%, 3/1/01 1.4 0.7

Dell Computer Corp. $7.00 1.4 0.0

Texas Instruments, Inc. euro
2 3/4%, 9/29/02 1.4 0.0

TOP FIVE INDUSTRIES AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

Health 13.8 8.3

Media & Leisure 11.9 5.8

Technology 11.0 9.4

Transportation 9.0 16.5

Finance 8.9 11.9

ASSET ALLOCATION
AS OF NOVEMBER 30, 1993* AS OF MAY 31, 1993*
Row: 1, Col: 1, Value: 11.6
Row: 1, Col: 2, Value: 76.40000000000001
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 11.1
Row: 1, Col: 1, Value: 10.1
Row: 1, Col: 2, Value: 84.5
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 4.7
Common Stocks 11.1%
Nonconvertible
Bonds 0.9%
Convertible
Securities 76.4%
Short-term
investments 11.6%
FOREIGN
INVESTMENTS 5.3%
Common Stocks 4.7%
Nonconvertible
Bonds 0.7%
Convertible
Securities 84.5%
Short-term
investments 10.1%
FOREIGN
INVESTMENTS 2.2%
*
*
INVESTMENTS NOVEMBER 30, 1993

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 11.1%
SHARES VALUE (NOTE 1)
(000S)
CONGLOMERATES - 1.0%
Canadian Pacific Ltd. Ord. 300,000 $ 4,913 13644030
Litton Industries, Inc. (a) 80,000 5,220 53802110
10,133
CONSTRUCTION & REAL ESTATE - 0.0%
BUILDING MATERIALS - 0.0%
Bird Corp. 45,000 405 09076310
ENERGY - 0.6%
OIL & GAS - 0.6%
British Petroleum PLC ADR 100,000 5,925 11088940
FINANCE - 0.7%
INSURANCE - 0.3%
Life USA Holding, Inc. 160,000 2,680 53191820
SAVINGS & LOANS - 0.4%
Baltimore Bancorp (a) 329,600 4,614 05902910
TOTAL FINANCE 7,294
HEALTH - 2.4%
DRUGS & PHARMACEUTICALS - 1.7%
Barr Laboratories, Inc. (a) 245,100 5,086 06830610
Pfizer, Inc. 56,200 3,737 71708110
Schering-Plough Corp. 130,000 8,694 80660510
17,517
MEDICAL EQUIPMENT & SUPPLIES - 0.3%
Laserscope, Inc. (a) 220,000 1,320 51808110
Moore Medical Corp. (a) 116,100 1,568 61579910
Scherer Healthcare, Inc. (a) 10,700 219 80653010
3,107
MEDICAL FACILITIES MANAGEMENT - 0.4%
Charter Medical Corp. (a) 190,000 4,560 16124170
TOTAL HEALTH 25,184
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
Indresco, Inc. (a) 212,300 $ 2,946 45590510
MEDIA & LEISURE - 1.7%
BROADCASTING - 0.9%
Home Shopping Network, Inc. (a) 584,000 8,760 43735110
PUBLISHING - 0.8%
Dow Jones & Co Inc. 150,000 5,381 26056110
Tribune Co. 60,000 3,345 89604710
8,726
TOTAL MEDIA & LEISURE 17,486
PRECIOUS METALS - 1.0%
Agnico Eagle Mines Ltd. 227,000 3,038 00847410
Homestake Mining Co. 230,000 4,312 43761410
Placer Dome Inc. 140,000 3,223 72590610
10,573
RETAIL & WHOLESALE - 1.1%
GENERAL MERCHANDISE STORES - 0.9%
Sears, Roebuck & Co. 170,000 9,244 81238710
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
Intertan, Inc. (warrants) (a) (d) 3,000 2,044 46112092
TOTAL RETAIL & WHOLESALE 11,288
TECHNOLOGY - 1.2%
COMPUTERS & OFFICE EQUIPMENT - 1.2%
Apple Computer, Inc. 140,000 4,410 03783310
Sun Microsystems, Inc. (a) 270,000 7,189 86681010
Electro Brain International Corp. (a) 280,000 560 28506220
12,159
TRANSPORTATION - 0.6%
RAILROADS - 0.6%
Santa Fe Pacific Corp. 300,000 6,150 80218310
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 0.5%
CELLULAR - 0.5%
Paging Network, Inc. (a) 180,000 $ 5,175 69554210
TOTAL COMMON STOCKS
(Cost $111,545) 114,718
PREFERRED STOCKS - 17.4%

CONVERTIBLE PREFERRED STOCKS - 17.4%
CONSTRUCTION & REAL ESTATE - 0.5%
BUILDING MATERIALS - 0.5%
Bird Corp. $1.85 105,800 1,852 09076330
Southdown, Inc. $.70 (a) 295,000 3,134 84129794
4,986
DURABLES - 1.3%
AUTOS, TIRES, & ACCESSORIES - 0.5%
Navistar International Corp., Series G, $6.00 (a) 100,000 5,500 63890140
TEXTILES & APPAREL - 0.8%
Fieldcrest Cannon, Inc., Series A, $3.00 (e) 150,000 8,100 31654920
TOTAL DURABLES 13,600
ENERGY - 3.2%
ENERGY SERVICES - 1.3%
Energy Service, Inc. $1.50 176,400 4,741 29271930
Noble Drilling Corp. $2.25 exchangeable 39,300 1,778 65504220
Offshore Pipeline 178,500 7,006 67626920
13,525
OIL & GAS - 1.9%
Diamond Shamrock, Inc. 5% (e) 220,000 12,210 25274730
Tosco Corp., Series F, $4.375 100,600 6,891 89149040
19,101
TOTAL ENERGY 32,626
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - 1.9%
BANKS - 1.2%
Citicorp $5.375 (e) 120,000 $ 12,780 17303451
CREDIT & OTHER FINANCE - 0.7%
American Express Co. 0% (a) 180,000 7,065 02581613
TOTAL FINANCE 19,845
HEALTH - 0.3%
MEDICAL FACILITIES MANAGEMENT - 0.3%
Beverly Enterprises, Inc. $2.75 31,300 1,772 08785120
IVF America, Inc., Series A, $.80 260,500 945 45070620
2,717
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
POLLUTION CONTROL - 0.4%
Environmental Systems Co., Series A, $1.75 206,370 4,076 29408720
MEDIA & LEISURE - 0.6%
BROADCASTING - 0.6%
Evergreen Media Corp. $3.00 exchangeable 123,000 6,181 30024820
PRECIOUS METALS - 0.8%
Newmont Mining Corp. $1.375 depositary shares
representing 1/2 pfd. (e) 130,000 8,385 65163930
TECHNOLOGY - 1.8%
COMPUTERS & OFFICE EQUIPMENT - 1.4%
Dell Computer Corp. $7.00 (e) 120,000 14,520 24702550
ELECTRONICS - 0.4%
Advanced Micro Devices, Inc. $3.00 80,000 3,880 00790330
TOTAL TECHNOLOGY 18,400
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
TRANSPORTATION - 6.2%
AIR TRANSPORTATION - 5.8%
AMR Corp. $3.00 (a) (e) 450,000 $ 23,288 00176588
UAL, Inc. (cumulative) 6 1/4% (e) 316,000 37,091 90254930
60,379
TRUCKING & FREIGHT - 0.4%
TNT Ltd. 8% 3,025,000 3,788 93599293
TOTAL TRANSPORTATION 64,167
UTILITIES - 0.4%
GAS - 0.4%
Tejas Gas Corp. Delaware $2.625 91,000 4,527 87907550
TOTAL CONVERTIBLE PREFERRED STOCKS 179,510
NONCONVERTIBLE PREFERRED STOCKS - 0.0%
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd. (a) (d) 2,566 7 40218L92
Gulf Canada Resources Ltd. Series 1, adj. rate 89,434 235 40218L40
TOTAL NONCONVERTIBLE PREFERRED STOCKS 242
TOTAL PREFERRED STOCKS
(Cost $176,010) 179,752
CORPORATE BONDS - 59.9%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNTS (B) (000S)
CONVERTIBLE BONDS - 59.0%
BASIC INDUSTRIES - 7.1%
CHEMICALS & PLASTICS - 1.0%
Hercules, Inc. 8%, 8/15/10 A3 $ 1,500 $ 3,423 427056AK
Park Electrochemical Corp. sinking fund
7 1/4%, 6/15/06 B2 6,883 7,038 700416AA
10,461
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNTS (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
BASIC INDUSTRIES - CONTINUED
IRON & STEEL - 1.5%
Allegheny Ludlum Corp. 5 7/8%, 3/15/02 Baa2 $ 8,000 $ 10,000 016900AA
Trimas Corp. 5%, 8/1/03 Ba3 5,000 5,750 896215AA
15,750
PAPER & FOREST PRODUCTS - 4.6%
International Paper Co. euro
5 3/4% 9/23/02 Baa1 5,000 5,400 460146AH
Mead Corp. 6 3/4%, 9/15/12 Baa1 5,500 5,706 582834AJ
Noranda Forest, Inc. 7 1/4%, 10/30/02 BBB- CAD 538 574 65542LAD
Stone Container Corp. 8 7/8%,
7/15/00 (e) B2 30,000 35,250 861589AL
46,930
TOTAL BASIC INDUSTRIES 73,141
CONSTRUCTION & REAL ESTATE - 1.8%
BUILDING MATERIALS - 0.4%
Lafarge Corp. 7%, 7/1/13 Baa2 2,850 3,000 505862AA
Nortek, Inc. sinking fund 7 1/2%, 5/1/06 Caa 2,000 1,440 656559AM
4,440
CONSTRUCTION - 1.4%
Continental Homes Holding Corp.
6 7/8%, 3/15/02 B3 6,150 6,626 21148CAB
Schuler Homes, Inc. 6 1/2%, 1/15/03 B2 4,000 5,240 808188AA
U.S. Home Corp. 4 7/8%, 11/1/05 B2 2,000 1,940 911920AC
13,806
TOTAL CONSTRUCTION & REAL ESTATE 18,246
DURABLES - 0.4%
CONSUMER ELECTRONICS - 0.4%
Whirlpool Corp. liquid yield option notes
0%, 5/14/11 Baa1 10,000 4,300 963320AJ
ENERGY - 1.9%
INDEPENDENT POWER - 0.4%
California Energy, Inc. 5%, 7/31/00 (e) Ba3 4,000 4,200 130190AB
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNTS (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
ENERGY - CONTINUED
OIL & GAS - 1.5%
Alaska Intermediate 8 1/4%, 12/1/95 - $ 1,217 $ 1,214 9047889B
Box Energy Corp. 8 1/4%, 12/1/02 B3 5,100 6,553 103168AA
Presidio Oil Co. 9%, 3/15/15 Ca 9,735 7,885 741016AB
15,652
TOTAL ENERGY 19,852
FINANCE - 6.3%
BANKS - 3.6%
Bank of Boston Corp. 7 3/4%, 6/15/11 Baa2 13,500 14,749 060716AF
Bank of New York Co., Inc.
7 1/2%, 8/15/01 Baa1 7,000 10,867 064057AK
C.S. Holdings euro 4 7/8%, 11/19/02 A2 2,000 2,970 175997AC
Midlantic Banks, Inc. 8 1/4%, 7/1/01 B1 6,550 6,616 597806AK
Societe Generale 3 1/2%, 1/1/00 Aa1 FRF 9,900 2,036 833991SG
37,238
CREDIT & OTHER FINANCE - 0.9%
Elan International Finance, Ltd.
liquid yield option notes 0%, 10/16/12 Ba2 18,000 8,685 283903AA
INSURANCE - 1.5%
Axa SA 6%, 1/1/01 - FRF 7 2,042 052997AA
Pioneer Financial Services 8%, 7/15/00 - 4,000 4,460 723672AB
Travelers Co. 8.32%, 3/10/15 Baa2 9,100 9,236 894180AD
15,738
SECURITIES INDUSTRY - 0.3%
American Capital Bond Fund 8 1/2%, 1/1/95 AAA 3,000 3,165 024902AA
TOTAL FINANCE 64,826
HEALTH - 11.1%
DRUGS & PHARMACEUTICALS - 3.0%
Centocor, Inc. 7 1/4%, 2/1/01 Caa 18,000 15,570 152342AA
IVAX Corp. 6 1/2%, 11/15/01 (e) - 10,000 10,200 465823AA
Roche Holdings, Inc. 0%, 9/23/08 (e) - 10,000 5,213 771196AA
30,983
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNTS (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 4.7%
Advanced Medical, Inc. 7 1/4%, 1/15/02 CCC- $ 19,977 $ 9,789 00754CAA
Cabot Medical Corp. 7 1/2%, 3/1/99 - 4,490 3,973 127095AA
MEDIQ Inc. 7 1/4%, 6/1/06 B3 4,145 3,710 584906AD
Medco Containment Services, Inc. 6%, 9/1/01 AAA 8,000 11,160 583905AC
Mentor Corp. euro 6 3/4%, 7/22/02 - 18,500 19,980 587188AA
48,612
MEDICAL FACILITIES MANAGEMENT - 3.4%
Abbey Healthcare Group, Inc.:
euro 6 1/2%, 12/1/02 - 2,000 2,650 0027869A
6 1/2%, 12/1/02 (e) B2 5,570 7,380 002786AA
Greenery Rehabilitation Group, Inc.
6 1/2%, 6/15/11 - 10,630 7,016 394797AA
Hillhaven Corp. 7 3/4%, 11/1/02 B3 5,000 6,775 431576AA
Horizon Healthcare Corp. 6 3/7%, 2/1/02 B3 3,475 4,830 44042HAA
Physicians Clinical Lab, Inc.
7 1/2%, 8/15/00 (e) - 6,000 6,780 71940RAA
35,431
TOTAL HEALTH 115,026
INDUSTRIAL MACHINERY & EQUIPMENT - 2.0%
ELECTRICAL EQUIPMENT - 1.0%
Willcox & Gibbs, Inc. 7%, 8/1/14 B2 6,500 6,370 969207AC
Zenith Electronics Corp. 8 1/2%, 11/19/00 (e) - 4,000 4,000
10,370
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
SKF AB euro 0%, 7/26/02 Baa3 XEU 6,000 3,496 7843759B
POLLUTION CONTROL - 0.7%
OHM Corp. 8%, 10/1/06 B2 4,993 4,843 670839AA
Sanifill, Inc. 7 1/2%, 6/1/06 B2 2,300 2,266 801018AA
7,109
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 20,975
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNTS (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - 9.6%
BROADCASTING - 5.1%
Time Warner, Inc. 8 3/4%, 1/10/15 Ba3 $ 50,000 $ 53,000 887315AQ
ENTERTAINMENT - 1.6%
All American Communications, Inc.
6 1/2%, 10/1/03 (e) - 6,200 6,014 016480AA
Carnival Cruise Lines, Inc. 4 1/2%, 7/1/97 Baa2 3,000 4,500 143658AB
Savoy Pictures Entertainment 7%, 7/1/03 B2 5,000 6,125 805375AA
16,639
LODGING & GAMING - 1.3%
WMS Industries, Inc. 5 3/4%, 12/1/02 B1 10,000 13,000 929297AB
PUBLISHING - 1.6%
Nelson Thomas, Inc. 5 3/4%,
11/30/99 (e) - 3,000 3,660 640376AA
Score Board, Inc.:
9%, 9/1/02 (e) - 3,500 7,551
9%, 2/1/03 - 3,000 5,438 8091739B
16,649
TOTAL MEDIA & LEISURE 99,288
NONDURABLES - 0.8%
FOODS - 0.8%
Chock Full-O-Nuts Corporation
7%, 4/1/12 B2 8,020 8,501 170268AC
PRECIOUS METALS - 0.4%
Canyon Resources Corp. 6%, 6/1/98 (e) - 1,300 1,495 138869AA
Coeur D'Alene Mines Corp. Idaho
7%, 11/30/02 B2 2,000 2,660 192108AC
4,155
RETAIL & WHOLESALE - 5.4%
APPAREL STORES - 1.3%
Baker (J.), Inc. 7%, 6/1/02 B2 7,075 9,622 057232AA
Petrie Stores Corp. sinking fund
8%, 12/15/10 Ba2 3,250 4,290 716434AC
13,912
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNTS (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 1.0%
American Stores Co. 7 1/4%, 9/15/01 Ba1 $ 1,500 $ 1,658 030096AC
Kroger Co. 8 1/4%, 4/15/11 B3 6,000 5,880 501044AV
Promodes 5 1/2%, 1/1/00 - FRF 15,800 3,106 74699693
10,644
RETAIL & WHOLESALE, MISCELLANEOUS - 3.1%
Ben Franklin Retail Stores, Inc.
7 1/2%, 6/1/03 B- 3,750 3,675 081499AA
Lowe's Companies, Inc. 3%, 7/22/03 Baa1 12,000 13,230 548661AC
Price Co. 6 3/4%, 3/1/01 Baa1 14,000 14,630 741440AC
31,535
TOTAL RETAIL & WHOLESALE 56,091
SERVICES - 1.3%
ADVERTISING - 0.6%
Regal Communications Corp.
10%, 6/15/08 - 5,475 5,694 758756AA
SERVICES - 0.7%
ADT Ltd. euro 6%, 10/3/02 - 5,500 7,370 001999AD
TOTAL SERVICES 13,064
TECHNOLOGY - 8.0%
COMMUNICATIONS EQUIPMENT - 1.0%
M/A-Com, Inc. 9 1/4%, 5/15/06 B2 7,150 7,257 552618AA
Porta Systems Corp. euro 6%, 7/1/02 - 3,910 2,913 7356479A
10,170
COMPUTERS & OFFICE EQUIPMENT - 1.3%
IBM France 5 3/4%, 1/1/98 - FRF 193,000 13,875 45499D22
COMPUTER SERVICES & SOFTWARE - 0.7%
Ceridian Corp. 8 1/2%, 6/15/11 - 6,774 6,909 15677TAA
ELECTRONIC INSTRUMENTS - 0.7%
Fisher Scientific International, Inc.
4 3/4%, 3/1/03 Ba2 6,500 7,573 338032AA
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNTS (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
ELECTRONICS - 2.9%
Computer Products, Inc. 9 1/2%, 5/15/07 B3 $ 7,594 $ 7,784 205300AA
Storage Technology Corp. 8%, 5/31/15 B2 8,000 8,600 862111AG
Texas Instruments, Inc. euro
2 3/4%, 9/29/02 Baa1 14,000 14,070 8825089A
30,454
PHOTOGRAPHIC EQUIPMENT - 1.4%
Eastman Kodak Co. liquid yield option notes
0%, 10/15/11 Baa1 40,000 14,050 277461BA
TOTAL TECHNOLOGY 83,031
TRANSPORTATION - 2.2%
AIR TRANSPORTATION - 1.7%
Air Wisconsin Services, Inc.
7 3/4%, 6/15/10 B3 4,530 4,100 009236AA
Delta Air Lines, Inc. 3.23%, 6/15/03 Ba3 16,000 13,720 247361YA
17,820
SHIPPING - 0.5%
Seacor Holdings, Inc. 6%, 7/15/03 (e) B3 4,000 4,400 811904AA
TOTAL TRANSPORTATION 22,220
UTILITIES - 0.7%
CELLULAR - 0.5%
Cellular Puerto Rico 8 1/4%, 8/1/00 Caa 3,500 5,250 150919AA
TELEPHONE SERVICES - 0.2%
CAM-NET Communications Network
10%, 8/15/97 - 1,750 1,751 13173M9A
TOTAL UTILITIES 7,001
TOTAL CONVERTIBLE BONDS 609,717
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNTS (B) (000S) (000S)
NONCONVERTIBLE BONDS - 0.9%
BASIC INDUSTRIES - 0.7%
PAPER & FOREST PRODUCTS - 0.7%
Stone Container Corp.:
10 3/4%, 6/15/97 B2 $ 4,000 $ 3,600 861589AG
11 1/2%, 9/1/99 B2 4,000 3,600 861589AC
7,200
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0%
NWA Inc., 8 5/8%, 8/1/96 Caa 375 311 62945JAB
UTILITIES - 0.2%
GAS - 0.2%
SFP Pipeline Holdings, Inc. exchangeable
0%, 8/15/10 (f) Baa3 1,000 1,290 784163AA
TOTAL NONCONVERTIBLE BONDS 8,801
TOTAL CORPORATE BONDS
(Cost $578,327) 618,518
REPURCHASE AGREEMENTS - 11.6%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.24%
dated 11/30/93 due 12/1/93 $ 119,854 119,843
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $985,725) $ 1,032,831
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
XEU - European currency unit
FRF - French franc
LEGEND
1. Non-income producing
2. Principal amount is stated in United States dollars unless otherwise
noted.
3. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
4. Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Gulf Canada
Resources Ltd. 10/15/93 $ 6,000
Intertan, Inc.
(warrants) 9/17/93 $ 2,272,000
5. 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 $212,517,000 or 20.1% of net
assets.
6. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A .8% AAA, AA, A 6.4%
Baa 12.4% BBB 9.0%
Ba 9.5% BB 6.5%
B 18.5% B 17.3%
Caa 2.2% CCC 4.7%
Ca, C 0.8% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 11.3%
INCOME TAX INFORMATION
At November 30, 1993, the aggregate cost of investment securities for
income tax purposes was $989,415,000. Net unrealized appreciation
aggregated $43,416,000, of which $58,145,000 related to appreciated
investment securities and $14,729,000 related to depreciated investment
securities.
The fund hereby designates $11,423,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) NOVEMBER 30, 1993

ASSETS 7. 8.

9.Investment in securities, at value (including 10. $ 1,032,831
repurchase agreements of $119,843) (cost $985,725)
(Notes 1 and 2) - See accompanying schedule

11.Cash 12. 2,588

13.Receivable for investments sold 14. 106,951

15.Receivable for fund shares sold 16. 4,037

17.Dividends receivable 18. 1,205

19.Interest receivable 20. 11,483

21.Other receivables 22. 36

23. TOTAL ASSETS 24. 1,159,131

LIABILITIES 25. 26.

27.Payable for investments purchased $ 99,122 28.

29.Payable for fund shares redeemed 2,417 30.

31.Accrued management fee 461 32.

33.Other payables and accrued expenses 506 34.

35.Collateral on securities loaned, at value (Note 5) 343 36.

37. TOTAL LIABILITIES 38. 102,849

39.NET ASSETS 40. $ 1,056,282

41.Net Assets consist of: 42. 43.

44.Paid in capital 45. $ 916,138

46.Undistributed net investment income 47. 9,921

48.Accumulated undistributed net realized gain (loss) on 49. 83,117
investments

50.Net unrealized appreciation (depreciation) on 51. 47,106
investment securities

52.NET ASSETS, for 59,906 shares outstanding 53. $ 1,056,282

54.NET ASSET VALUE, offering price and redemption price 55. $17.63
per share ($1,056,282 (divided by) 59,906 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1993

INVESTMENT INCOME 57. $ 13,608
56.Dividends

58.Interest (including security lending fees of $33) (Note 59. 29,744
5)

60. TOTAL INCOME 61. 43,352

EXPENSES 62. 63.

64.Management fee (Note 4) $ 4,131 65.

66.Transfer agent fees (Note 4) 2,183 67.

68.Accounting and security lending fees (Note 4) 388 69.

70.Non-interested trustees' compensation 5 71.

72.Custodian fees and expenses 77 73.

74.Registration fees 257 75.

76.Audit 53 77.

78.Legal 7 79.

80.Reports to shareholders 96 81.

82.Miscellaneous 7 83.

84. Total expenses before reductions 7,204 85.

86. Expense reductions (Note 6) (12) 7,192

87.NET INVESTMENT INCOME 88. 36,160

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 90.
(NOTES 1, 2 AND 3)
89.Net realized gain (loss) on:

91. Investment securities 80,620 92.

93. Short sales (3,865) 76,755

94.Change in net unrealized appreciation (depreciation) 95. 16,159
on investment securities

96.NET GAIN (LOSS) 97. 92,914

98.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 99. $ 129,074
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEARS ENDED NOVEMBER 30,

1993 1992

INCREASE (DECREASE) IN NET ASSETS

100.Operations $ 36,160 $ 12,242
Net investment income

101. Net realized gain (loss) on investments 76,755 14,298

102. Change in net unrealized appreciation 16,159 25,215
(depreciation) on investments

103. 129,074 51,755
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS

104.Distributions to shareholders from: (30,010) (9,558)
Net investment income

105. Net realized gain (10,919) (3,348)

106.Share transactions 999,266 457,959
Net proceeds from sales of shares

107. Reinvestment of distributions from: 27,360 8,938
Net investment income

108. 10,468 3,195
Net realized gain

109. Cost of shares redeemed (481,320) (222,808)

110. 555,774 247,284
Net increase (decrease) in net assets resulting from
share transactions

111. 643,919 286,133
TOTAL INCREASE (DECREASE) IN NET ASSETS

NET ASSETS 112. 113.

114. Beginning of period 412,363 126,230

115. $ 1,056,282 $ 412,363
End of period (including undistributed net investment
income of $9,921 and $3,771, respectively)

OTHER INFORMATION 117. 118.
116.Shares

119. Sold 60,275 31,078

120. Issued in reinvestment of distributions from: 1,677 629
Net investment income

121. 682 248
Net realized gain

122. Redeemed (28,876) (15,192)

123. Net increase (decrease) 33,758 16,763

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
124. YEARS ENDED NOVEMBER 30,

125. 1993 1992 1991 1990 1989

126. 127. 128. 129. 130.

131.SELECTED PER-SHARE
DATA

132.Net asset value, $ 15.77 $ 13.45 $ 10.53 $ 11.81 $ 10.01
beginning of period

133.Income from Investment
Operations

134. Net investment income .75 .67 .60 .64 .80

135. Net realized and 2.24 2.66 2.94 (1.15) 1.72
unrealized
gain (loss) on
investments

136. Total from investment 2.99 3.33 3.54 (.51) 2.52
operations

137.Less Distributions

138. From net investment (.73) (.64) (.62) (.77) (.72)
income

139. From net realized gain (.40) (.37) - - -

140. Total distributions (1.13) (1.01) (.62) (.77) (.72)

141.Net asset value, end of $ 17.63 $ 15.77 $ 13.45 $ 10.53 $ 11.81
period

142.TOTAL RETURN 19.94 26.18% 34.52% (4.61)% 26.28%
%

143.RATIOS AND SUPPLEMENTAL DATA

144.Net assets, end of $ 1,056 $ 412 $ 126 $ 57 $ 60
period
(in millions)

145.Ratio of expenses to .92 .96% 1.17% 1.31% 1.38%
average net assets* %

146.Ratio of net investment 4.62 4.82% 4.99% 5.63% 7.48%
income to average net %
assets

147.Portfolio turnover rate 312 258% 152% 223% 207%
%

</TABLE>

* SEE NOTE 6 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1993

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Convertible Securities Fund (the fund) is a fund of Fidelity
Financial 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 following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange), are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities maturing within sixty days
are valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities, other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the ex-
dividend date. Interest income, which includes accretion of original issue
discount, is accrued as earned. Dividend and interest income is recorded
net of foreign taxes where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
SHORT SALES AGAINST THE BOX. The fund may hedge its investments against
changes in value by engaging in short sales against the box. In a short
sale against the box, the fund sells a borrowed security, while at the same
time either owning an identical security or having the right to obtain such
a security. By selling short against the box the equity underlying one of
its convertible holdings, the fund would seek to offset the effect that a
decline in the underlying equity might have on the value of the convertible
security. While the short sale is outstanding, the fund will not dispose of
the security hedged by the short sale.
2. OPERATING POLICIES -
CONTINUED.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-
consuming negotiations and expense, and prompt sale at an acceptable price
may be difficult. At the end of the period, restricted securities
(excluding 144A issues) amounted to $2,051,000 or .2% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities, other than short-term securities,
aggregated $2,606,858,000 and $2,148,735,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the
average net assets of the fund. The group fee rate is the weighted average
of a series of rates ranging from .30% to .52% and is based on the monthly
average net assets of all the mutual funds advised by FMR. The annual
individual fund fee rate is .20%. Effective November 1, 1994, the basic
fee will be subject to a performance adjustment (up to a maximum of + or -
.15%) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annual rate of .53% of average net
assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $40,000 for the
period.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's accounting
records and administers the security lending program. The security lending
fee is based on the number and duration of lending transactions. The
accounting fee is based on the level of average net assets for the month
plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $374,000 for the period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This
collateral must be maintained at not less than 100% of the market value of
the loaned securities during the period of the loan. At period end, the
value of the securities loaned and the value of collateral amounted to
$332,000 and $343,000, respectively.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$12,000 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Financial Trust and the Shareholders of
Fidelity Convertible Securities Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments except for Moody's and Standard &
Poor's ratings, 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 Convertible Securities Fund (a
fund of Fidelity Financial Trust) at November 30, 1993, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for the periods indicated in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fidelity Convertible Securities Fund's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements
in accordance with generally accepted auditing standards which require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities owned at November 30,
1993 by correspondence with the custodian and brokers and the application
of alternative auditing procedures where confirmations from brokers were
not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Boston, Massachusetts
January 6, 1994
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Market Index Fund
Puritan Fund
Real Estate Portfolio
Utilities Income Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY CONVERTIBLE SECURITIES FUND
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS 02109

TO THE SHAREHOLDERS:
The Board of Trustees of Fidelity Convertible Securities Fund voted to pay
on January 10, 1994, to shareholders of record at the opening of business
on January 7, 1994, a distribution of $____ derived from capital gains
realized from sales of portfolio securities and $____ derived from net
investment income.
In the opinion of management, regardless of whether you took payments in
cash or in additional shares, the distribution will be reportable for tax
purposes for the year 1994. You will be notified at a later date as to the
tax treatment of this distribution.
If your account is a Fidelity prototype retirement plan such as an
Individual Retirement Account (IRA), a Keogh Plan, a 403(b), or a qualified
pension or profit sharing plan, the above information is provided for
informational purposes only and is not reportable for tax purposes in 1994.

FIDELITY CONVERTIBLE SECURITIES FUND
January 7, 1994

FIDELITY

(REGISTERED TRADEMARK)
RETIREMENT GROWTH
FUND
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.

INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the last six
months.

INVESTMENTS 10 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 28 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 32 Footnotes to the financial
statements.

REPORT OF INDEPENDENT 36 The auditor's opinion.
ACCOUNTANTS

PRESIDENT'S MESSAGE

There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Retirement Growth 19.47% 120.54% 320.40%

S&P 500(Registered trademark) 10.10% 98.31% 295.47%

Average Capital Appreciation Fund 14.36% 108.75% 205.12%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. You can compare
these figures to the performance of the Standard & Poor's 500 Composite
Price Index - a common proxy for the U.S. stock market. You can also
compare them to the average capital appreciation fund, which reflects the
performance of 159 capital appreciation funds tracked by Lipper Analytical
Services. Both benchmarks include reinvested dividends and capital gains,
if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Retirement Growth 19.47% 17.14% 15.44%

S&P 500(Registered trademark) 10.10% 14.67% 14.74%

Average Capital Appreciation Fund 14.36% 15.33% 11.06%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.

$10,000 OVER 10 YEARS
Retirement Growth (073) S&P 500
11/30/83 10000.00 10000.00
12/31/83 9913.26 9948.00
01/31/84 9738.40 9892.29
02/29/84 9190.57 9544.08
03/31/84 9337.75 9709.20
04/30/84 9370.45 9801.43
05/31/84 8789.91 9258.43
06/30/84 9125.15 9459.34
07/31/84 8961.62 9342.05
08/31/84 10106.35 10374.34
09/30/84 9951.00 10376.42
10/31/84 10024.59 10416.88
11/30/84 9934.64 10300.22
12/31/84 10237.18 10572.14
01/31/85 11237.13 11395.71
02/28/85 11178.03 11535.88
03/31/85 10975.41 11543.95
04/30/85 10781.23 11533.56
05/31/85 11254.01 12200.20
06/30/85 11498.85 12391.75
07/31/85 11684.59 12373.16
08/31/85 11549.50 12267.99
09/30/85 11051.39 11884.00
10/31/85 11617.05 12433.04
11/30/85 12562.62 13285.95
12/31/85 13195.82 13928.99
01/31/86 13777.86 14006.99
02/28/86 15135.33 15054.71
03/31/86 15975.67 15894.76
04/30/86 15883.32 15715.15
05/31/86 16363.52 16551.20
06/30/86 16058.78 16830.91
07/31/86 14793.65 15890.07
08/31/86 15874.09 17069.11
09/30/86 14738.25 15657.49
10/31/86 15458.54 16560.93
11/30/86 15633.99 16963.36
12/31/86 15061.45 16530.80
01/31/87 17175.37 18757.49
02/28/87 18324.26 19498.42
03/31/87 18985.75 20061.92
04/30/87 18997.35 19883.37
05/31/87 19368.71 20056.35
06/30/87 20018.59 21069.20
07/31/87 21562.05 22137.41
08/31/87 22211.93 22963.13
09/30/87 22037.86 22460.24
10/31/87 16096.11 17622.31
11/30/87 15016.84 16170.23
12/31/87 16465.41 17400.78
01/31/88 16754.01 18133.35
02/29/88 18181.82 18978.37
03/31/88 18166.63 18391.94
04/30/88 18500.80 18596.09
05/31/88 18409.66 18757.87
06/30/88 19366.60 19618.86
07/31/88 19138.76 19544.31
08/31/88 18607.13 18879.80
09/30/88 19169.14 19684.08
10/31/88 19305.84 20231.30
11/30/88 19062.81 19941.99
12/31/88 19021.71 20290.98
01/31/89 20489.67 21776.28
02/28/89 20072.46 21234.05
03/31/89 20597.84 21728.80
04/30/89 21571.33 22856.52
05/31/89 21988.54 23782.21
06/30/89 21679.49 23646.66
07/31/89 23719.19 25781.95
08/31/89 23997.33 26287.27
09/30/89 24352.73 26179.50
10/31/89 23502.86 25572.13
11/30/89 24136.40 26093.80
12/31/89 24806.36 26720.05
01/31/90 23584.23 24927.14
02/28/90 23830.75 25248.70
03/31/90 24027.97 25917.79
04/30/90 23337.70 25269.85
05/31/90 25523.56 27733.65
06/30/90 26098.78 27545.07
07/31/90 26000.17 27456.92
08/31/90 23337.70 24974.82
09/30/90 20856.02 23758.54
10/31/90 20182.18 23656.38
11/30/90 21579.16 25184.58
12/31/90 22287.21 25887.23
01/31/91 23314.58 27015.92
02/28/91 25236.75 28947.55
03/31/91 25899.57 29648.09
04/30/91 26065.27 29719.24
05/31/91 26926.93 31003.11
06/30/91 25203.61 29583.17
07/31/91 26844.08 30961.74
08/31/91 27987.44 31695.54
09/30/91 28335.42 31166.22
10/31/91 29346.21 31583.85
11/30/91 28517.69 30311.02
12/31/91 32446.83 33778.60
01/31/92 32518.02 33150.32
02/29/92 32980.79 33581.27
03/31/92 31966.27 32926.44
04/30/92 32322.24 33894.48
05/31/92 32927.39 34060.56
06/30/92 31717.09 33553.06
07/31/92 32802.80 34925.38
08/31/92 31912.87 34209.41
09/30/92 32286.64 34613.08
10/31/92 33301.16 34734.22
11/30/92 35187.81 35918.66
12/31/92 35884.97 36360.46
01/31/93 36779.91 36665.89
02/28/93 35623.03 37164.54
03/31/93 36627.12 37948.72
04/30/93 36343.35 37030.36
05/31/93 38264.20 38022.77
06/30/93 38766.24 38133.04
07/31/93 39028.18 37980.50
08/31/93 41210.96 39419.97
09/30/93 41363.76 39116.43
10/31/93 42586.12 39926.14
11/30/93 42040.42 39546.84

$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity
Retirement Growth Fund on November 30, 1983. As the chart shows, by
November 30, 1993, the value of your investment would have grown to $42,040
- - a 320.40% increase on your initial investment. For comparison, look at
how the S&P 500 did over the same period. With dividends reinvested,
the same $10,000 investment would have grown to $39,547 - a 295.47%
increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Low inflation, falling interest rates
and a gradually improving
economy boosted U.S. stocks
during the 12 months ended
November 30, 1993. The Standard
& Poor's 500 index - a broad
measure of U.S. stock
performance - rose 10.10%, in
line with the market's long-term
average annual return. Continued
poor performance by tobacco, drug
and brand-name consumer
products stocks was offset by
impressive results in other sectors,
including technology, although
semiconductors gave back part of
their gains in October and
November. Other market leaders
were finance, notably securities
brokers; autos; entertainment; and
precious metals. Communications
stocks soared as traditional
telephone utilities, cellular
communications companies and
entertainment companies
scrambled to form strategic
alliances. Mergers and acquisitions
activity resumed at a pace
reminiscent of the 1980s. The
NASDAQ Composite Index, which
tracks over-the-counter stocks,
rose 15.57% for the year,
compared to 14.73% for the Dow
Jones Industrial Average, an index
of 30 blue-chip stocks. Both trailed
the Morgan Stanley EAFE
(Europe, Australia, Far East) index,
which rose 24.27%. Two widely
watched benchmarks broke
records during the period: slow
growth and the prospect of higher
taxes helped push the yield on the
30-year Treasury below 6% in
early September; meanwhile, the
Dow closed above 3700 for the
first time in mid-November, and
finished the month at 3684.
An interview with Harris Leviton, Portfolio Manager of Fidelity Retirement
Growth Fund
Q. HARRIS, HOW DID THE FUND PERFORM?
A. Better than its peers. The total return for the 12 months ended November
30, 1993 was 19.47%, compared to 14.36% for the average capital
appreciation fund, according to Lipper Analytical Services. Meanwhile, the
Standard & Poor's 500 index, a broad measure of the U.S. stock market's
performance, rose 10.10%.
Q. HOW DO YOU EXPLAIN THE RESULTS?
A. I'm always searching for inexpensive stocks in companies that are
increasing their earnings. They've been hard to find lately in the United
States so I've looked overseas and I've had good luck, especially in Hong
Kong and Malaysia. Hong Kong stocks were 3.4% of investments at the end of
November. Among the winners were Hutchison Whampoa, which has interests in
shipping and cellular communications; and Innovative International, a maker
of car antennas. The percentage of foreign stocks in the fund has risen
steadily over the past year, from roughly 5% a year ago to about 10% in May
and more than 25% at the end of November. Total foreign stocks may decline
slightly in the months ahead, if only because I've begun taking profits.
Q. WHAT ABOUT EUROPEAN STOCKS?
A. I own very few. Europe has gotten expensive compared to the rest of the
world. And in my view, the outlook for many aging industries in Europe is
dim, even with an economic recovery. My focus instead has been on
fast-growing developing countries - the so-called emerging markets. Among
the more attractive have been Hong Kong; Malaysia; Brazil, where my largest
investment is Telebras, the telephone monopoly; and lately India, which has
the largest middle class in the world and over 6,000 publicly traded
stocks.
Q. WHAT WERE YOUR FAVORITE U.S. SECTORS?
A. The U.S. economy grew very little in 1993, so you had to be picky about
which companies and sectors to invest in. Technology was the largest sector
in the fund at the end of November - 8.9% of total investments. That was
down from 16.3% six months ago, mainly because last fall I began selling
the fund's semiconductor stocks, including Intel and Texas Instruments.
They'd had a good run and it seemed prudent to take profits. After
technology came utilities, mainly telephone companies with exciting growth
prospects like Bell Atlantic.
Q. IBM SHOWED UP RECENTLY ON YOUR TOP-10 LIST. WHAT'S THE STORY THERE?
A. The stock is cheap, management is aggressively cutting costs, and IBM's
core business, mainframe computers, seems to be improving. Many questions
remain. But whenever a company is cutting costs and business is better than
expected, it begins to look attractive. If IBM has indeed started to turn
itself around, we could see hard evidence of that as early as the
fourth-quarter earnings report, due out in early 1994. The other thing I
like about IBM is that even if I'm wrong, the risk of further steep
declines is slim.
Q. HAS YOUR STAKE IN WARNER-LAMBERT PAID OFF?
A. Not as much as some other stocks the fund owns. It's still my largest
investment, although I've scaled back over the last six months.
Warner-Lambert has a lot of businesses beyond brand-name drugs that may be
worth more money than the market realizes, including generic drugs, and
candy and gum. They also have a new Alzheimer's drug, which has no
competition. My hope is that soon the market will recognize the stock's
value and its price will rise accordingly. Again, if I'm wrong, I shouldn't
have to pay a big price.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Some of the cyclical stocks in the fund - those that tend to move in
tandem with the economy - lost ground unexpectedly, namely Reynolds Metals,
but the damage was slight. I also expected more from Halliburton, an energy
services company, than I got last year; that whole sector failed to produce
expected gains. But overall, it was a year when the disappointments,
thankfully, were few and far between.
Q. WHAT'S YOUR OUTLOOK?
A. So far in the 1990s, economic growth has been minimal. And yet stock
prices keep spiraling ever higher. We're seeing more and more money chasing
fewer good ideas. Speculation is rising, and the market has gotten more
volatile. While no one can predict what will happen, these are all signs
that in the past have presaged market declines. That's why I'm more
cautious now than I was six months ago. The percentage of cash in the fund
- - 14.7% at the end of November - was recently as high as 20%. I'm not
deliberately raising cash. But when stocks get expensive, I sell them; and
if I can't find enough cheap stocks to replace them, the cash piles up.
Investors have grown accustomed lately to double-digit returns. It would
probably be a good idea to lower those expectations going forward.
FUND FACTS
GOAL: to increase the value
of the fund's shares over the
long term by investing in
stocks with growth potential
START DATE: March 25, 1983
SIZE: as of November 30,
1993, over $2.6 billion
MANAGER: Harris Leviton,
since March 1992; manager,
Fidelity Convertible
Securities Fund, 1990-1992;
Fidelity Select Electronics
Portfolio, 1987-1990;
securities analyst 1986-1987
(checkmark)
HARRIS LEVITON'S INVESTMENT
STYLE:
"I like to buy growth stocks at
a discount. Then if the
company can come through
with improved earnings,
there's a good chance the
market will reward it with a
higher price-to-earnings ratio.
"A good example of that
recently was IHOP -
International House of
Pancakes - which went
public last year at $10 a
share, or 12 times projected
earnings. At the time, not
many people thought it was a
growth company. But
management took the money
from the offering and put it
into renovating the
restaurants, and earnings
improved. As the market took
notice, the stock rose to $28 a
share, while the
price-to-earnings ratio
expanded to 28. Basically,
what I'm trying to do is get a
little more reward for a little
less risk, by buying
inexpensive stocks."
DISTRIBUTIONS:
The Board of Trustees of
Retirement Growth Fund
voted to pay on December 20,
1993, to shareholders of
record at the opening of
business on December 17,
1993, a distribution of $1.75
derived from capital gains
realized from sales of portfolio
securities and a dividend of
$.14 from net investment
income.
INVESTMENT CHANGES

TOP TEN STOCKS AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

Warner-Lambert Co. 2.2 3.5

Cellular Communications, Inc. Class 1.7 1.9
P

International Business Machines 1.6 0.0
Corp.

Chrysler Corp., Series A, $4.625 1.2 2.0

Hutchison Whampoa Ltd. Ord. 1.0 0.0

Reynolds Metals Co. 1.0 0.0

Comstat Corp., Series1 1.0 0.0

Telebras "PN" (Pfd. Reg.) 0.9 0.8

American Bankers Insurance Group, 0.9 1.1
Inc.

British Petroleum PLC ADR 0.8 1.0

TOP FIVE INDUSTRIES AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

Technology 8.9 16.3

Utilities 8.9 7.3

Finance 8.6 12.4

Media and Leisure 7.5 7.7

Durables 7.4 8.4

ASSET ALLOCATION
AS OF NOVEMBER 30, 1993* AS OF MAY 31, 1993**
Row: 1, Col: 1, Value: 24.7
Row: 1, Col: 2, Value: 1.6
Row: 1, Col: 3, Value: 73.7
Stocks 90.5%
Bonds 0.9%
Short-term and other
Investments 8.6%

FOREIGN
INVESTMENTS 9.4%
Stocks 73.7%
Bonds 1.6%
Short-term and other
investments 24.7%

FOREIGN
INVESTMENTS 27.9%
Row: 1, Col: 1, Value: 8.5
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 90.5
*
*
*
INVESTMENTS NOVEMBER 30, 1993

Showing Percentage of Total Value of Investments

COMMON STOCKS - 71.0%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.6%
AEROSPACE & DEFENSE - 0.4%
BE Aerospace, Inc. (a) 195,000 $ 2,169 07330210
McDonnell Douglas Corp. 84,800 9,254 58016910
11,423
DEFENSE ELECTRONICS - 0.2%
Standard Telecommunications, Inc. 22,500 489 85440210
Watkins-Johnson Co. 257,900 5,481 94248610
5,970
TOTAL AEROSPACE & DEFENSE 17,393
BASIC INDUSTRIES - 4.6%
CHEMICALS & PLASTICS - 0.5%
Airgas, Inc. (a) 16,400 344 00936310
Grace (W.R.) & Co. 138,000 5,382 38388310
Reliance Industries Ltd. GDS (e) 50,000 1,075 75947010
Southern Petrochemical Industries GDS (a) 528,000 7,260 84361310
14,061
IRON & STEEL - 0.7%
Acesita (Acos Espec Itabira) (a)
PN 10,500,000 2,893 00499L22
ON 6,500,000 1,873 00499L22
British Steel PLC Ord. 2,684,700 4,867 11101510
Compania Siderurgica Nacional (a) 143,600,000 3,103 24499523
Insteel Industries, Inc. 261,119 2,611 45774W10
Kentucky Electric Steel, Inc. (a) (d) 307,000 3,761 49127B10
LTV Corp. (a) 91,800 1,331 50192110
20,439
METALS & MINING - 3.0%
Alcan Aluminium Ltd. 400,000 8,310 01371610
Alumax, Inc. 713,050 13,815 02219710
Belden, Inc. (a) 1,200,000 21,900 07745910
Cable Design Technology Corp. (a) (d) 640,000 6,240 12692410
Cyprus Amax Minerals Co. 379,850 8,452 23280910
Inco Ltd. 50,000 1,198 45325840
Reynolds Metals Co. 634,900 28,491 76176310
88,406
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PACKAGING & CONTAINERS - 0.0%
U.S. Can Corp. (a) 45,000 $ 686 90328W10
PAPER & FOREST PRODUCTS - 0.4%
Repola OY 679,200 10,512 75999A92
TOTAL BASIC INDUSTRIES 134,104
CONGLOMERATES - 0.8%
Brierley Investments Ltd. 4,000,000 2,558 10901410
Grupo Carso SA DE CV:
Class A-1 (a) 801,000 7,074 40099594
sponsored ADR 800,000 13,200 40048510
Hanson PLC Ord. 11,620 49 41135210
Tomkins PLC Ord. 102,276 354 89003010
23,235
CONSTRUCTION & REAL ESTATE - 1.0%
BUILDING MATERIALS - 0.3%
China Southern Class B (a) 2,282,000 3,693 21699522
Holnam, Inc. (a) 1,583 10 43642910
Lafarge Corp. 237,400 4,748 50586210
8,451
CONSTRUCTION - 0.6%
Ekran Berhad Ord. (a) 893,000 4,713 28299792
Hopewell Holdings Ltd. 3,670,000 4,204 44099999
Pulte Corp. 99,300 3,674 74586710
Redman Industries (a) 9,000 142 75764210
Renong BHD 3,000,000 3,894 75999H22
Sundance Homes, Inc. (a) 167,000 1,503 86724Q10
18,130
REAL ESTATE INVESTMENT TRUSTS - 0.1%
Chateau Properties, Inc. (a) 21,000 404 16173910
McArthur/Glen Realty Corp. (a) 12,800 304 57918810
Taubman Centers, Inc. 70,500 890 87666410
1,598
TOTAL CONSTRUCTION & REAL ESTATE 28,179
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 6.2%
AUTOS, TIRES, & ACCESSORIES - 1.9%
Danaher Corp. 429,800 $ 15,903 23585110
Discount Auto Parts, Inc. (a) 129,100 3,211 25464210
Ford Motor Co. 80,000 4,860 34537010
Grupo Dina (Consorcio G) ADR (a) 37,600 827 21030610
Innovative International Holdings 31,339,000 14,301 46199B92
NACCO Industries, Inc. Class A 113,500 5,108 62957910
Purolator Products Co. (a) 191,200 3,442 74638110
Shenzhen China Bicycles Co. Holdings (a) 2,002,000 2,358 82399A92
UMW Holdings BHD (a) 2,200,000 6,450 90302599
56,460
CONSUMER DURABLES - 0.6%
Libbey, Inc. (d) 1,041,700 16,928 52989810
Syratech Corp. (a) 114,900 1,924 87182410
18,852
CONSUMER ELECTRONICS - 0.6%
Aktiebolaget Electrolux (a) 142,700 4,889 01019810
Fossil, Inc. 575,700 11,082 34988210
North Americans Watch Corp. (a) 160,000 2,160 65720920
18,131
HOME FURNISHINGS - 0.4%
Craftmade International, Inc. (a) 10,000 101 22413E10
Knape & Vogt Mfg. Co. 2,500 51 49878210
LADD Furniture, Inc. 506,800 4,941 50573910
Loewenstein Furniture Group, Inc. (a) (d) 248,000 3,038 54042210
Pulaski Furniture Corp. 2,500 58 74555310
Rhodes, Inc. (a) 290,000 4,060 76235P10
Winston Furniture, Inc. (Del.) (a) 28,000 336 97562910
12,585
TEXTILES & APPAREL - 2.7%
Burlington Industries Equity, Inc. (a) 743,000 10,773 12169010
Donnkenny, Inc. (Del.) (a) 110,000 2,104 25800610
Dyersburg Corp. (d) 306,400 2,528 26757510
Fieldcrest Cannon, Inc. (a) 230,800 5,799 31654910
Galey & Lord, Inc. (a) 222,100 2,665 36352K10
High Fashion International 4,310,000 1,911 42999392
Image Industries, Inc. (a) (d) 500,000 5,125 45244B10
Interface, Inc. Class A 538,400 7,605 45866510
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
K Swiss, Inc. Class A (a) 308,900 $ 6,410 48268610
Nine West Group, Inc. (a) 349,800 11,500 65440D10
Pillowtex Corp. (a) (d) 962,400 18,165 72150110
Quaker Fabric Corp. (a) 115,000 1,380 74739910
Springs Industries, Inc. Class A 6,100 254 85178310
Texfi Industries, Inc. (a) 187,000 865 88289510
Unifi, Inc. 93,900 2,336 90467710
Valley Fashions Corp. Class A (a) 14,500 240 91961010
79,660
TOTAL DURABLES 185,688
ENERGY - 3.4%
COAL - 0.0%
Pittston Co. Minerals Group 38,000 845 72570120
ENERGY SERVICES - 0.8%
Halliburton Co. 733,300 22,641 40621610
OIL & GAS - 2.6%
Amerada Hess Corp. 504,800 23,536 02355110
British Petroleum PLC:
ADR 416,100 24,654 11088940
Ord. 813,251 4,012 11088910
Louis Dreyfus Natural Gas Corp. (a) 50,000 869 54601110
Newfield Exploration Co. (a) 13,000 213 65129010
Northstar Energy Corp. (a) 78,800 1,593 66703R10
Repsol SA sponsored ADR 124,400 3,561 76026T20
Summit Resources Ltd. 40,000 262 86624610
Tarragon Oil & Gas Ltd. (a) 100,000 1,170 87629E20
Tosco Corp. 32,700 1,030 89149030
Ulster Petroleums Ltd. (a) 50,000 159 90384010
Unocal Corp. 230,000 6,239 91528910
YPF Sociedad Anonima sponsored ADR representing
Class D shares 453,400 11,221 98424510
78,519
TOTAL ENERGY 102,005
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 8.2%
BANKS - 2.2%
Bancfirst Corp. 52,100 $ 794 05945F10
Banco Frances Del Rio PL (Reg.) 337,500 3,331 21199692
Bank of Boston Corp. 52,444 1,141 06071610
Bank of New York Co., Inc. 230,000 12,765 06405710
Cho Hing Bank Co. Ltd. 17,000 210 17099E22
Citicorp (a) 301,300 10,696 17303410
First Fidelity Bancorporation 105,518 4,419 32019510
First Union Corp. 193,700 7,869 33735810
HSBC Holdings PLC 23,870 264 42199192
Mellon Bank Corp. 157,192 8,724 58550910
Shawmut National Corp. 50,000 1,044 82048410
Signet Banking Corp. 26,435 855 82668110
Westpac Banking Corp. 4,804,022 13,458 96121410
65,570
CLOSED END INVESTMENT COMPANY - 0.0%
Orange Free State Investments Ltd. ADR 40,200 1,467 68486520
CREDIT & OTHER FINANCE - 2.0%
Argentaria Corp. Bancaria de Espana (a) 446,400 19,075 21991392
Beneficial Corp. 279,700 20,628 08172110
Corporacion Bancaria de Espana SA sponsored ADR (a) 128,900 2,771
21991310
Equicredit Corp. (a) 12,500 237 29442210
GFC Financial Corp. 125,400 3,386 36160910
Industrial Finance Corp. Thailand (Loc. Reg.) (a) 50,000 111 45799893
Man AG Ord. 27,000 5,778 56154210
Primerica Corp. 216,566 8,663 74158910
60,649
FEDERAL SPONSORED CREDIT - 0.6%
Federal National Mortgage Association 219,000 16,534 31358610
INSURANCE - 2.1%
Allstate Corp. (a) 41,000 1,210 02000210
American Bankers Insurance Group, Inc. (d) 1,113,435 26,722 02445610
American General Corp. 172,000 4,622 02635110
American Income Holding, Inc. 57,500 1,423 02672810
GAN (Groupe Des Assur Natl) 20,000 1,823 36599792
Heath (CE) International Holdings 4,076,273 4,568 42299992
Mid Ocean Ltd. (a) 534,100 15,222 59599D23
Penncorp. Financial Group, Inc. 213,500 4,057 70809410
St. Paul Companies, Inc. (The) 46,200 4,100 79286010
63,747
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SAVINGS & LOANS - 0.6%
Ahmanson (H.F.) & Co. 460,400 $ 8,690 00867710
Coast Savings Financial, Inc. (a) 70,900 939 19039M10
Cragin Financial Corp. (a) 175,235 6,484 22413810
FirstFed Michigan Corp. 18,300 423 33761R10
16,536
SECURITIES INDUSTRY - 0.7%
Aokam Perdana BHD 1,000,000 9,773 01899792
John Nuveen Co. Class A 60,000 1,628 47803510
Paine Webber Group, Inc. 234,400 6,241 69562910
Shanghai International Growth Investments 300,000 3,120
20,762
TOTAL FINANCE 245,265
HEALTH - 6.9%
DRUGS & PHARMACEUTICALS - 5.6%
Alkermes, Inc. (a) 93,200 850 01642T10
Alpha 1 Biomedicals, Inc. (a) 117,500 2,130 02091010
Cocensys, Inc. (a) 225,800 1,101 19126310
Cortech, Inc. (a) 270,000 3,577 22051J10
Creative Biomolecules, Inc. (a) 564,900 5,649 22527010
Cygnus Therapeutics Systems (a) 265,000 2,319 23256410
IMCERA Group, Inc. 505,400 17,436 45245410
Liposome Co, Inc. (a) 553,000 6,774 53631110
Magainin Pharmaceuticals, Inc. (g) 200,000 2,650 55903692
Magainin Pharmaceuticals, Inc. (a) 314,000 4,161 55903610
Mylan Laboratories, Inc. 418,700 11,305 62853010
Pfizer, Inc. 50,000 3,325 71708110
Protein Design Labs, Inc. (a) 236,500 5,646 74369L10
Schering-Plough Corp. 150,000 10,031 80660510
SciClone Pharmaceuticals, Inc. (a) 645,600 15,979 80862K10
T Cell Sciences, Inc. (a) (g) 250,000 1,594 87234292
Upjohn Co. 184,600 5,769 91530210
Warner-Lambert Co. 987,700 65,559 93448810
165,855
MEDICAL EQUIPMENT & SUPPLIES - 1.0%
Boston Scientific Corp. (a) 120,000 1,485 10113710
Cyberonics Inc. (a) 12,000 126 23251P10
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
Maxxim Medical, Inc. (a) 189,500 $ 3,624 57777G10
Millipore Corp. 113,700 3,922 60107310
Sofamor/Danek Group, Inc. (a) 321,600 10,854 83400510
Spacelabs Medical, Inc. (a) 135,500 3,049 84624710
Steris Corporation (a) 195,700 3,376 85915210
Utah Medical Products, Inc. 254,000 2,191 91748810
28,627
MEDICAL FACILITIES MANAGEMENT - 0.3%
HCA - Hospital Corporation of America Class A (a) 174,100 5,136 40412010
U.S. Healthcare, Inc. 51,550 2,983 91191010
8,119
TOTAL HEALTH 202,601
INDUSTRIAL MACHINERY & EQUIPMENT - 3.5%
ELECTRICAL EQUIPMENT - 2.0%
Holophane Corp. (a) 168,000 2,436 43645B10
Hutchison Whampoa Ltd. Ord. 7,100,000 28,493 44841510
Johnson Electric Industrial Manufacturing, Ltd. (e) 250,000 582
47899999
Kemet Corp. (a) 238,000 3,451 48836010
Philips Electronics 856,100 16,642 71833799
Philips NV (NY shs.) (a) 301,000 5,870 71833750
Westinghouse Electric Corp. 244,100 3,417 96040210
60,891
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
Bearings, Inc. 9,400 262 07400520
Caterpillar, Inc. 198,400 16,914 14912310
Cincinnati Milacron, Inc. 523,200 10,464 17217210
Granite Industries BHD 2,369,000 13,614 38799522
SKF AB Ord. (a) 296,700 4,241 78437530
45,495
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 106,386
MEDIA & LEISURE - 7.3%
BROADCASTING - 1.7%
Cablemaxx, Inc. (a) 37,000 425 12685910
Home Shopping Network, Inc. (a) 209,300 3,139 43735110
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
BROADCASTING - CONTINUED
NTN Communications, Inc. (a) 61,900 $ 596 62941030
Peoples Choice TV Corp. (a) (d) 353,600 9,194 71084710
Preferred Entertainment, Inc. (a) 180,500 3,881 74036T10
Scandinavian Broadcasting Corp. (a) 161,500 3,169 80699E92
Television Broadcast Limited Ord. (a) 2,840,000 9,890 87953110
United International Holdings, Inc. Class A (a) 5,000 158 91073410
Viacom, Inc. (non-vtg.) (a) 468,200 20,659 92552430
51,111
ENTERTAINMENT - 2.2%
Multi-Purpose Holding BHD (a) 2,400,000 6,098 00099292
New Line Cinema Corp. (a) 811,100 18,757 64646510
PolyGram N.V. Ord. 270,000 10,455 73173392
RHI Entertainment, Inc. (a) (d) 764,900 17,593 74955910
Royal Carribean Cruises Ltd. 364,700 9,391 78015392
Shaw Bros Hong Kong Ltd. 1,900,000 3,222 82028710
65,516
LEISURE DURABLES & TOYS - 0.2%
Coachmen Industries, Inc. 6,700 94 18987310
Just Toys, Inc. (a) (d) 405,000 4,050 48213310
Playmates International Holdings 3,000,000 1,126 72799292
Varsity Spirit Corp. (a) 81,000 1,195 92229410
Vermont Teddy Bear (a) 1,100 17 92427X10
6,482
LODGING & GAMING - 1.4%
Aztar Corp. (a) 278,800 1,952 05480210
Caesars World, Inc. (a) 249,600 12,199 12769510
Circus Circus Enterprises, Inc. (a) 389,850 13,498 17290910
Hospitality Franchise Systems, Inc. (a) 56,000 2,394 44091210
Mandarin Oriental International Ltd. Ord. 6,374,000 7,261 56259499
Mirage Resorts, Inc. (a) 19,500 429 60462E10
Shangri-La Asia Ltd. (a) 3,224,000 3,840 84599M22
41,573
PUBLISHING - 0.5%
Big Entertainment, Inc. (a) 120,000 795 08914410
Harvey Comics Entertainment, Inc. (a) 70,000 656 41764710
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
PUBLISHING - CONTINUED
MaClean Hunter Ltd. 1,328,800 $ 11,813 55474980
Times Mirror Co., Series A 44,800 1,400 88736010
14,664
RESTAURANTS - 1.3%
Cafe De Coral Holdings Ltd. 5,487,900 4,014 12799092
F&M Distributors, Inc. (a) (d) 460,600 3,570 30272310
Fairwood Holdings Ltd. (a) (e) 7,089,000 3,304 30699392
IHOP Corp. (a) (d) 809,600 22,770 44962310
Quantum Restaurant Group, Inc. 325,400 3,417 74763T10
37,075
TOTAL MEDIA & LEISURE 216,421
NONDURABLES - 2.1%
BEVERAGES - 1.0%
Dr. Pepper/Seven-Up Companies, Inc. (a) 440,500 10,021 25613130
Emvasa Del Valle de Enah Ord. (a) 835,000 3,364 29299E22
Grupo Embot. Mex. Class B ADS (e) 540,000 16,200 40048J10
29,585
FOODS - 0.3%
Hormel (George A) & Co. 366,500 8,063 44045210
Mavesa SA sponsored ADR (a) (e) 240,000 2,220 57771720
10,283
HOUSEHOLD PRODUCTS - 0.7%
Luxottica Group S.P.A. sponsored ADR (a) 11,500 293 55068R20
Premark International, Inc. 240,500 18,819 74045910
Safeskin Corp. (a) 12,000 186 78645410
19,298
TOBACCO - 0.1%
ITC Ltd.:
warrants (a) (e) 20,000 160 45031811
GDR (e) 60,000 1,395 45031810
RJR Nabisco Holdings Corp. (a) 427,800 2,781 74960K10
4,336
TOTAL NONDURABLES 63,502
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
PRECIOUS METALS - 0.7%
Amax Gold, Inc. 239,779 $ 1,529 02312010
Anglo American Corp. of South Africa Ltd.:
ADR 16,000 562 03486130
(Reg.) (a) 94,200 3,311 03486110
Driefontein Consolidated Ltd.:
ADR 155,000 1,724 26202640
Ord. 183,200 2,048 26202630
Free State Consolidated Gold Mines Ltd.:
ADR 74,400 1,023 35614220
Ord . 83,700 1,209
Kloof Gold Mining Ltd.:
ADR 219,300 2,056 49874650
Ord. 145,200 1,359 49874640
Vaal Reefs Exploration & Mining Co. Ltd.:
ADR 283,800 2,341 91850640
(Reg.) 14,000 1,186 91850610
Western Deep Levels Ltd.:
ADR 59,100 2,327 95807720
Ord. 33,900 1,339 95807710
22,014
RETAIL & WHOLESALE - 4.8%
APPAREL STORES - 0.7%
Catherines Stores Corp. (a) 139,000 2,676 14916F10
Designs, Inc. (a) 141,400 2,298 25057L10
Giordano Holdings Ltd. Ord. 5,000,000 2,702 37599592
Shoe Carnival, Inc. (a) (d) 774,000 12,964 82488910
Sportstown, Inc. (a) 16,900 106 84919810
20,746
GENERAL MERCHANDISE STORES - 1.5%
Bradlees, Inc. 468,800 7,149 10449910
Dayton Hudson Corp. 70,700 5,046 23975310
Freds, Inc. Class A (d) 839,700 12,595 35610810
Hudsons Bay Co. Ord. 500,000 14,365 44420410
Sears, Roebuck & Co. 100,000 5,438 81238710
44,593
GROCERY STORES - 1.6%
Bruno's, Inc. 134,000 1,223 11688110
Giant Food, Inc. Class A 389,700 9,060 37447810
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - CONTINUED
Great Atlantic & Pacific Tea Co., Inc. 43,400 $ 1,204 39006410
Safeway, Inc. (a) 707,500 13,443 78651420
Whole Foods Market, Inc. (a) (d) 1,129,500 23,155 96683710
48,085
RETAIL & WHOLESALE, MISC - 0.9%
Barnes & Noble, Inc. 169,200 4,907 06777410
Best Buy Co., Inc. (a) 94,800 4,716 08651610
Good Guys, Inc. (a) 103,300 1,614 38209110
Lillian Vernon Corp. 82,100 1,498 53243010
Natural Wonders, Inc. (a) 220,000 2,145 63901410
Orchard Supply Hardware Corp. (a) 160,400 2,246 68569110
Redoute (LA) 30,000 4,683 75799492
Toys "R" Us, Inc. (a) 100,000 4,075 89233510
25,884
TRADING COMPANIES - 0.1%
Linkful International Holding (a) 15,000,000 4,369 53599522
TOTAL RETAIL & WHOLESALE 143,677
SERVICES - 0.3%
ADVERTISING - 0.0%
HA-LO Industries, Inc. (a) 105,000 551 40442910
SERVICES - 0.3%
Oroamerica, Inc. (a) (d) 314,000 4,396 68702710
TRO Learning, Inc. (a) 289,300 2,821 87263R10
7,217
TOTAL SERVICES 7,768
TECHNOLOGY - 8.8%
COMMUNICATIONS EQUIPMENT - 0.5%
Champion Technology Holdings Ltd. (a) 2,000,000 1,812 15899922
DSC Communications Corp. (a) 100,000 5,413 23331110
Ericsson (L.M.) Telephone Co. Class B ADR 63,200 2,496 29482140
General Instrument Corp. (a) 104,200 5,562 37012110
15,283
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - 2.3%
America Online, Inc. (a) 69,200 $ 4,532 02364J10
BancTec, Inc. (a) 218,850 4,596 05978410
Ceridian Corp. (a) 227,300 4,262 15677T10
Compuware Corp. (a) 57,200 1,416 20563810
Integrated Systems, Inc. (a) (d) 672,000 6,888 45812M10
Microsoft Corp. (a) 200,000 16,000 59491810
SPSS, Inc. 79,000 790 78462K10
Sierra On-Line, Inc. (a) (d) 700,900 16,121 82640910
Sterling Software, Inc. (a) 92,300 2,573 85954710
SunGard Data Systems, Inc. (a) 333,300 11,832 86736310
Viewlogic Systems, Inc. (a) 30,000 690 92672110
69,700
COMPUTERS & OFFICE EQUIPMENT - 3.6%
Amdahl Corp. 216,000 1,188 02390510
Compaq Computer Corp. (a) 279,000 20,193 20449310
International Business Machines Corp. 857,700 46,209 45920010
Merisel, Inc. (a) 556,200 8,134 58984910
Netframe Systems, Inc. (a) 547,900 9,040 64110610
Norand Corp. (a) 3,500 87 65542110
Seagate Technology (a) 432,700 10,493 81180410
Xerox Corp. 145,600 12,012 98412110
107,356
ELECTRONIC INSTRUMENTS - 0.3%
ASECO Corp. (a) 75,000 656 04365910
Fisher Scientific International, Inc. 170,900 5,811 33803210
Megatest Corp. (a) 65,100 879 58495810
7,346
ELECTRONICS - 1.9%
Advanced Micro Devices, Inc. (a) 979,800 18,616 00790310
Integrated Device Technology, Inc. (a) 1,114,400 15,462 45811810
Methode Electronics, Inc. Class A 298,300 3,729 59152020
Micron Technology, Inc. 253,300 11,715 59511210
Recoton Corp. (a) 20,000 495 75626810
Samsung Electronics Co. Ltd. GDR (a) (e) 9,001 265 79605030
Texas Instruments, Inc. 103,000 6,618 88250810
56,900
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
PHOTOGRAPHIC EQUIPMENT - 0.2%
Eastman Kodak Co. 100,000 $ 6,087 27746110
TOTAL TECHNOLOGY 262,672
TRANSPORTATION - 3.5%
AIR TRANSPORTATION - 1.5%
AMR Corp. (a) 210,000 13,834 00176510
East Asiatic Co. Hong Kong Ltd. 2,447,000 950 27099892
Technology Resources (a) 2,000,000 8,210 93699692
UAL Corp. 142,500 21,161 90254910
44,155
RAILROADS - 0.4%
Chicago & North Western Holdings Corp. (a) 532,900 12,656 16715510
SHIPPING - 0.2%
Shun Tak Holdings Ltd. 6,284,000 7,240 82799192
TRUCKING & FREIGHT - 1.4%
Airborne Freight Corp. 540,300 17,830 00926610
Federal Express Corp. (a) 338,200 24,181 31330910
Landair Services, Inc. (a) 17,000 315 51475910
42,326
TOTAL TRANSPORTATION 106,377
UTILITIES - 8.3%
CELLULAR - 1.7%
Cellular Communications, Inc. Class P (a) 1,094,300 49,856 15091793
Nationwide Cellular Service, Inc. (a) 46,000 656 63859510
50,512
ELECTRIC UTILITY - 0.6%
Consolidated Electric Power Asia Ltd. sponsored ADR 64,100 1,039
20855210
Korea Electric Power Corp. 400,000 9,652 50099B92
Meralco Class B (a) 495,000 5,912 58799A92
16,603
GAS - 0.4%
Sonat, Inc. 194,000 5,990 83541510
Trident Holdings (a) 400,000 4,500 89592610
10,490
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - 5.6%
Ameritech Corp. 150,000 $ 11,475 03095410
Bell Atlantic Corp. 372,400 22,344 07785310
BellSouth Corp. 188,700 10,779 07986010
Comsat Corp., Series 1 896,600 28,355 20564D10
Davel Communications GRP, Inc. (a) 54,400 830 23833810
GTE Corp. 320,000 11,880 36232010
MCI Communications Corp. 339,400 8,273 55267310
NYNEX Corp. 120,000 5,115 67076810
Southwestern Bell Corp. 432,400 18,377 84533310
Sprint Corporation 638,100 20,898 85206110
Telebras "PN" (Pfd. Reg.) 795,857,000 27,959 95499792
Telecomasia Corp. Public Ltd. 400,000 864 87928D92
167,149
TOTAL UTILITIES 244,754
TOTAL COMMON STOCKS
(Cost $1,754,584) 2,112,041
PREFERRED STOCKS - 2.7%

CONVERTIBLE PREFERRED STOCKS - 2.1%
BASIC INDUSTRIES - 0.1%
METALS & MINING - 0.1%
Alumex, Inc., Series A, $4.00 22,000 2,046 02219720
Cyprus Amax Minerals Co., Series A, $4.00 (e) 24,000 1,410 23280920
3,456
DURABLES - 1.2%
AUTOS, TIRES, & ACCESSORIES - 1.2%
Chrysler Corp., Series A, $4.625 (e) 247,400 36,739 17119670
ENERGY - 0.4%
OIL & GAS - 0.4%
Unocal Corp. $3.50 (e) 200,000 11,600 91528920
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
TRANSPORTATION - 0.4%
AIR TRANSPORTATION - 0.4%
AMR Corp. $3.00 (e) 139,000 $ 7,193 00176588
UAL, Inc. 6 1/4% cumulative (e) 45,200 5,305 90254930
12,498
TOTAL CONVERTIBLE PREFERRED STOCKS 64,293
NONCONVERTIBLE PREFERRED STOCKS - 0.6%
UTILITIES - 0.6%
TELEPHONE SERVICES - 0.6%
Stet Societa Finanziaria Telefonica SPA 9,530,000 15,758 85982592
SIP (Societa Ital Per L'Eser) Spa Di Risp N/C Ord. 670,000 1,032
78401796
16,790
TOTAL PREFERRED STOCKS
(Cost $57,789) 81,083
CONVERTIBLE BONDS - 1.6%
MOODY'S RATINGS (C) PRINCIPAL
(UNAUDITED) AMOUNT (F) (000S)
BASIC INDUSTRIES - 0.9%
CHEMICALS & PLASTICS - 0.4%
Reliance Industries Ltd.:
3 1/2%, 11/3/93 (e) - $ 10,000 11,450 759470AA
3 1/2%, 11/3/99 - 1,000 1,152 7594709A
12,602
IRON & STEEL - 0.1%
Essar Gujarat, Ltd. 5 1/2%, 8/5/98 - 250 339 296994AC
Jindal Strip 4 1/4%, 3/31/99 (e) - 1,240 1,392 642994AA
1,731
CONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNTS (B) (000S) (000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - 0.4%
Repap Enterprises, Inc. 8 1/2%,
8/1/97 - $ 15,880 $ 12,704 76026M9B
TOTAL BASIC INDUSTRIES 27,037
CONGLOMERATES - 0.0%
Polly Peck International PLC
7 1/4%, 1/4/05 (b) - 6,500 1,235 731991AA
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE - 0.0%
New World Development Ltd. 4 3/8%,
12/11/00 (e) - 1,000 978 649272AA
BUILDING MATERIALS - 0.0%
Gujar Ambuja 3 1/2%, 6/30/99 - 880 880
TOTAL CONSTRUCTION & REAL ESTATE 1,858
FINANCE - 0.4%
CREDIT & OTHER FINANCE - 0.3%
Asia Credit 3 3/4%, 11/17/03 (e) - 1,355 1,477 044909AA
Benpress Holdings Corp. 4.2%,
12/31/94 (e) - 113 254 082300AA
Scici Ltd. 3 1/2%, 4/1/04 (e) - 4,900 5,978 79599KAA
7,709
SECURITIES INDUSTRY - 0.1%
Phatra TH 3 1/2%, 12/13/03 - 2,500 2,500
TOTAL FINANCE 10,209
MEDIA & LEISURE - 0.2%
ENTERTAINMENT - 0.2%
New Line Cinema Corp. 6 1/2%,
11/15/06 (e) - 3,000 4,110 646465AA
RHI Entertainment 6 1/2%, 6/1/03 (e) - 710 916 749559AA
5,026
CONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNTS (B) (000S) (000S)
TECHNOLOGY- 0.1%
COMPUTER SERVICES & SOFTWARE - 0.0%
Sterling Software, Inc. 5 3/4%, 2/1/03 B1 $ 910 $ 1,083 859547AD
ELECTRONICS - 0.1%
Microsemi Corp. 5 7/8%, 3/1/12 Caa 596 226 595137AA
Richardson Electronics, Ltd. 7 1/4%,
12/15/06 B3 2,382 1,906 763165AB
2,132
TOTAL TECHNOLOGY 3,215
TOTAL CONVERTIBLE BONDS
(Cost $51,440) 48,580
U.S. TREASURY OBLIGATIONS - 10.0%

Bills, yields at date of purchase 3.13% to 3.15%
2/24/94 to 3/3/94 (Cost $297,713) Aaa 300,000 297,658
REPURCHASE AGREEMENTS - 14.7%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 3.24% dated
11/30/93 due 12/1/93 $ 438,780 438,741
TOTAL INVESTMENTS - 100%
(Cost $2,600,267) $ 2,978,103
LEGEND
1. Non-income producing
2. Non-income producing - the company moved to seek a court appointed
administrator under British bankruptcy law.
3. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
4. Affiliated company (see Note 6 of Notes to Financial Statements).
5. 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 $114,003,000 or 4.2% of net
assets.
6. Principal amount is stated in United States dollars unless otherwise
noted.
7. Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Magainin
Pharmaceuticals, Inc. 9/24/93 $ 1,750,000
T Cell Sciences, Inc. 11/23/93 $ 1,587,500
OTHER INFORMATION
Distribution of investments by country, as a percentage of total value of
investments, is as follows:
United States 81.9%
Hong Kong 3.4
Malaysia 1.8
Canada 1.7
Brazil 1.2
United Kingdom 1.2
Netherlands 1.1
India 1.0
Others (individually less than 1%) 6.7
TOTAL 100.0%
INCOME TAX INFORMATION
At November 30, 1993, the aggregate cost of investment securities for
income tax purposes was $2,601,018,000. Net unrealized appreciation
aggregated $377,085,000, of which $429,097,000 related to appreciated
investment securities and $52,012,000 related to depreciated investment
securities.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) NOVEMBER 30, 1993

ASSETS 8. 9.

10.Investment in securities, at value (including 11. $ 2,978,103
repurchase agreements of $438,741) (cost
$2,600,267) (Notes 1 and 2) - See accompanying
schedule

12.Receivable for investments sold 13. 23,357

14.Receivable for fund shares sold 15. 4,942

16.Dividends receivable 17. 3,723

18.Interest receivable 19. 926

20.Other receivables 21. 5,190

22. TOTAL ASSETS 23. 3,016,241

LIABILITIES 24. 25.

26.Payable to custodian bank $ 626 27.

28.Payable for investments purchased 278,292 29.

30.Payable for fund shares redeemed 2,582 31.

32.Accrued management fee 1,727 33.

34.Other payables and accrued expenses 691 35.

36.Collateral on securities loaned, at value (Note 5) 44,055 37.

38. TOTAL LIABILITIES 39. 327,973

40.NET ASSETS 41. $ 2,688,268

42.Net Assets consist of: 43. 44.

45.Paid in capital 46. $ 2,025,390

47.Undistributed net investment income 48. 42,699

49.Accumulated undistributed net realized gain (loss) on 50. 242,343
investments

51.Net unrealized appreciation (depreciation) on 52. 377,836
investment securities

53.NET ASSETS, for 139,581 shares outstanding 54. $ 2,688,268

55.NET ASSET VALUE, offering price and redemption price 56. $19.26
per share ($2,688,268 (divided by) 139,581 shares)

</TABLE>

STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1993

<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME 58. $ 33,578
57.Dividends (including $417 received from affiliated
issuers) (Note 6)

59.Interest (including security lending fees of $192) 60. 10,767
(Note 5)

61. TOTAL INCOME 62. 44,345

EXPENSES 63. 64.

65.Management fee (Note 4) $ 15,111 66.
Basic fee

67. Performance adjustment 3,094 68.

69.Transfer agent fees (Note 4) 5,706 70.

71.Accounting and security lending fees (Note 4) 779 72.

73.Non-interested trustees' compensation 16 74.

75.Custodian fees and expenses 227 76.

77.Registration fees 51 78.

79.Audit 61 80.

81.Legal 29 82.

83.Miscellaneous 170 84.

85. Total expenses before reductions 25,244 86.

87. Expense reductions (Note 7) (51) 25,193

88.NET INVESTMENT INCOME 89. 19,152

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 91. 266,482
(NOTES 1 AND 3)
90.Net realized gain (loss) on investment securities
(including realized (loss) of $3,251 on sales of
investments in affiliated issuers)

92.Change in net unrealized appreciation (depreciation) 93. 144,257
on investment securities

94.NET GAIN (LOSS) 95. 410,739

96.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 97. $ 429,891
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEARS ENDED NOVEMBER 30,

1993 1992

INCREASE (DECREASE) IN NET ASSETS

98.Operations $ 19,152 $ 19,298
Net investment income

99. Net realized gain (loss) on investments 266,482 381,043

100. Change in net unrealized appreciation 144,257 (14,726)
(depreciation) on investments

101. 429,891 385,615
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS

102.Distributions to shareholders from: (17,541) (18,500)
Net investment income

103. Net realized gain (387,106) (96,199)

104.Share transactions 665,444 732,259
Net proceeds from sales of shares

105. Reinvestment of distributions from: 17,513 18,481
Net investment income

106. 386,611 96,126
Net realized gain

107. Cost of shares redeemed (572,056) (529,417)

108. 497,512 317,449
Net increase (decrease) in net assets resulting from
share transactions

109. 522,756 588,365
TOTAL INCREASE (DECREASE) IN NET ASSETS

NET ASSETS 110. 111.

112. Beginning of period 2,165,512 1,577,147

113. $ 2,688,268 $ 2,165,512
End of period (including undistributed net investment
income of $42,699 and $41,088, respectively)

OTHER INFORMATION 115. 116.
114.Shares

117. Sold 37,751 40,145

118. Issued in reinvestment of distributions from: 1,074 1,105
Net investment income

119. 23,719 5,746
Net realized gain

120. Redeemed (32,513) (29,083)

121. Net increase (decrease) 30,031 17,913

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
122. YEARS ENDED NOVEMBER 30,

123. 1993 1992 1991 1990 1989

124. 125. 126. 127. 128.

129.SELECTED PER-SHARE DATA

130.Net asset value, beginning $ 19.77 $ 17.21 $ 13.13 $ 15.62 $ 12.55
of period

131.Income from Investment
Operations

132. Net investment income .09 .14 .27 .34 .37

133. Net realized and 3.09 3.66 3.92 (1.88) 2.91
unrealized
gain (loss) on investments

134. Total from investment 3.18 3.80 4.19 (1.54) 3.28
operations

135.Less Distributions

136. From net investment (.16) (.20) (.11) (.45) (.21)
income

137. From net realized gain (3.53) (1.04) - (.50) -

138. Total distributions (3.69) (1.24) (.11) (.95) (.21)

139.Net asset value, end of $ 19.26 $ 19.77 $ 17.21 $ 13.13 $ 15.62
period

140.TOTAL RETURN (dagger) 19.47% 23.39% 32.15% (10.59) 26.62%
%

141.RATIOS AND SUPPLEMENTAL
DATA

142.Net assets, end of period $ 2,688 $ 2,166 $ 1,577 $ 1,292 $ 1,448
(in millions)

143.Ratio of expenses to 1.05% 1.02% .83% .98% .92%
average net assets *

144.Ratio of expenses to 1.05% 1.02% .83% .98% .92%
average net assets before
expense reductions *

145.Ratio of net investment .80% 1.01% 1.56% 2.34% 2.51%
income to average net assets

146.Portfolio turnover rate 101% 138% 119% 127% 139%

</TABLE>

* SEE NOTE 7 OF NOTES TO FINANCIAL STATEMENTS.
(dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1993

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Retirement Growth Fund (the fund) is a fund of Fidelity Financial
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 following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange), are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities maturing within sixty days
are valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities, other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Dividend and interest income is
recorded net of foreign taxes where recovery of such taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the
end of the period, restricted securities (excluding 144A issues) amounted
to $4,244,000 or .2% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,148,845,000 and $2,200,708,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.31% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .30%.
The basic fee is subject to a performance adjustment (up to a maximum of +
or - .20%) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annual rate of .76% of average net
assets after the performance adjustment.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $31,000 for the
period.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's accounting
records and administers the security lending program. The security lending
fee is based on the number and duration of lending transactions. The
accounting fee is based on the level of average net assets for the month
plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $1,179,000 for the period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund negotiated
lenders' fees. These fees are included in interest income. The fund
receives U.S. Treasury obligations and/or cash as collateral against the
loaned securities, in an amount at least equal to 102% of the market value
of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 100% of the market value of the loaned
securities during the period of the loan. At period end, the value of the
securities loaned and the value of collateral amounted to $42,541,000 and
$44,055,000 respectively.
6. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions with companies which are or
were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS PURCHASES SALES DIVIDEND MARKET
COST COST INCOME VALUE
AFFILIATE
American Bankers Insurance
Group, Inc. $ 1,121 $ 17 $ 189 $ 26,722 Cable Design Technology Corp.
(a) 6,400 - - 6,240 Dyersburg Corp. - 801 9 - F&M
Distributors, Inc. (a) 1,352 - - - Freds, Inc. Class A 6,102 - 91
12,595 IHOP Corp. (a) 5,569 230 - 22,770 Image Industries, Inc. (a)
- - - - 5,125 Integrated Systems, Inc. (a) 188 - - 6,888 Just Toys,
Inc. (a) 1,356 - - 4,050 Kentucky Electric Steel, Inc. (a) 3,684 -
- - 3,761 Libbey, Inc. 13,730 - 78 16,928 Loewenstein Furniture
Group, Inc. (a) 112 - - 3,038 Microcom, Inc. 180 9,695 - -
Micropose, Inc. 307 8,920 - - Minerals Technologies, Inc. 183
20,113 50 - Netframe Systems, Inc. (a) 1,106 3,210 - - Network
Equipment
Technologies, Inc. 34 17,858 - - New Line Cinema Corp. 552 513 -
- - Oroamerica, Inc. (a) 802 - - 4,396 Peoples Choice TV Corp. (a) 779
- - - 9,194 Pillowtex Corp. (a) 8,351 - - 18,165 RHI Entertainment,
Inc. (a) - - - 17,593 Shoe Carnival, Inc. (a) 2,983 - - 12,964
Sierra On-Line, Inc. (a) 724 408 - - Sportstown, Inc. (a) 1,405
4,455 - -
Whole Foods Market, Inc. (a) 3,272 242 - 23,155
TOTALS $ 60,292 $ 66,462 $ 417 $ 193,584

(a) Non-income producing
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$51,000 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Financial Trust and the Shareholders of
Fidelity Retirement Growth Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments (except for Moody's and Standard
& Poor's ratings), 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 Retirement Growth
Fund (a fund of Fidelity Financial Trust) at November 30, 1993, the results
of its operations for the year then ended, the changes in its net assets
and the financial highlights for the periods indicated in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fidelity Retirement Growth Fund 's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements
in accordance with generally accepted auditing standards which require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities owned at November 30,
1993 by correspondence with the custodian and brokers and the application
of alternative auditing procedures where confirmations from brokers were
not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Boston, Massachusetts
January 3, 1994
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OFFICERS
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Security Transactions
BOARD OF TRUSTEES
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TO THE SHAREHOLDERS:
The Board of Trustees of Fidelity Retirement Growth Fund voted to pay on
January 10, 1994, to shareholders of record at the opening of business on
January 7, 1994, a distribution of $.13 derived from capital gains realized
from sales of portfolio securities.
In the opinion of management, regardless of whether you took payments in
cash or in additional shares, the distribution will be reportable for tax
purposes for the year 1994. You will be notified at a later date as to the
tax treatment of this distribution.
If your account is a Fidelity prototype retirement plan such as an
Individual Retirement Account (IRA), a Keogh Plan, a 403(b), or a qualified
pension or profit sharing plan, the above information is provided for
informational purposes only and is not reportable for tax purposes in 1994.

FIDELITY RETIREMENT GROWTH FUND
January 7, 1994

(2_FIDELITY_LOGOS)FIDELITY

EQUITY-INCOME II
FUND
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.

PERFORMANCE 4 How the fund has done over time.

FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.

INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the last six
months.

INVESTMENTS 10 A complete list of the fund's
investments with their market value.

FINANCIAL STATEMENTS 28 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 32 Footnotes to the financial
statements.

There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 LIFE OF
YEAR FUND

Equity-Income II 19.08% 112.04%

S&P 500(Registered trademark) 10.10% 55.72%

Average Equity Income Fund 13.66% 63.10%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund began on
August 21, 1990. For example, if you invested $1,000 in a fund that had a
5% return over the past year, you would end up with $1,050. You can compare
the fund's returns to the performance of the Standard & Poor's 500
Composite Stock Price Index - a common proxy for the U.S. stock market. You
can also compare them to the average equity income fund, which reflects the
performance of 92 equity income funds with similar objectives tracked by
Lipper Analytical Services. Both benchmarks include reinvested dividends
and capital gains, if any, and exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 LIFE OF
YEAR FUND

Equity-Income II 19.08% 25.74%

S&P 500(Registered trademark) 10.10% 14.45%

Average Equity Income Fund 13.66% 16.03%

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.

$10,000 OVER LIFE OF FUND
Equity-Income II (319) S&P 500
08/21/90 10000.00 10000.00
08/31/90 10090.00 9833.94
09/30/90 9790.00 9355.02
10/31/90 9790.00 9314.80
11/30/90 10180.00 9916.53
12/31/90 10451.06 10193.20
01/31/91 10954.00 10637.63
02/28/91 11929.70 11398.22
03/31/91 12425.00 11674.06
04/30/91 12770.42 11702.07
05/31/91 13420.62 12207.60
06/30/91 13105.68 11648.49
07/31/91 13833.74 12191.31
08/31/91 14361.43 12480.25
09/30/91 14456.52 12271.83
10/31/91 14904.70 12436.27
11/30/91 14456.52 11935.09
12/31/91 15320.98 13300.46
01/31/92 15754.68 13053.08
02/29/92 16262.55 13222.77
03/31/92 16199.85 12964.92
04/30/92 16550.86 13346.09
05/31/92 16731.69 13411.49
06/30/92 16626.26 13211.65
07/31/92 17139.48 13752.01
08/31/92 16786.64 13470.10
09/30/92 17001.03 13629.04
10/31/92 17140.73 13676.74
11/30/92 17807.02 14143.12
12/31/92 18240.50 14317.08
01/31/93 18739.34 14437.34
02/28/93 19071.80 14633.69
03/31/93 19793.83 14942.46
04/30/93 19849.52 14580.86
05/31/93 20150.27 14971.62
06/30/93 20341.48 15015.04
07/31/93 20542.99 14954.98
08/31/93 21214.70 15521.77
09/30/93 21136.44 15402.26
10/31/93 21530.15 15721.08
11/30/93 21203.93 15571.73

$21,204
$15,572
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Equity-Income II Fund on August 21, 1990, when the fund started. As the
chart shows, by November 30, 1993, the value of your investment would have
grown to $21,204 - a 112.04% increase on your initial investment. For
comparison, look at how the S&P 500 did over the same period. With
dividends reinvested, the same $10,000 investment would have grown to
$15,572 - a 55.72% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
Low inflation, falling interest rates
and a gradually improving
economy boosted U.S. stocks
during the 12 months ended
November 30, 1993. The Standard
& Poor's 500 index - a broad
measure of U.S. stock
performance - rose 10.10%, in
line with the market's long-term
average annual return. Continued
poor performance by tobacco, drug
and brand-name consumer
products stocks was offset by
impressive results in other sectors,
including technology, although
semiconductors gave back part of
their gains in October and
November. Other market leaders
were finance, notably securities
brokers; autos; entertainment; and
precious metals. Communications
stocks soared as traditional
telephone utilities, cellular
communications companies and
entertainment companies
scrambled to form strategic
alliances. Mergers and acquisitions
activity resumed at a pace
reminiscent of the 1980s. The
NASDAQ Composite Index, which
tracks over-the-counter stocks,
rose 15.57% for the year,
compared to 14.73% for the Dow
Jones Industrial Average, an index
of 30 blue-chip stocks. Both trailed
the Morgan Stanley EAFE
(Europe, Australia, Far East) index,
which rose 24.27%. Two widely
watched benchmarks broke
records during the period: slow
growth and the prospect of higher
taxes helped push the yield on the
30-year Treasury below 6% in
early September; meanwhile, the
Dow closed above 3700 for the
first time in mid-November, and
finished the month at 3684.
An Interview with Brian S. Posner, Portfolio Manager of Fidelity
Equity-Income II Fund
Q. BRIAN, HOW HAS THE FUND PERFORMED DURING THE LAST YEAR?
A. For the 12 months ended November 30, 1993, the fund delivered a total
return of 19.08%. That was ahead of the average equity-income fund's
return, which was 13.66% according to Lipper Analytical Services. The fund
also outpaced the Standard and Poor's 500 index, which gained 10.10%.
Q. WHAT DROVE THE FUND'S PERFORM-ANCE DURING THE PERIOD?
A. The fund's gains came from a broad cross-section of stocks. For example,
we profited by investing in companies in the oil and gas industry that are
cutting costs or have the potential to increase their production. One of
our largest holdings was British Petroleum, which accounts for 3.2% of the
fund's investments and was a strong performer. The fund also owned stock in
companies such as Apache and Parker & Parsley, which benefited from
strong natural gas prices. I continued to invest heavily in banks and
S&Ls, although I became more selective as share prices of financial
services firms rose during the year. Among banks, I concentrated on firms
such as Citicorp, whose stock price rose sharply as investors recognized
the enormous improvement in the company's balance sheet and its growing
earnings power. Among S&Ls, the fund owned shares of financially strong
companies such as Standard Federal Bank, a Michigan-based S&L, which
was also a strong performer. Ford and Chrysler also contributed to the
fund's performance.
Q. THE FUND'S ASSET SIZE HAS MORE THAN DOUBLED THIS YEAR, FROM $1.9 BILLION
TO $4.8 BILLION. SHOULD SHAREHOLDERS BE CONCERNED THAT THIS GROWTH WILL
AFFECT PERFORMANCE?
A. As the fund becomes larger, it is somewhat more difficult to buy and
sell shares of small companies without influencing their prices in ways
that penalize the fund's returns. But because I invest with a 12- to
24-month horizon, I can move gradually into or out of those issues, which
helps alleviate that problem. Overall, I feel that any impact on
performance resulting from the fund's growth has been minimal.
Q. ANY DISAPPOINTMENTS?
A. Aluminum stocks such as Reynolds Metals have been very frustrating.
Aluminum is one commodity that looks like it should rise in price in the
foreseeable future. Worldwide demand is going up and production capacity
down. Meanwhile, the stocks are much cheaper than other commodity-based
stocks where the outlook for price increases isn't nearly as good. So far,
the problem has been that the Russians are producing far more aluminum than
they can use and dumping the excess on the world market. I expect that this
scenario should improve over the next one to two years, so I'm sticking
with these stocks.
Q. THE FUND'S STAKE IN TRANSPORTATION STOCKS HAS MOVED UP SHARPLY IN RECENT
MONTHS, TO OVER 5%. WHY?
A. I recently invested in the convertible preferred stocks issued by UAL
and AMR, the parent corporations of United and American Airlines,
respectively. The airline industry has finally started to cut back on
capacity, which should help bolster prices and profitability. In addition,
there is a renewed interest in controlling general operating costs. I
bought the convertible issues because they were attractively priced
relative to the common stocks. If the stocks rise, the fund should
participate in most of those gains through the convertibles. And while we
wait for that to happen, the fund will collect higher yields on the
convertibles than it would if I bought the common shares themselves.
Q. WHAT ROLE HAVE OVERSEAS STOCKS PLAYED IN THE FUND?
A. Foreign stocks account for roughly 19% of the fund's investments. I
don't aim to invest a set percentage of the fund's assets overseas. Instead
I take a stock-by-stock approach, just as I do in the U.S. During the year,
I found opportunities on a selective basis in Canada and the United
Kingdom, among other countries. For example, British financial stocks such
as Barclays Bank and National Westminster were very strong performers.
Q. WHAT'S THE OUTLOOK FOR THE FUND?
A. Unlike last year, in which rates fell to levels not seen in a
generation, the next 12 months are likely to bring relatively stable
interest rates. Investors should therefore be prepared for more modest
returns than those they may have enjoyed in recent years in both the stock
and bond markets. In addition, stock market valuations - as measured by
yardsticks like price-to- earnings ratios - have become quite high. In such
an environment, I intend to focus more on companies with solid business
prospects and relatively low valuations.
FUND FACTS
GOAL: to provide current
income and increase the
value
of the fund's shares
START DATE: August 21, 1990
SIZE: as of November 30,
1993, over $4.8 billion
MANAGER: Brian S. Posner,
since April 1992; manager,
Fidelity Value Fund, October
1990 - June 1992; Select
Energy Portfolio, 1990
(checkmark)

BRIAN S. POSNER ON HIS
INVESTMENT STRATEGY:
"I don't try to figure out what
sector of the economy or the
stock market is going to do
well. Instead, I take a very
stock-specific approach. In the
long run, that strategy works
best because it makes me
more familiar with the individual
stocks in the fund, so I know
why the fund owns them and
what they're worth. That way, I
have a very clear idea of when
to sell them or when to buy
more.
"The fund must invest at least
two-thirds of its assets in
securities that pay a dividend.
At the end of November the
figure was 74%. At times the
fund will invest in stocks that do
not pay a dividend, if I think
they can provide a superior
total return. An example of
such an investment is HCA -
Hospital Corporation of
America, which has done an
excellent job of reducing
operating costs and interest
expense, and has recently
agreed to be acquired by
Columbia Healthcare. "
(bullet) As of November 30, 1993,
the fund held 6.3% of its assets
in fixed- income securities,
including a 2.2% position in
bonds rated below investment
grade. It also held 19.9% of its
assets in cash.
DISTRIBUTIONS
The Board of Trustees of
Fidelity Equity-Income II Fund
voted to pay on December 20,
1993, to shareholders of
record at the opening of
business on December 17,
1993, a distribution of $.68
derived from capital gains
realized from sales of portfolio
securities and a dividend of
$.18 from net investment
income.
INVESTMENT CHANGES

TOP TEN STOCKS AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

British Petroleum PLC 3.2 3.0

Grace (W.R.) & Co. 1.8 1.1

HCA - Hospital Corporation of
America 1.3 0.9

Bank of New York, Inc. 1.3 1.5

Philip Morris Companies, Inc. 1.2 0.0

Litton Industries, Inc. 1.2 0.6

AMR Corp. $3.00 1.1 1.0

Reynolds Metals Co. 1.1 1.0

Canadian Pacific Ltd. Ord. 1.1 0.6

Dayton Hudson Corp. 1.1 0.4

TOP FIVE INDUSTRIES AS OF NOVEMBER 30, 1993
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE INDUSTRIES
6 MONTHS AGO

Finance 17.7 18.2

Basic Industries 11.7 11.8

Energy 12.2 12.6

Conglomerates 5.8 4.8

Transportation 5.0 4.2

ASSET ALLOCATION
AS OF NOVEMBER 30, 1993* AS OF MAY 31, 1993*
Row: 1, Col: 1, Value: 19.9
Row: 1, Col: 2, Value: 6.7
Row: 1, Col: 3, Value: 4.5
Row: 1, Col: 4, Value: 34.45
Row: 1, Col: 5, Value: 34.45
Row: 1, Col: 1, Value: 16.6
Row: 1, Col: 2, Value: 8.1
Row: 1, Col: 3, Value: 4.2
Row: 1, Col: 4, Value: 35.55
Row: 1, Col: 5, Value: 35.55
Stocks 68.9%
Bonds 4.5%
Convertible
securities 6.7%
Short-term invest-
ments and other 19.9%
FOREIGN
INVESTMENTS 19.0%
Stocks 71.1%
Bonds 4.2%
Convertible
securities 8.1%
Short-term invest-
ments and other 16.6%
FOREIGN
INVESTMENTS 16.9%

*
*
INVESTMENTS NOVEMBER 30, 1993

Showing Percentage of Total Value of Investments

COMMON STOCKS - 68.7%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.6%
Flightsafety International, Inc. 505,000 $ 17,170 33942310
Martin Marietta Corp. 311,800 12,784 57290010
29,954
BASIC INDUSTRIES - 11.1%
CHEMICALS & PLASTICS - 4.3%
Akzo NV Ord. 141,600 13,094 01019910
Ferro Corp. 18,000 554 31540510
GEON 91,000 2,093 37246W10
Goodrich (B.F.) Company 83,400 3,638 38238810
Grace (W.R.) & Co. 2,284,500 89,095 38388310
Imperial Chemical Industries:
PLC ADR 116,100 5,239 45270450
Ord. 2,881,300 32,069 45270440
Lubrizol Corp. 102,800 3,290 54927110
Lyondell Petrochemical Co. 152,300 3,065 55207810
Monsanto Co. 172,500 11,730 61166210
OM Group, Inc. (b) 223,500 4,191 67087210
Potash Corp. of Saskatchewan 1,025,900 21,409 73755L10
Union Carbide Corp. 702,300 14,573 90558110
Vigoro Corp. 481,600 13,545 92675410
217,585
IRON & STEEL - 1.7%
Allegheny Ludlum Industries, Inc. 1,018,300 23,803 01690010
British Steel PLC:
ADR 13,200 239 11101530
Ord. 8,323,300 15,089 11101510
Cleveland Cliffs, Inc. 103,800 3,438 18589610
Inland Steel Industries, Inc. (b) 307,700 10,000 45747210
LTV Corp. (b) 799,400 11,591 50192110
USX-U.S. Steel Group 353,000 12,708 90337T10
Wheeling Pittsburgh Corp. (b) 650,000 10,725 96314210
87,593
METALS & MINING - 2.4%
Alcan Aluminum Ltd. 1,858,300 38,606 01371610
Alumax, Inc. 475,500 9,213 02219710
Aluminum Co. of America 96,308 6,669 02224910
De Beers Consolidated Mines Ltd. ADR 440,000 8,195 24025330
Reynolds Metals Co. 1,230,200 55,205 76176310
117,888
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PACKAGING & CONTAINERS - 0.2%
Owens-Illinois, Inc. (b) 686,800 $ 7,641 69076840
PAPER & FOREST PRODUCTS - 2.5%
Champion International Corp. 672,600 20,683 15852510
Chesapeake Corp. 314,100 7,578 16515910
Georgia-Pacific Corp. 157,000 11,540 37329810
International Paper Co. 372,000 24,831 46014610
Pentair, Inc. 295,350 10,411 70963110
Repola OY 753,500 11,661 75999A92
Temple-Inland, Inc. 232,600 11,775 87986810
Union Camp Corp. 354,800 16,498 90553010
Willamette Industries, Inc. 238,900 11,467 96913310
126,444
TOTAL BASIC INDUSTRIES 557,151
CONGLOMERATES - 5.3%
Allied-Signal, Inc. 82,400 5,861 01951210
Canadian Pacific Ltd. Ord. 3,314,900 54,287 13644030
Christies International PLC 540,000 1,645 17099892
Dial Corp. (The) 507,800 19,487 25247010
GenCorp, Inc. 235,800 3,272 36868210
Hanson Trust PLC sponsored ADR 2,204,000 46,284 41135230
Litton Industries, Inc. (b) 924,068 60,295 53802110
Mark IV Industries, Inc. 188,527 3,558 57038710
Standex International Corp. 261,900 6,482 85423110
Suncor, Inc. 245,000 5,411 86722910
Textron, Inc. 771,200 42,512 88320310
United Technologies Corp. 278,000 17,201 91301710
266,295
CONSTRUCTION & REAL ESTATE - 1.6%
BUILDING MATERIALS - 0.7%
Armstrong World Industries, Inc. 389,000 17,845 04247610
BPB Industries PLC 498,000 2,061 05562299
Lafarge Corp. 161,200 3,224 50586210
Medusa Corp. 221,550 5,594 58507230
USG Corp. (b) 276,700 6,883 90329340
35,607
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
CONSTRUCTION - 0.1%
Lennar Corp. 120,000 $ 3,570 52605710
ENGINEERING - 0.2%
EG&G, Inc. 671,200 11,914 26845710
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Associated Estates Realty Corp. REIT 65,600 1,312 04560410
Bradley Real Estate Trust (SBI) 450,000 3,712 10458310
Carr Realty Corp. 132,700 3,102 14441K10
Crown American Realty Trust (SBI) 114,500 1,861 22818610
Developers Diversified Realty 100,000 2,700 25159110
Excel Realty Trust, Inc. 41,300 785 30067R10
Federal Realty Investment Trust 47,100 1,242 31374720
Kimco Realty Corporation 2,500 80 49446R10
LTC Properties, Inc. 103,400 1,318 50217510
Nationwide Health Properties, Inc. 20,800 785 63862010
New Plan Realty Trust 32,127 743 64805910
Taubman Centers, Inc. 142,500 1,799 87666410
Urban Shopping Centers, Inc. REIT (b) 87,000 1,827 91706010
Vornado Realty Trust 84,400 3,144 92904210
Weingarten Realty Investors (SBI) 37,800 1,441 94874110
Western Investment Real Estate Trust (SBI) 87,100 1,176 95846810
27,027
TOTAL CONSTRUCTION & REAL ESTATE 78,118
DURABLES - 0.6%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Volvo Aktiebolaget Class B (b) 90,000 4,402 92885630
CONSUMER ELECTRONICS - 0.3%
Newell Co. 216,900 8,730 65119210
Sony Corp. 134,000 5,738 83569999
14,468
TEXTILES & APPAREL - 0.2%
Kellwood Co. 90,800 3,450 48804410
Stride Rite Corp. 291,600 5,394 86331410
Unifi, Inc. 179,600 4,468 90467710
13,312
TOTAL DURABLES 32,182
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 10.9%
COAL - 0.1%
Pittston Co. Minerals Group 313,920 $ 6,985 72570120
ENERGY SERVICES - 2.1%
BJ Services Co. 146,300 3,219 05548210
Baker Hughes, Inc. 539,000 10,713 05722410
Enterra Corp. (b) 61,300 1,103 29380510
Halliburton Co. 1,070,400 33,049 40621610
Offshore Logistics, Inc. (b) 142,500 2,173 67625510
Schlumberger Ltd. 777,900 44,729 80685710
Smith International, Inc. (b) 173,000 1,535 83211010
Tidewater, Inc. 302,500 6,050 88642310
102,571
OIL & GAS - 8.7%
Amerada Hess Corp. 1,104,400 51,493 02355110
Apache Corp. 224,000 4,900 03741110
British Borneo Petroleum 154,500 475 11099D22
British Petroleum PLC:
ADR 2,425,900 143,735 11088940
Ord. 3,397,225 16,760 11088910
Burlington Resources, Inc. 412,600 18,567 12201410
Louisiana Land & Exploration Co. 251,200 9,954 54626810
Murphy Oil Corp. 817,400 32,798 62671710
Newfield Exploration Co. (b) 167,000 2,735 65129010
Noble Affiliates, Inc. 191,988 4,752 65489410
Norsk Hydro A.S. 225,000 6,364 65653150
Norsk Hydro A.S. ADR (b) 266,200 7,420 65653160
Occidental Petroleum Corp. 815,000 14,466 67459910
Parker & Parsley Petroleum Co. 200,100 4,102 70101810
Petro-Canada 200,000 1,797 71644E10
Petroleum Heat & Power, Inc. Class A 537,700 5,243 71660030
Repsol SA sponsored ADR 586,700 16,794 76026T20
Royal Dutch Petroleum Co. 517,203 52,238 78025770
Total Compagnie Francaise des Petroles Class B (b) 676,028 34,420
20434510
Total SA sponsored ADR (b) 161,467 4,097 89151E10
YPF Sociedad Anonima sponsored ADR representing
Class D shares 205,500 5,086 98424510
438,196
TOTAL ENERGY 547,752
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 14.5%
BANKS - 5.5%
BNP CI Ord. 137,700 $ 6,586 05599996
Banco de Santander Ord. (Reg.) 50,000 2,172 05957410
Banco Central SA (Reg.) 107,300 2,334 05947010
Banco Popular Espanol 57,700 6,318 05999110
Bank of Boston Corp. 2,226,357 48,423 06071610
Bank of Ireland U.S. Holdings Inc. 2,985,000 12,220 06278793
Bank of New York Co., Inc. 1,163,632 64,581 06405710
BanPonce Corp. 301,262 8,963 06670410
Barclays PLC Ord. 2,115,000 18,386 06738E10
Citicorp (b) 832,000 29,536 17303410
First Empire State Corp. 86,100 12,011 32007610
First Fidelity Bancorporation 1,003,414 42,018 32019510
NationsBank Corp. 221,615 10,444 63858510
Westpac Banking Corp. 4,750,726 13,309 96121410
277,301
CREDIT & OTHER FINANCE - 2.7%
American Express Co. 665,000 20,864 02581610
Argentaria Corp. Bancaria de Espana (b) 167,400 7,153 21991392
Beneficial Corp. 524,600 38,689 08172110
Corporacion Bancaria de Espana
SA sponsored ADR (b) 267,000 5,741 21991310
Dean Witter Discover & Co. 291,924 11,093 24240V10
GFC Financial Corp. 719,900 19,437 36160910
Household International, Inc. 615,105 20,298 44181510
Primerica Corp. 241,724 9,669 74158910
132,944
FEDERAL SPONSORED CREDIT - 1.1%
Federal Home Loan Mortgage Corporation 909,600 43,661 31340030
Federal National Mortgage Association 50,000 3,775 31358610
Student Loan Marketing Association 150,000 6,675 86387150
54,111
INSURANCE - 3.7%
ACE Ltd. 683,600 19,910 00499G92
Allstate Corp. (b) 720,100 21,243 02000210
American Bankers Insurance Group, Inc. 326,400 7,834 02445610
American General Corp. 237,200 6,375 02635110
American Reinsurance Corp. (b) 65,900 1,779 02916310
Capital Holding Corp. 465,900 17,821 14018610
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Exel Ltd. 446,200 $ 19,354 30161610
Loews Corp. 520,600 48,155 54042410
Midocean Reinsurance Ord. (b) 300,000 6,413 59899993
Penncorp. Financial Group, Inc. 309,900 5,888 70809410
Sedgwick Group 585,621 1,653 81482610
St. Paul Companies, Inc. (The) 274,000 24,317 79286010
Torchmark Corp. 52,500 2,310 89102710
Willis Coroon PLC Ord. (b) 352,000 1,242 97062410
184,294
SAVINGS & LOANS - 1.3%
Ahmanson (H.F.) & Co. 1,544,700 29,156 00867710
Golden West Financial Corp. 172,700 6,671 38131710
Standard Federal Bank 1,073,600 30,866 85338910
66,693
SECURITIES INDUSTRY - 0.2%
Paine Webber Group, Inc. 467,600 12,450 69562910
TOTAL FINANCE 727,793
HEALTH - 2.1%
DRUGS & PHARMACEUTICALS - 0.3%
Upjohn Co. 473,700 14,803 91530210
MEDICAL EQUIPMENT & SUPPLIES - 0.1%
Johnson & Johnson 100,000 4,363 47816010
MEDICAL FACILITIES MANAGEMENT - 1.7%
Columbia Healthcare Corp. 659,900 19,137 19767910
HCA - Hospital Corporation of America Class A (b) 2,191,400 64,646
40412010
83,783
TOTAL HEALTH 102,949
INDUSTRIAL MACHINERY & EQUIPMENT - 3.2%
ELECTRICAL EQUIPMENT - 1.3%
Alcatel Alsthom CGE 65,000 8,523 01390492
General Electric Co. 332,100 32,629 36960410
Itel Corp. (b) 95,554 2,449 46564210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
Philips Electronics 869,700 $ 16,907 71833799
Philips NV (NY shs.) (b) 314,000 6,123 71833750
66,631
INDUSTRIAL MACHINERY & EQUIPMENT - 1.9%
Caterpillar, Inc. 603,400 51,439 14912310
Deere & Co. 298,000 21,121 24419910
Tenneco, Inc. 468,500 22,547 88037010
95,107
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 161,738
MEDIA & LEISURE - 1.2%
LEISURE DURABLES & TOYS - 0.2%
Huffy Corp. 188,100 3,409 44435610
Outboard Marine Corp. 290,700 5,596 69002010
9,005
PUBLISHING - 1.0%
Dow Jones & Co Inc. 474,800 17,033 26056110
MaClean Hunter Ltd. 1,151,200 10,234 55474980
Times Mirror Co., Series A 755,400 23,607 88736010
50,874
TOTAL MEDIA & LEISURE 59,879
NONDURABLES - 3.8%
BEVERAGES - 0.2%
Seagram Co. Ltd. 367,100 10,169 81185010
FOODS - 1.2%
ConAgra, Inc. 1,531,400 40,965 20588710
Dole Food, Inc. 749,200 19,573 25660510
60,538
HOUSEHOLD PRODUCTS - 0.9%
Avon Products, Inc. 628,800 31,361 05430310
Orkla AS:
Class A Free shares 206,500 7,308 39299193
Class B (non-vtg.) 178,450 6,100 39299192
Stanhome, Inc. 21,300 708 85442510
45,477
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
TOBACCO - 1.5%
American Brands, Inc. 115,300 $ 3,963 02470310
Imasco Ltd. 320,300 9,202 45245170
Philip Morris Companies, Inc. 1,084,300 60,586 71815410
RJR Nabisco Holdings Corp. (b) 223,100 1,450 74960K10
75,201
TOTAL NONDURABLES 191,385
RETAIL & WHOLESALE - 4.2%
APPAREL STORES - 1.0%
Charming Shoppes, Inc. 997,500 13,466 16113310
Edison Brothers Stores, Inc. 351,300 11,110 28087510
Limited, Inc. (The) 1,155,000 26,276 53271610
50,852
GENERAL MERCHANDISE STORES - 2.2%
Dayton Hudson Corp. 753,800 53,803 23975310
Dillard Department Stores, Inc. Class A 410,500 16,933 25406310
Federated Department Stores, Inc. (b) 777,600 17,010 31410J10
Penney (J.C.) Co., Inc. 200,000 10,675 70816010
Sears, Roebuck & Co. 150,400 8,178 81238710
106,599
GROCERY STORES - 0.8%
American Stores Co. 190,300 7,874 03009610
Great Atlantic & Pacific Tea Co., Inc. 1,054,300 29,256 39006410
Stop & Shop Companies, Inc. (b) 168,400 2,947 86209910
40,077
RETAIL & WHOLESALE, MISCELLANEOUS - 0.2%
Sotheby's Holdings, Inc. Class A 743,500 10,967 83589810
Wolohan Lumber Co. 95,860 1,486 97786510
12,453
TOTAL RETAIL & WHOLESALE 209,981
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 0.4%
ADVERTISING - 0.1%
Saatchi & Saatchi Co. (b):
sponsored ADR 182,300 $ 1,413 78514340
PLC Ord. 2,027,600 5,423 78514310
6,836
PRINTING - 0.3%
Harland (John H.) Co. 358,200 8,238 41269310
Nashua Corp. 87,500 2,352 63122610
Standard Register Co. 90,400 1,831 85388710
12,421
TOTAL SERVICES 19,257
TECHNOLOGY - 2.1%
COMPUTERS & OFFICE EQUIPMENT - 0.9%
Comdisco, Inc. 591,500 10,869 20033610
Digital Equipment Corp. (b) 510,000 18,806 25384910
Stratus Computer, Inc. (b) 357,100 9,597 86315510
Tandem Computers, Inc. (b) 539,300 5,595 87537010
44,867
ELECTRONICS - 0.4%
Hitachi, Ltd. 2,641,000 18,597 43357810
PHOTOGRAPHIC EQUIPMENT - 0.8%
Polaroid Corp. 1,147,100 40,579 73109510
TOTAL TECHNOLOGY 104,043
TRANSPORTATION - 2.7%
RAILROADS - 2.7%
Burlington Northern, Inc. 206,000 11,819 12189710
CSX Corp. 339,700 28,195 12640810
Chicago & North Western Holdings Corp. (b) 892,300 21,192 16715510
Illinois Central Corp., Series A 1,045,800 34,642 45184110
Union Pacific Corp. 603,200 38,304 90781810
134,152
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 4.4%
ELECTRIC UTILITY - 3.9%
Central & South West Corp. 521,700 $ 15,521 15235710
DPL, Inc. 341,250 6,612 23329310
DQE, Inc. 202,100 6,821 23329J10
Entergy Corp. 1,315,100 48,494 29364F10
Houston Industries, Inc. 558,600 25,346 44216110
Illinois Power Co. 1,103,000 24,266 45209210
NIPSCO Industries, Inc. 594,400 18,872 62914010
Niagara Mohawk Power Corp. 113,800 2,333 65352210
PSI Resources, Inc. 209,200 5,387 69363210
PacifiCorp. 707,500 13,443 69511410
Pinnacle West Capital Corp. (b) 251,700 5,317 72348410
Rochester Gas & Electric Corp. 203,100 5,331 77136710
Texas Utilities Co. 360,657 15,418 88284810
Union Electric Co. 122,700 4,739 90654810
197,900
GAS - 0.4%
MCN Corp. 50,000 1,738 55267J10
Pacific Enterprises 153,000 3,921 69423210
UGI Corporation 172,354 3,770 90268110
Westcoat Energy, Inc. 770,000 12,682 95751D10
22,111
TELEPHONE SERVICES - 0.1%
Comsat Corp., Series 1 95,000 3,004 20564D10
TOTAL UTILITIES 223,015
TOTAL COMMON STOCKS
(Cost $3,152,762) 3,445,644
PREFERRED STOCKS - 5.1%
CONVERTIBLE PREFERRED STOCKS - 4.9%
BASIC INDUSTRIES - 0.2%
METALS & MINING - 0.2%
Alumax, Inc., Series A, $4.00 98,166 9,129 02219720
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
DURABLES - 0.8%
AUTOS, TIRES, & ACCESSORIES - 0.8%
Chrysler Corp., Series A, $4.625 (e) 45,100 $ 6,697 17119670
Ford Motor Co. (Del.), Series A, $4.20 331,100 33,938 34537020
40,635
ENERGY - 0.9%
OIL & GAS - 0.9%
Occidental Petroleum Corp. $3.875 (e) 305,000 16,318 67459982
Unocal Corp. $3.50 (b)(e) 504,600 29,266 91528920
45,584
FINANCE - 0.9%
BANKS - 0.9%
Citicorp $5.375 (b)(e) 432,300 46,040 17303451
SAVINGS & LOANS - 0.0%
California Federal Bank, Series A, $1.94 19,200 324 13020940
TOTAL FINANCE 46,364
NONDURABLES - 0.1%
TOBACCO - 0.1%
RJR Nabisco Holdings Corp., Series A,
depositary shares representing 1/4 share (b) 830,200 5,708 74960K40
TRANSPORTATION - 2.0%
AIR TRANSPORTATION - 2.0%
AMR Corp. $3.00 (b)(e) 1,110,300 57,458 00176588
UAL, Inc. (cumulative) 6 1/4% (e) 360,100 42,267 90254930
99,725
TOTAL CONVERTIBLE PREFERRED STOCKS 247,145
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONCONVERTIBLE PREFERRED STOCKS - 0.2%
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd. sr. Series 1, adj. rate 410,232 $ 1,077
40218L40
Gulf Canada Resources Ltd. (b)(d) 11,768 34 40218L92
1,111
FINANCE - 0.2%
SAVINGS & LOANS - 0.2%
Ahmanson (H.F.) & Co. depositary shares
representing 1/2 share pref. B 9.6% 265,161 7,159 00867730
TOTAL NONCONVERTIBLE PREFERRED STOCKS 8,270
TOTAL PREFERRED STOCKS
(Cost $227,004) 255,415
CORPORATE BONDS - 4.7%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNTS (B) (000S) (000S)
CONVERTIBLE BONDS - 1.8%
CONGLOMERATES - 0.2%
American Group Ltd.:
euro 6 1/4%, 6/15/03 - $ 2,000 1,830 0235129B
6 1/4%, 6/15/03 (e) - 5,000 4,475 023512AA
Gencorp, Inc. 8%, 8/1/02 Ba3 2,000 2,255 368682AC
8,560
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Sizeler Property Investors, Inc.
8%, 7/15/03 - 1,000 1,008 830137AA
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Magna International, Inc.
10%, 5/1/01 (e) - 1,345 6,819 559222AC
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
ENERGY - 0.1%
OIL & GAS - 0.1%
Alaska Intermediate 8 1/4%,
12/1/95 - $ 300 $ 299 9047889B
USX-Marathon Group
0%, 8/9/05 BB 4,000 1,685 902905AG
1,984
FINANCE - 0.7%
BANKS - 0.6%
Banco Santander euro 9%,
6/24/94 A ESP 310,000 2,535 0595749B
Bank of New York Co., Inc.
7 1/2%, 8/15/01 A2 18,000 27,945 064057AK
30,480
CREDIT & OTHER FINANCE - 0.1%
Lend Lease Finance International Ltd. gtd.
bond 4 3/4%, 6/1/03 (e) Aa 3,550 4,020 526025AA
TOTAL FINANCE 34,500
MEDIA & LEISURE - 0.1%
BROADCASTING - 0.1%
Time Warner, Inc. liquid yield option 0%,
6/22/13 BBB 8,055 3,303 887315AS
PUBLISHING - 0.0%
News Corp./Pearson euro 5%, 3/15/99 - DEM 3,175 2,129 7050999B
TOTAL MEDIA & LEISURE 5,432
RETAIL & WHOLESALE - 0.0%
GENERAL MERCHANDISE STORES - 0.0%
Caseys General Stores Inc. 6 1/4%,
5/1/12 B 700 820 147528AA
SERVICES - 0.2%
Manpower, Inc. 6 1/4%, 10/1/02 (e) Ba 11,540 12,463 56418HAA
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.1%
PHOTOGRAPHIC EQUIPMENT - 0.1%
Eastman Kodak Co. liquid yield option 0%,
10/15/11 Baa1 $ 17,000 $ 5,971 277461BA
TRANSPORTATION - 0.3%
AIR TRANSPORTATION - 0.3%
Alaska Air Group, Inc. liquid yield option 0%,
4/18/06 B 27,500 10,656 011659AC
TRUCKING & FREIGHT - 0.0%
Builders Transport, Inc. 8%, 8/15/05 B 618 609 120084AA
TOTAL TRANSPORTATION 11,265
TOTAL CONVERTIBLE BONDS 88,822
NONCONVERTIBLE BONDS - 2.9%
BASIC INDUSTRIES - 0.4%
CHEMICALS & PLASTICS - 0.3%
du Pont (E.I.) de Nemours & Co. euro
9%, 7/18/94 Aa 2,000 2,060 263991AG
IMC Fertilizer Group, Inc.:
10 1/8, 6/15/01 B 10,000 10,400 449669AF
9.45%, 12/15/11 B 3,000 2,955 449669AB
15,415
IRON & STEEL - 0.1%
Inland Steel Industries, Inc. 12 3/4%,
12/15/02 Ba 4,000 4,575 457472AB
TOTAL BASIC INDUSTRIES 19,990
CONGLOMERATES - 0.3%
Coltec Industries, Inc. 10 1/4%, 4/1/02 Ba 6,750 7,155 196879AB
Sequa Corp. 10 1/2%, 5/1/98 B 6,300 6,536 817320AC
13,691
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.2%
BUILDING MATERIALS - 0.2%
USG Corp.:
10 1/4%, 12/15/02 B $ 2,500 $ 2,563 903293AK
10 1/4%, 12/15/02 B 8,000 8,200 903293AL
10,763
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Auburn Hills Trust gtd. exchangeable 15 7/8%,
5/1/20 Baa 1,100 1,656 050297AA
ENERGY - 0.3%
ENERGY SERVICES - 0.1%
TransTexas Gas Corp. 10 1/2%, 9/1/00 B 4,000 4,280 893895AA
OIL & GAS - 0.2%
Atlantic Richfield Co. notes 10 3/8%,
7/15/1995 A 500 544 048825AM
BP America, Inc. gtd. 10.15%, 3/15/96 A 1,500 1,662 055625AH
Chevron Corp. Profit Sharing/Savings Plan
Trust Fund gtd. 6.92%, 1/1/96 Aa 2,000 2,045 16675HAD
Mesa Capital Corp. (f):
0%, 6/30/96 - 2,000 1,600 590910AD
secured 0%, 6/30/98 - 7,500 6,450 590910AF
12,301
TOTAL ENERGY 16,581
FINANCE - 1.4%
BANKS - 0.1%
Keycorp 8.55%, 2/25/94 A2 1,000 1,011 49326EAF
Morgan (J.P.) & Co., Inc. 5 3/8%, 1/21/95 Aa 2,000 2,029 6168809D
Republic National Bank New York
5.20%, 1/17/95 Aa 2,000 2,021 760677BE
5,061
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 0.2%
AT&T Capital Corp. 5.22%, 2/18/94 Aa $ 2,000 $ 2,000 00206J9B
Chrysler Financial Corp. 9 1/2%, 12/15/99 Baa 5,000 5,773 171205CY
Exxon Capital Corp. gtd. 7 3/4%, 2/14/96 Aaa 2,000 2,127 302289AJ
9,900
INSURANCE - 1.0%
American Reinsurance 10 7/8%, 9/15/04 Baa 22,000 26,107 029163AA
ICH Corp. 9 3/4%, 8/31/94 B 2,500 2,556 449264AA
ITT Hartford Group, Inc. 7 1/4%, 12/1/96 A 1,500 1,585 45068HAB
Phoenix Reinsurance Corp. 9 3/4%, 08/15/03 Ba 5,300 5,565 719123AA
Reliance Group 9%, 11/15/00 Ba 13,900 14,039 759464AG
49,852
SAVINGS & LOANS - 0.1%
Coast Savings Financial, Inc. 10%, 4/1/00 B 4,000 4,210 19039MAA
TOTAL FINANCE 69,023
MEDIA & LEISURE - 0.0%
PUBLISHING - 0.0%
News America Holdings, Inc. 12%,
12/15/01 Ba 950 1,148 652478AB
NONDURABLES - 0.0%
BEVERAGES - 0.0%
Coca-Cola Company (The) 12 1/8%,
6/15/95 Aa 1,000 1,064 191216AB
TRANSPORTATION - 0.1%
AIR TRANSPORTATION - 0.1%
US Air, Inc. 9 5/8%, 9/1/94 Ba 4,000 4,030 91154RAB
UTILITIES - 0.2%
ELECTRIC UTILITY - 0.2%
Carolina Power & Light Co. 5.20%, 1/1/95 A 2,000 2,022 144141BU
Long Island Lighting Co. 10 1/4%, 6/15/94 Baa 2,000 2,060 542671CB
Ontario Hydro gtd. 9 1/4%, 5/1/95 Aa 1,000 1,066 683078DM
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (A) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
ELECTRIC UTILITY - CONTINUED
Philadelphia Electric Co. 1st & ref. mtg.
4 1/2%, 5/1/94 Baa $ 2,250 $ 2,250 717537AN
Southern California Edison Co. 5.55%, 2/1/95 Aa 2,000 2,030 842400CW
9,428
TOTAL NONCONVERTIBLE BONDS 147,374
TOTAL CORPORATE BONDS
(Cost $225,352) 236,196
U.S. TREASURY OBLIGATIONS - 8.1%
Bills, Yields at date of purchase,
3.13% - 3.15%, 2/4/94 to 2/24/94 400,000 396,878 99399H5Q
8 7/8%, 2/15/94 Aaa 50 51 912827WY
9 1/2%, 10/15/94 Aaa 3,000 3,149 912827VK
9 1/4%, 1/15/96 Aaa 2,000 2,201 912827XB
7 7/8% 7/31/96 Aaa 2,000 2,168 912827B7
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $404,712) 404,447
FOREIGN GOVERNMENT OBLIGATIONS - 1.4%
Canadian Government:
7 1/2%, 3/6/94 Aaa CAD 1,800 1,359 136992JQ
8 1/4%, 3/1/97 Aaa CAD 1,200 969 136992JW
Mexican Government:
Adjustabono 7 3/4%, 1/20/94 - MXN 6,713 3,071 597998SK
Cetes 0%, 1/6/94 to 4/7/94 - MXN 201,894 63,319 597998TC
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $67,653) 68,718
COMMERCIAL PAPER - 0.3%
Bancomer SNC 0%, 2/3/94 MXN 32,319 10,142 05999KBE
Nacional Financiera SNC 0%, 6/2/94 MXN 21,973 6,629 66299CAH
TOTAL COMMERCIAL PAPER
(Cost $16,669) 16,771
REPURCHASE AGREEMENT - 11.7%
MATURITY VALUE (NOTE 1)
AMOUNT (000S)
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 3.24%
dated 11/30/93 due 12/1/93 $585,740 $ 585,687
TOTAL INVESTMENTS - 100.0%
(Cost $4,679,839) $ 5,012,878
CURRENCY TYPE ABBREVIATIONS
CAD - Canadian dollar
MXN - Mexican peso
ESP - Spanish peseta
DEM - German Deutsche mark
LEGEND
1. Principal amount is stated in United States dollars unless otherwise
noted.
2. Non-income producing
3. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
4. Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on this holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Gulf Canada
Resources, Ltd. 11/3/93 $ 29,000
5. 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 $225,823,000 or 4.7% of net
assets.
(f) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
OTHER INFORMATION
Distribution of investments by country, as a percentage of total value of
investments in securities, is as follows:
United States 81.0%
United Kingdom 5.9
Canada 3.5
Netherlands 2.7
Mexico 1.7
France 1.1
Others (individually less than 1%) 4.1
TOTAL 100.0%
INCOME TAX INFORMATION
At November 30, 1993, the aggregate cost of investment securities for
income tax purposes was $4,680,451,000. Net unrealized appreciation
aggregated $332,427,000, of which $435,609,000 related to appreciated
investment securities and $103,182,000 related to depreciated investment
securities.
The fund hereby designates $25,352,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) NOVEMBER 30, 1993

ASSETS 6. 7.

8.Investment in securities, at value (including 9. $ 5,012,878
repurchase agreements of $585,687) (cost
$4,679,839) (Notes 1 and 2) - See accompanying
schedule

10.Receivable for investments sold 11. 60,892

12.Receivable for fund shares sold 13. 17,092

14.Dividends receivable 15. 11,768

16.Interest receivable 17. 4,566

18.Other receivables 19. 19

20. TOTAL ASSETS 21. 5,107,215

LIABILITIES 22. 23.

24.Payable for investments purchased $ 277,725 25.

26.Payable for fund shares redeemed 10,512 27.

28.Accrued management fee 2,094 29.

30.Other payables and accrued expenses 1,990 31.

32. TOTAL LIABILITIES 33. 292,321

34.NET ASSETS 35. $ 4,814,894

36.Net Assets consist of: 37. 38.

39.Paid in capital 40. $ 4,227,817

41.Undistributed net investment income 42. 37,905

43.Accumulated undistributed net realized gain (loss) on 44. 216,133
investments

45.Net unrealized appreciation (depreciation) on 46. 333,039
investment securities

47.NET ASSETS, for 255,388 shares outstanding 48. $ 4,814,894

49.NET ASSET VALUE, offering price and redemption price 50. $18.85
per share ($4,814,894 (divided by) 255,388 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1993

INVESTMENT INCOME 52. $ 86,739
51.Dividends

53.Interest 54. 40,119

55. TOTAL INCOME 56. 126,858

EXPENSES 57. 58.

59.Management fee (Note 4) $ 18,696 60.

61.Transfer agent fees (Note 4) 10,129 62.

63.Accounting fees and expenses (Note 4) 762 64.

65.Non-interested trustees' compensation 21 66.

67.Custodian fees and expenses 363 68.

69.Registration fees 1,041 70.

71.Audit 96 72.

73.Legal 32 74.

75.Miscellaneous 335 76.

77. Total expenses before reductions 31,475 78.

79. Expense reductions (Note 5) (108) 31,367

80.NET INVESTMENT INCOME 81. 95,491

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 83. 207,418
(NOTES 1 AND 3)
82.Net realized gain (loss) on investment securities

84.Change in net unrealized appreciation (depreciation) 85. 234,493
on investment securities

86.NET GAIN (LOSS) 87. 441,911

88.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 89. $ 537,402
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEARS ENDED NOVEMBER 30,

1993 1992

INCREASE (DECREASE) IN NET ASSETS

90.Operations $ 95,491 $ 32,277
Net investment income

91. Net realized gain (loss) on investments 207,418 53,780

92. Change in net unrealized appreciation (depreciation) 234,493 94,616
on
investments

93. NET INCREASE (DECREASE) IN NET ASSETS RESULTING 537,402 180,673
FROM OPERATIONS

94.Distributions to shareholders from: (71,676) (19,098)
Net investment income

95. Net realized gain (45,921) (3,099)

96.Share transactions 3,502,848 1,977,114
Net proceeds from sales of shares

97. Reinvestment of distributions from: 69,446 18,507
Net investment income

98. Net realized gain 45,020 3,018

99. Cost of shares redeemed (1,164,550) (506,981)

100. 2,452,764 1,491,658
Net increase (decrease) in net assets resulting from
share transactions

101. 2,872,569 1,650,134
TOTAL INCREASE (DECREASE) IN NET ASSETS

NET ASSETS 102. 103.

104. Beginning of period 1,942,325 292,191

105. $ 4,814,894 $ 1,942,325
End of period (including undistributed net investment
income of $37,905 and $14,090, respectively)

OTHER INFORMATION 107. 108.
106.Shares

109. Sold 196,097 127,494

110. Issued in reinvestment of distributions from: 3,936 1,210
Net investment income

111. 2,746 216
Net realized gain

112. Redeemed (64,583) (32,792)

113. Net increase (decrease) 138,196 96,128

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
114. YEARS ENDED NOVEMBER 30, AUGUST 21, 1990
(COMMENCEMENT
OF OPERATIONS) TO
NOVEMBER 30,

115. 1993 1992 1991 1990

116. 117. 118. 119.

120.SELECTED PER-SHARE DATA

121.Net asset value, beginning of $ 16.57 $ 13.87 $ 10.18 $ 10.00
period

122.Income from Investment
Operations

123. Net investment income .44 .40 .45(dagger)(dagger) .03

124. Net realized and unrealized 2.62 2.75 3.76 .15
gain (loss) on investments

125. Total from investment 3.06 3.15 4.21 .18
operations

126.Less Distributions

127. From net investment income (.41) (.32) (.44) -

128. From net realized gain (.37) (.13) (.08) -

129. Total distributions (.78) (.45) (.52) -

130.Net asset value, end of period $ 18.85 $ 16.57 $ 13.87 $ 10.18

131.TOTAL RETURN (dagger) 19.08 23.18 42.01% 1.80%(double dagger)
% %

132.RATIOS AND SUPPLEMENTAL
DATA

133.Net assets, end of period (in $ 4,815 $ 1,942 $ 292 $ 3
millions)

134.Ratio of expenses to average .88 1.01 1.52% 2.50%*(double dagger)
net assets % %

135.Ratio of expenses to average .89 1.01 1.52% 2.50%*
net assets before expense % %
reductions (diamond)

136.Ratio of net investment income 2.69 3.09 3.83% 3.89%*
to average net assets % %

137.Portfolio turnover rate 55 89 206% 167%*
% %

</TABLE>

* ANNUALIZED
(double dagger) DURING THE PERIOD AUGUST 21, 1990 (COMMENCEMENT OF
OPERATIONS) TO NOVEMBER 30, 1990,
EXPENSES WERE LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD THIS LIMITATION NOT BEEN IN EFFECT.
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(dagger)(dagger) NET INVESTMENT INCOME PER SHARE REFLECTS $.12 PER SHARE
RELATING TO A NONRECURRING INITIATIVE TO INVEST IN DIVIDEND INCOME
PRODUCING SECURITIES WHICH WAS IN EFFECT FOR A PORTION OF 1991.
(diamond) SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1993

1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Equity-Income II Fund (the fund) is a fund of Fidelity Financial
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 following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange), are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general supervision
of the Board of Trustees. Short-term securities maturing within sixty days
are valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities, other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the current exchange rate. Purchases and sales of securities,
income receipts and expense payments are translated into U.S. dollars at
the exchange rate on the dates of the transactions.
It is not practical to identify the portion of each amount shown in the
fund's Statement of Operations under the caption "Realized and Unrealized
Gain (Loss) on Investments" that arises from changes in foreign currency
exchange rates. Investment income includes net realized and unrealized
currency gains and losses recognized between accrual and payment dates.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Dividend and
interest income is recorded net of foreign taxes where recovery of such
taxes is not assured.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may enter into forward foreign
currency contracts. These contracts involve market risk in excess of the
amount reflected in the fund's Statement of Assets and Liabilities. The
face or contract amount in U.S. dollars reflects the total exposure the
fund has in that particular currency contract. The U.S. dollar value of
forward foreign currency contracts is determined using forward currency
exchange rates supplied by a quotation service. Losses may arise due to
changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and presented net on the Statement of
Assets and Liabilities. Gain (loss) on the purchase or sale of forward
foreign currency contracts having the same settlement date and broker is
recognized on the date of offset, otherwise gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (SEC), the fund, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the
end of the period, restricted securities (excluding 144A issues) amounted
to $34,000 or 0.0% of net assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $3,531,065,000 and $1,621,122,000, respectively, of which sales
of U.S. government and government agency obligations aggregated
$36,389,000.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.31% to .52% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .20%.
For the period, the management fee was equivalent to an annual rate of .53%
of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .2850% to .5200% FMR has voluntarily agreed to implement this
new group fee rate schedule as it results in the same or a lower management
fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $23,000 for the
period.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $1,812,000 for the period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a portion of
the fund's expenses. For the period, the fund's expenses were reduced by
$108,000 under this arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Financial Trust and the Shareholders of
Fidelity Equity-Income II Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments (except for Moody's and Standard
& Poor's ratings), 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 II
Fund (a fund of Fidelity Financial Trust) at November 30, 1993, the results
of its operations for the year then ended, the changes in its net assets
and the financial highlights for the periods indicated in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fidelity Equity-Income II Fund's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities owned at November 30, 1993 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Boston, Massachusetts
January 6, 1994
TO CALL FIDELITY

Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Brian S. Posner, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
Robert H. Morrison, Manager,
Security Transactions
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Chase Manhattan Bank, N.A.
New York, NY
GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced
Growth & Income Portfolio
Market Index Fund
Puritan Fund
Real Estate Portfolio
Utilities Income Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Corporate Headquarters
82 Devonshire St., Boston, MA 02109
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE

EXHIBIT 5(J)
Form of
MANAGEMENT CONTRACT
between
FIDELITY FINANCIAL TRUST:
Fidelity Equity-Income II Fund
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 1st day of December, 1993,by and between Fidelity
Financial Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the "Fund"),
on behalf of Fidelity Equity-Income II Fund (hereinafter called the
"Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract dated
August 20, 1990, to a modification of said Contract in the manner set forth
below. The Modified Management Contract shall when executed by duly
authorized officers of the Fund and the Adviser, take effect on the later
of December 1, 1993 or the first day of the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are advantageous
to the Portfolio and at commission rates which are reasonable in relation
to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Fund review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee Rate and an Individual Fund
Fee Rate.
(a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
Group Fee Rate shall be determined on a cumulative basis pursuant to the
following schedule:
Average Net Assets Annualized Fee Rate (for each level)

0 - $ 3 billion .52%

3 - 6 .49

6 - 9 .46

9 - 12 .43

12 - 15 .40

15 - 18 .385

18 - 21 .37

21 - 24 .36

24 - 30 .35

30 - 36 .345

36 - 42 .34

42 - 48 .335

48 - 66 .325

66 - 84 .32

84 - 102 .315

102 - 138 .31

138 - 174 .305

Over 174 .30

(b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be .20%.
The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the
Annual Management Fee Rate. One-twelfth of the Annual Management Fee Rate
shall be applied to the average of the net assets of the Portfolio
(computed in the manner set forth in the Fund's Declaration of Trust)
determined as of the close of business on each business day throughout the
month.
In case of termination of this Contract during any month, the fee for that
month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
[SIGNATURE LINES OMITTED]

EXHIBIT 5(K)
FORM OF
MANAGEMENT CONTRACT
between
FIDELITY FINANCIAL TRUST:
FIDELITY CONVERTIBLE SECURITIES FUND
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 1st day of December, 1993 by and between Fidelity
Financial Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the "Fund"), on
behalf of Fidelity Convertible Securities Fund (hereinafter called the
"Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract
modified January 29, 1990, to a modification of said Contract in the manner
set forth below. The Modified Management Contract shall, when executed by
duly authorized officers of the Fund and the Adviser, take effect on the
later of December 1, 1993 or the first day of the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are advantageous
to the Portfolio and at commission rates which are reasonable in relation
to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Fund shall periodically review the commissions paid by
the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the
Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Basic Fee and a Performance
Adjustment to the Basic Fee based upon the investment performance of the
Portfolio in relation to the Merrill Lynch Convertible Securities Index
(the "Index"). The Basic Fee and the Performance Adjustment will be
computed as follows:
(a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum of the
Group Fee Rate and the Individual Fund Fee Rate calculated to the nearest
millionth decimal place as follows:
(i) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
Group Fee Rate shall be determined on a cumulative basis pursuant to the
following schedule:
Average Net Assets Annualized Fee Rate (for each level)

0 - $ 3 .520
billion

3 - 6 .490

6 - 9 .460

9 - 12 .430

12 - 15 .400

15 - 18 .385

18 - 21 .370

21 - 24 .360

24 - 30 .350

30 - 36 .345

36 - 42 .340

42 - 48 .335

48 - 66 .325

66 - 84 .320

84 - 102 .315

102 - 138 .310

138 - 174 .305

Over 174 .300

(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.20%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to the
average of the net assets of the Portfolio (computed in the manner set
forth in the Fund's Declaration of Trust) determined as of the close of
business on each business day throughout the month. The resulting dollar
amount comprises the Basic Fee. This Basic Fee will be subject to upward or
downward adjustment on the basis of the Portfolio's investment performance
as follows:
(c) Performance Adjustment Rate: The Performance Adjustment Rate is 0.02%
for each percentage point (the performance of the Portfolio and the Index
each being calculated to the nearest 0.01%) that the Portfolio's investment
performance for the performance period was better or worse than the record
of the Index as then constituted. The maximum performance adjustment rate
is 0.15%.
The performance period will commence with the effective date of this
Contract. During the first eleven months of the performance period for the
Portfolio, there will be no performance adjustment. Starting with the
twelfth month of the performance period, the performance adjustment will
take effect. Following the twelfth month a new month will be added to the
performance period until the performance period equals 36 months.
Thereafter the performance period will consist of the current month plus
the previous 35 months.
The Portfolio's investment performance will be measured by comparing (i)
the opening net asset value of one share of the Portfolio on the first
business day of the performance period with (ii) the closing net asset
value of one share of the Portfolio as of the last business day of such
period. In computing the investment performance of the Portfolio and the
investment record of the Index, distributions of realized capital gains,
the value of capital gains taxes per share paid or payable on undistributed
realized long-term capital gains accumulated to the end of such period and
dividends paid out of investment income on the part of the Portfolio, and
all cash distributions of the securities included in the Index, will be
treated as reinvested in accordance with Rule 205-1 or any other applicable
rules under the Investment Advisers Act of 1940, as the same from time to
time may be amended.
(d) Performance Adjustment. One-twelfth of the annual Performance
Adjustment Rate will be applied to the average of the net assets of the
Portfolio (computed in the manner set forth in the Fund's Declaration of
Trust or other organizational document) determined as of the close of
business on each business day throughout the month and the performance
period.
(e) In case of termination of this Contract during any month, the fee for
that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect for that month. The Basic Fee
Rate will be computed on the basis of and applied to net assets averaged
over that month ending on the last business day on which this Contract is
in effect. The amount of this Performance Adjustment to the Basic Fee will
be computed on the basis of and applied to net assets averaged over the
36-month period ending on the last business day on which this Contract is
in effect provided that if this Contract has been in effect less than 36
months, the computation will be made on the basis of the period of time
during which it has been in effect.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31,
1994 and indefinitely thereafter, but only so long as the continuance after
such date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.

[SIGNATURE LINES OMITTED]

EXHIBIT 5(L)
FORM OF
MANAGEMENT CONTRACT
between
FIDELITY FINANCIAL TRUST:
Fidelity Retirement Growth Fund
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 1st day of December 1993, by and between Fidelity
Financial Trust, a Massachusetts business trust which may issue one or more
series of shares of beneficial interest (hereinafter called the "Fund"), on
behalf of Fidelity Retirement Growth Fund (hereinafter called the
"Portfolio"), and Fidelity Management & Research Company, a
Massachusetts corporation (hereinafter called the "Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract
modified January 29, 1990, to a modification of said Contract in the
manner set forth below. The Modified Management Contract shall when
executed by duly authorized officers of the Fund and the Adviser, take
effect on the later of December 1, 1993 or the first day of the month
following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are advantageous
to the Portfolio and at commission rates which are reasonable in relation
to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Fund review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Basic Fee and a Performance
Adjustment to the Basic Fee based upon the investment performance of the
Portfolio in relation to the Standard & Poor's Daily Stock Price Index
of 500 Common Stocks (the "Index"). The Basic fee and the Performance
Adjustment will be computed as follows:
(a) Basic Fee Rate: The annual Basic Fee Rate shall be the sum of the
Group Fee Rate and the Individual Fund Fee Rate calculated to the nearest
millionth decimal place as follows:
(i) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
Group Fee Rate shall be determined on a cumulative basis pursuant to the
following schedule:
Average Net Assets Annualized Fee Rate (for each level)

0 - $ 3 .52
billion

3 - 6 .49

6 - 9 .46

9 - 12 .43

12 - 15 .40

15 - 18 .385

18 - 21 .37

21 - 24 .36

24 - 30 .35

30 - 36 .345

36 - 42 .34

42 - 48 .335

48 - 66 .325

66 - 84 .32

84 - 102 .315

102 - 138 .31

138 - 174 .305

Over 174 .30

(ii) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
.30%.
(b) Basic Fee. One-twelfth of the Basic Fee Rate shall be applied to the
average of the net assets of the Portfolio (computed in the manner set
forth in the Fund's Declaration of Trust ) determined as of the close of
business on each business day throughout the month. The resulting dollar
amount comprises the Basic Fee.
(c) Performance Adjustment Rate: The performance adjustment rate is
0.02% for each percentage point rounded to the nearer point (the higher
point if exactly one-half point) that the Portfolio's investment
performance for the performance period was better or worse than the record
of the Index as then constituted. The maximum performance adjustment rate
is 0.20%.
The performance period will commence with the first day of the first full
month following the Portfolio's commencement of operations. During the
first eleven months of the performance period for the Portfolio, there will
be no performance adjustment. Starting with the twelfth month of the
performance period, the performance adjustment will take effect. Following
the twelfth month a new month will be added to the performance period until
the performance period equals 36 months. Thereafter the performance period
will consist of the current month plus the previous 35 months.
The Portfolio's investment performance will be measured by comparing (i)
the opening net asset value of one share of the Portfolio on the first
business day of the performance period with (ii) the closing net asset
value of one share of the Portfolio as of the last business day of such
period. In computing the investment performance of the Portfolio and the
investment record of the Index, distributions of realized capital gains,
the value of capital gains taxes per share paid or payable on undistributed
realized long-term capital gains accumulated to the end of such period and
dividends paid out of investment income on the part of the Portfolio, and
all cash distributions of the companies whose stocks comprise the Index,
will be treated as reinvested in accordance with Rule 205-1 or any other
applicable rules under the Investment Advisers Act of 1940, as the same
from time to time may be amended.
The adjustment to the Basic Fee will not be cumulative. An increased fee
will result even though the performance of the Portfolio over some period
of time shorter than the performance period has been behind that of the
Index, and, conversely, a reduction in the fee will be made for a month
even though the performance of the Portfolio over some period of time
shorter than the performance period has been ahead of that of the Index.
(d) One-twelfth of the annual performance adjustment rate shall be
applied to the average of the net assets of the Portfolio (computed in the
manner set forth in the Fund's Declaration of Trust) determined as of the
close of business on each business day throughout the month and the
performance period. The resulting dollar amount is added to or deducted
from the basic fee.
(e) In case of termination of this Contract during any month, the fee
for that month shall be reduced proportionately on the basis of the number
of business days during which it is in effect for that month. The Basic Fee
Rate will be computed on the basis of and applied to net assets averaged
over that month ending on the last business day on which this Contract is
in effect. The amount of this performance adjustment to the Basic Fee will
be computed on the basis of and applied to net assets averaged over the
36-month period ending on the last business day on which this Contract is
in effect provided that if this Contract has been in effect less than 36
months, the computation will be made on the basis of the period of time
during which it has been in effect.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph 6, the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those
Trustees of the Fund who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust or
other organizational document and agrees that the obligations assumed by
the Fund pursuant to this Contract shall be limited in all cases to the
Portfolio and its assets, and the Adviser shall not seek satisfaction of
any such obligation from the shareholders or any shareholder of the
Portfolio or any other Portfolios of the Fund. In addition, the Adviser
shall not seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Adviser understands that the rights and
obligations of any Portfolio under the Declaration of Trust or other
organizational document are separate and distinct from those of any and all
other for Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY FINANCIAL TRUST
on behalf of Fidelity Retirement Growth Fund

By ___________________________________
Senior Vice President

FIDELITY MANAGEMENT & RESEARCH COMPANY

By ___________________________________
President

EXHIBIT 5(M)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY FINANCIAL TRUST ON BEHALF OF
FIDELITY EQUITY-INCOME II FUND
AGREEMENT made this 1st day of December, 1993, by Fidelity Management
& Research Company, a Massachusetts corporation with principal offices
at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the
"Advisor"); Fidelity Management & Research (Far East) Inc. (hereinafter
called the "Sub-Advisor"; and Fidelity Financial Trust, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of Fidelity
Equity-Income II Fund hereinafter called the "Portfolio."
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor acts as
investment manager to the Portfolio, and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries,
including securities issued in and issuers located in such countries, and
providing investment advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor,
the Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations, all as the Adviser may reasonably require. Such
information may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the Advisor,
manage all or a portion of the investments of the Portfolio in accordance
with the investment objective, policies and limitations provided in the
Portfolio's Prospectus or other governing instruments, as amended from time
to time, the Investment Company Act of 1940 (the "1940 Act") and rules
thereunder, as amended from time to time, and such other limitations as the
Trust or Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money, or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor, at its own expense,
shall place all orders for the purchase and sale of portfolio securities
for the Portfolio's account with brokers or dealers selected by the
Sub-Advisor, which may include brokers or dealers affiliated with the
Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to seek
to execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and to any
other accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts over
which it exercises investment discretion. The Trustees of the Trust shall
periodically review the commissions paid by the Portfolio to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph
(a) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal
to 105% of the Sub-Advisor's costs incurred in connection with rendering
the services referred to in subparagraph (a) of paragraph 1 of this
Agreement. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from time
to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1994 and
indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
[SIGNATURE LINES OMITTED]

EXHIBIT 5(N)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY FINANCIAL TRUST ON BEHALF OF
FIDELITY EQUITY-INCOME II FUND
AGREEMENT made this 1st day of December 1993 by Fidelity Management &
Research Company, a Massachusetts corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts (hereinafter called the
"Advisor"); Fidelity Management & Research (U.K.) Inc. (hereinafter
called the "Sub-Advisor"; and Fidelity Financial Trust, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of Fidelity
Equity-Income II Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor acts as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries,
including securities issued in and issuers located in such countries, and
providing investment advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor,
the Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations all as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the Advisor,
manage all or a portion of the investments of the Portfolio in accordance
with the investment objective, policies and limitations provided in the
Portfolio's Prospectus or other governing instruments, as amended from time
to time, the Investment Company Act of 1940 (the "1940 Act") and rules
thereunder, as amended from time to time, and such other limitations as the
Trust or Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor, at its own expense,
shall place all orders for the purchase and sale of portfolio securities
for the Portfolio's account with brokers or dealers selected by the
Sub-Advisor, which may include brokers or dealers affiliated with the
Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to seek
to execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and to any
other accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts over
which it exercises investment discretion. The Trustees of the Trust shall
periodically review the commissions paid by the Portfolio to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph
(a) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal
to 110% of the Sub-Advisor's costs incurred in connection with rendering
the services referred to in subparagraph (a) of paragraph 1 of this
Agreement. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from time
to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers or
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1) for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and that
directors, officers and stockholders of the Advisor or the Sub-Advisor are
or may be or become similarly interested in the Trust, and that the Advisor
or the Sub-Advisor may be or become interested in the Trust as a
shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1994
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed on their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
[SIGNATURE LINES OMITTED]

EXHIBIT 5(O)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY FINANCIAL TRUST ON BEHALF OF
FIDELITY CONVERTIBLE SECURITIES FUND
AGREEMENT made this 1st day of December, 1993 by Fidelity Management &
Research Company, a Massachusetts corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts (hereinafter called the
"Advisor"); Fidelity Management & Research (Far East) Inc. (hereinafter
called the "Sub-Advisor"); and Fidelity Financial Trust, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of Fidelity Convertible
Securities Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor acts as
investment manager to the Portfolio, and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries,
including securities issued in and issuers located in such countries, and
providing investment advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor,
the Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations, all as the Adviser may reasonably require. Such
information may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the Advisor,
manage all or a portion of the investments of the Portfolio in accordance
with the investment objective, policies and limitations provided in the
Portfolio's Prospectus or other governing instruments, as amended from time
to time, the Investment Company Act of 1940 (the "1940 Act") and rules
thereunder, as amended from time to time, and such other limitations as the
Trust or Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money, or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor, at its own expense,
shall place all orders for the purchase and sale of portfolio securities
for the Portfolio's account with brokers or dealers selected by the
Sub-Advisor, which may include brokers or dealers affiliated with the
Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to seek
to execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and to any
other accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts over
which it exercises investment discretion. The Trustees of the Trust shall
periodically review the commissions paid by the Portfolio to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph
(a) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal
to 105% of the Sub-Advisor's costs incurred in connection with rendering
the services referred to in subparagraph (a) of paragraph 1 of this
Agreement. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from time
to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1994 and
indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust' Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11 Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
[SIGNATURE LINES OMITTED]

EXHIBIT 5(P)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY FINANCIAL TRUST ON BEHALF OF
FIDELITY CONVERTIBLE SECURITIES FUND
AGREEMENT made this 1st day of December, 1993 by Fidelity Management
& Research Company, a Massachusetts corporation with principal offices
at 82 Devonshire Street, Boston, Massachusetts (hereinafter called the
"Advisor"); Fidelity Management & Research (U.K.) Inc. (hereinafter
called the "Sub-Advisor"; and Fidelity Financial Trust, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of Fidelity Convertible
Securities Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor acts as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries,
including securities issued in and issuers located in such countries, and
providing investment advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor,
the Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations all as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the Advisor,
manage all or a portion of the investments of the Portfolio in accordance
with the investment objective, policies and limitations provided in the
Portfolio's Prospectus or other governing instruments, as amended from time
to time, the Investment Company Act of 1940 (the "1940 Act") and rules
thereunder, as amended from time to time, and such other limitations as the
Trust or Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor, at its own expense,
shall place all orders for the purchase and sale of portfolio securities
for the Portfolio's account with brokers or dealers selected by the
Sub-Advisor, which may include brokers or dealers affiliated with the
Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to seek
to execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and to any
other accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts over
which it exercises investment discretion. The Trustees of the Trust shall
periodically review the commissions paid by the Portfolio to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph
(a) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be equal
to 110% of the Sub-Advisor's costs incurred in connection with rendering
the services referred to in subparagraph (a) of paragraph 1 of this
Agreement. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from time
to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers or
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1) for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and that
directors, officers and stockholders of the Advisor or the Sub-Advisor are
or may be or become similarly interested in the Trust, and that the Advisor
or the Sub-Advisor may be or become interested in the Trust as a
shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1994
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11. Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed on their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.

[SIGNATURE LINES OMITTED]

EXHIBIT 5(Q)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY FINANCIAL TRUST ON BEHALF OF
FIDELITY RETIREMENT GROWTH FUND
AGREEMENT made this 1st day of December 1993 by Fidelity Management &
Research Company, a Massachusetts corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts (hereinafter called the
"Advisor"); Fidelity Management & Research (Far East) Inc. (hereinafter
called the "Sub-Advisor"; and Fidelity Financial Trust, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of Fidelity Retirement
Growth Fund hereinafter called the "Portfolio".
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor acts as
investment manager to the Portfolio, and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various
countries,including securities issued in and issuers located in such
countries, and providing investment advisory services in connection
therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, ((the Trust)), the Advisor and the Sub-Advisor agree
as follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor,
the Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations, all as the Adviser may reasonably require. Such
information may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the Advisor,
manage all or a portion of the investments of the Portfolio in accordance
with the investment objective, policies and limitations provided in the
Portfolio's Prospectus or other governing instruments, as amended from time
to time, the Investment Company Act of 1940 (the "1940 Act") and rules
thereunder, as amended from time to time, and such other limitations as the
Trust or Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money, or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor, at its own expense,
shall place all orders for the purchase and sale of portfolio securities
for the Portfolio's account with brokers or dealers selected by the
Sub-Advisor, which may include brokers or dealers affiliated with the
Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to seek
to execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and to any
other accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts over
which it exercises investment discretion. The Trustees of the Trust shall
periodically review the commissions paid by the Portfolio to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Portfolio.))
4. Compensation:)) The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph
(a) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be))
equal to 105% of the Sub-Advisor's costs incurred in connection with
rendering the services referred to in subparagraph (a) of paragraph 1 of
this Agreement. The Sub-Advisory Fee shall not be reduced to reflect
expense reimbursements or fee waivers by the Advisor, if any, in effect
from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor
or the Sub-Advisor as directors, officers or otherwise and that directors,
officers and stockholders of the Advisor or the Sub-Advisor are or may be
or become similarly interested in the Trust, and that the Advisor or the
Sub-Advisor may be or become interested in the Trust as a shareholder or
otherwise.
4. The Sub-Advisor shall for all purposes be an independent contractor and
not an agent or employee of the Adviser or the Fund. The Sub Adviser shall
have no authority to act for, represent, bind or obligate the Adviser or
the Fund, and shall in no event have discretion to invest or reinvest
assets held by the Portfolio.]
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9.Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1994 and
indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust' Board of Trustees or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio)) by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11.Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FMR FAR EAST

By: ___________________________________
Name: Charles F. Dornbush
Title: Treasurer of FMR Far East

FIDELITY MANAGEMENT & RESEARCH COMPANY

By ___________________________________
Name: J. Gary Burkhead
Title: President of FMR

FIDELITY FINANCIAL TRUST

By ___________________________________
Name: J. Gary Burkhead
Title: Senior Vice President of the Trust

EXHIBIT 5(R)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
AND
FIDELITY FINANCIAL TRUST ON BEHALF OF
FIDELITY RETIREMENT GROWTH FUND
AGREEMENT made this 1st day of December 1993 by Fidelity Management &
Research Company, a Massachusetts corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts (hereinafter called the
"Advisor"); Fidelity Management & Research (U.K.) Inc.) (hereinafter
called the "Sub-Advisor"; and Fidelity Financial Trust, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Trust") on behalf of Fidelity Retirement
Growth Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management Contract
on behalf of the Portfolio, pursuant to which the Advisor acts as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated persons
have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries,
including securities issued in and issuers located in such countries, and
providing investment advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion
of the investments of the Portfolio to be advised or managed by the
Sub-Advisor shall be as agreed upon from time to time by the Advisor and
the Sub-Advisor. The Sub-Advisor shall pay the salaries and fees of all
personnel of the Sub-Advisor performing services for the Portfolio relating
to research, statistical and investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor,
the Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Portfolio
and the Advisor such factual information, research reports and investment
recommendations all as the Advisor may reasonably require. Such information
may include written and oral reports and analyses.
(b)INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or
analyses to the Trust and the Advisor as the Trust's Board of Trustees or
the Advisor may reasonably request from time to time, or as the Sub-Advisor
may deem to be desirable.
3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor, at its own expense,
shall place all orders for the purchase and sale of portfolio securities
for the Portfolio's account with brokers or dealers selected by the
Sub-Advisor, which may include brokers or dealers affiliated with the
Advisor or Sub-Advisor. The Sub-Advisor shall use its best efforts to seek
to execute portfolio transactions at prices which are advantageous to the
Portfolio and at commission rates which are reasonable in relation to the
benefits received. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and to any
other accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Sub-Advisor has with respect to accounts over
which it exercises investment discretion. The Trustees of the Trust shall
periodically review the commissions paid by the Portfolio to determine if
the commissions paid over representative periods of time were reasonable in
relation to the benefits to the Portfolio.
4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph
(a) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be))
equal to 110% of the Sub-Advisor's costs incurred in connection with
rendering the services referred to in subparagraph (a) of paragraph 1 of
this Agreement. The Sub-Advisory Fee shall not be reduced to reflect
expense reimbursements or fee waivers by the Advisor, if any, in effect
from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers or
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph (1) for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.
5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the
Portfolio, which expenses payable by the Portfolio shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase or sale of securities and other
investment instruments; (iii) fees and expenses of the Trust's Trustees
other than those who are "interested persons" of the Trust, the Sub-Advisor
or the Advisor; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Trust and the Portfolio's shares for
distribution under state and federal securities laws; (vii) expenses of
printing and mailing reports and notices and proxy material to shareholders
of the Portfolio; (viii) all other expenses incidental to holding meetings
of the Portfolio's shareholders, including proxy solicitations therefore;
(ix) a pro rata share, based on relative net assets of the Portfolio and
other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for
fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders; and
(xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which the Portfolio is a
party and the legal obligation which the Portfolio may have to indemnify
the Trust's Trustees and officers with respect thereto.
6. Interested Persons: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the
Advisor or the Sub-Advisor as directors, officers or otherwise and that
directors, officers and stockholders of the Advisor or the Sub-Advisor are
or may be or become similarly interested in the Trust, and that the Advisor
or the Sub-Advisor may be or become interested in the Trust as a
shareholder or otherwise.
7. Services to Other Companies or Accounts: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the
Sub-Advisor being free to render services to others and engage in other
activities, provided, however, that such other services and activities do
not, during the term of this Agreement, interfere, in a material manner,
with the Sub-Advisor's ability to meet all of its obligations hereunder.
The Sub-Advisor shall for all purposes be an independent contractor and not
an agent or employee of the Advisor or the Trust.
8. Standard of Care: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Sub-Advisor, the Sub-Advisor shall not be subject to
liability to the Advisor, the Trust or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
9. Duration and Termination of Agreement; Amendments:
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph 9, this Agreement shall continue in force until July 31, 1994
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor, the
Sub-Advisor and the Portfolio, such consent on the part of the Portfolio to
be authorized by vote of a majority of the outstanding voting securities of
the Portfolio.
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph 9, the terms of any continuance or modification of this
Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any time
on sixty (60) days' prior written notice to the other parties, terminate
this Agreement, without payment of any penalty, by action of its Board of
Trustees or Directors, or with respect to the Portfolio by vote of a
majority of its outstanding voting securities. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and
agrees that any obligations of the Trust or the Portfolio arising in
connection with this Agreement shall be limited in all cases to the
Portfolio and its assets, and the Sub-Advisor shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the
Portfolio. Nor shall the Sub-Advisor seek satisfaction of any such
obligation from the Trustees or any individual Trustee.
11Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without
giving effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons,"
when used herein, shall have the respective meanings specified in the 1940
Act as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed on their behalf by their respective officers thereunto duly
authorized, and their respective seals to be hereunto affixed, all as of
the date written above.
FMR UK

By: ___________________________________
Name: Charles F. Dornbush
Title: Treasurer of FMR UK

FIDELITY MANAGEMENT & RESEARCH COMPANY

By ___________________________________
Name: J. Gary Burkhead
Title: President of FMR

FIDELITY FINANCIAL TRUST

By ___________________________________
Name: J. Gary Burkhead
Title: Senior Vice President of the Trust

Exhibit 16(d)
Convertable Securities
39 Week Moving Averages
Date Factor Adjusted NAV
05-Mar-93 1.018944 15.55
08-Mar-93 1.018944 15.68
09-Mar-93 1.018944 15.75
10-Mar-93 1.018944 15.78
11-Mar-93 1.018944 15.79
12-Mar-93 1.018944 15.78
15-Mar-93 1.018944 15.85
16-Mar-93 1.018944 15.93
17-Mar-93 1.018944 15.88
18-Mar-93 1.018944 15.95
19-Mar-93 1.018944 15.94
22-Mar-93 1.018944 15.92
23-Mar-93 1.018944 15.93
24-Mar-93 1.018944 15.91
25-Mar-93 1.018944 16.00
26-Mar-93 1.018944 16.01
29-Mar-93 1.018944 16.06
30-Mar-93 1.018944 16.07
31-Mar-93 1.018944 16.10
01-Apr-93 1.018944 16.12
02-Apr-93 1.018944 16.00
05-Apr-93 1.018944 16.00
06-Apr-93 1.018944 16.00
07-Apr-93 1.018944 16.13
08-Apr-93 1.018944 16.12
09-Apr-93 1.018944 16.12
12-Apr-93 1.018944 16.21
13-Apr-93 1.018944 16.24
14-Apr-93 1.018944 16.27
15-Apr-93 1.018944 16.24
16-Apr-93 1.018944 16.28
19-Apr-93 1.018944 16.27
20-Apr-93 1.018944 16.21
21-Apr-93 1.018944 16.27
22-Apr-93 1.018944 16.25
23-Apr-93 1.018944 16.25
26-Apr-93 1.018944 16.11
27-Apr-93 1.018944 16.14
28-Apr-93 1.018944 16.17
29-Apr-93 1.018944 16.20
30-Apr-93 1.018944 16.25
03-May-93 1.018944 16.29
04-May-93 1.018944 16.32
05-May-93 1.018944 16.36
06-May-93 1.018944 16.43
07-May-93 1.018944 16.42
10-May-93 1.018944 16.46
11-May-93 1.018944 16.46
12-May-93 1.018944 16.54
13-May-93 1.018944 16.54
14-May-93 1.018944 16.56
17-May-93 1.018944 16.50
18-May-93 1.018944 16.55
19-May-93 1.018944 16.63
20-May-93 1.018944 16.70
21-May-93 1.018944 16.66
24-May-93 1.018944 16.63
25-May-93 1.018944 16.67
26-May-93 1.018944 16.73
27-May-93 1.018944 16.72
28-May-93 1.018944 16.65
31-May-93 1.018944 16.65
01-Jun-93 1.018944 16.74
02-Jun-93 1.018944 16.75
03-Jun-93 1.018944 16.78
04-Jun-93 1.018944 16.76
07-Jun-93 1.018944 16.72
08-Jun-93 1.018944 16.62
09-Jun-93 1.018944 16.62
10-Jun-93 1.018944 16.55
11-Jun-93 1.009292 16.58
14-Jun-93 1.009292 16.57
15-Jun-93 1.009292 16.58
16-Jun-93 1.009292 16.53
17-Jun-93 1.009292 16.49
18-Jun-93 1.009292 16.48
21-Jun-93 1.009292 16.49
22-Jun-93 1.009292 16.47
23-Jun-93 1.009292 16.46
24-Jun-93 1.009292 16.52
25-Jun-93 1.009292 16.53
28-Jun-93 1.009292 16.61
29-Jun-93 1.009292 16.61
30-Jun-93 1.009292 16.64
01-Jul-93 1.009292 16.66
02-Jul-93 1.009292 16.61
05-Jul-93 1.009292 16.61
06-Jul-93 1.009292 16.61
07-Jul-93 1.009292 16.61
08-Jul-93 1.009292 16.63
09-Jul-93 1.009292 16.61
12-Jul-93 1.009292 16.65
13-Jul-93 1.009292 16.68
14-Jul-93 1.009292 16.72
15-Jul-93 1.009292 16.68
16-Jul-93 1.009292 16.65
19-Jul-93 1.009292 16.66
20-Jul-93 1.009292 16.66
21-Jul-93 1.009292 16.67
22-Jul-93 1.009292 16.66
23-Jul-93 1.009292 16.70
26-Jul-93 1.009292 16.78
27-Jul-93 1.009292 16.73
28-Jul-93 1.009292 16.76
29-Jul-93 1.009292 16.80
30-Jul-93 1.009292 16.80
02-Aug-93 1.009292 16.86
03-Aug-93 1.009292 16.82
04-Aug-93 1.009292 16.83
05-Aug-93 1.009292 16.77
06-Aug-93 1.009292 16.79
09-Aug-93 1.009292 16.86
10-Aug-93 1.009292 16.86
11-Aug-93 1.009292 16.84
12-Aug-93 1.009292 16.78
13-Aug-93 1.009292 16.79
16-Aug-93 1.009292 16.86
17-Aug-93 1.009292 16.93
18-Aug-93 1.009292 16.98
19-Aug-93 1.009292 17.01
20-Aug-93 1.009292 17.00
23-Aug-93 1.009292 17.04
24-Aug-93 1.009292 17.15
25-Aug-93 1.009292 17.16
26-Aug-93 1.009292 17.13
27-Aug-93 1.009292 17.14
30-Aug-93 1.009292 17.18
31-Aug-93 1.009292 17.20
01-Sep-93 1.009292 17.21
02-Sep-93 1.009292 17.23
03-Sep-93 1.009292 17.23
06-Sep-93 1.009292 17.14
07-Sep-93 1.009292 17.14
08-Sep-93 1.009292 17.06
09-Sep-93 1.009292 17.15
10-Sep-93 1.000000 17.22
13-Sep-93 1.000000 17.24
14-Sep-93 1.000000 17.18
15-Sep-93 1.000000 17.18
16-Sep-93 1.000000 17.17
17-Sep-93 1.000000 17.19
20-Sep-93 1.000000 17.19
21-Sep-93 1.000000 17.10
22-Sep-93 1.000000 17.18
23-Sep-93 1.000000 17.26
24-Sep-93 1.000000 17.28
27-Sep-93 1.000000 17.35
28-Sep-93 1.000000 17.35
29-Sep-93 1.000000 17.37
30-Sep-93 1.000000 17.40
01-Oct-93 1.000000 17.46
04-Oct-93 1.000000 17.51
05-Oct-93 1.000000 17.55
06-Oct-93 1.000000 17.61
07-Oct-93 1.000000 17.60
08-Oct-93 1.000000 17.60
11-Oct-93 1.000000 17.65
12-Oct-93 1.000000 17.77
13-Oct-93 1.000000 17.83
14-Oct-93 1.000000 17.82
15-Oct-93 1.000000 17.82
18-Oct-93 1.000000 17.81
19-Oct-93 1.000000 17.76
20-Oct-93 1.000000 17.74
21-Oct-93 1.000000 17.73
22-Oct-93 1.000000 17.72
25-Oct-93 1.000000 17.74
26-Oct-93 1.000000 17.72
27-Oct-93 1.000000 17.71
28-Oct-93 1.000000 17.79
29-Oct-93 1.000000 17.80
01-Nov-93 1.000000 17.80
02-Nov-93 1.000000 17.80
03-Nov-93 1.000000 17.78
04-Nov-93 1.000000 17.68
05-Nov-93 1.000000 17.67
08-Nov-93 1.000000 17.71
09-Nov-93 1.000000 17.70
10-Nov-93 1.000000 17.73
11-Nov-93 1.000000 17.77
12-Nov-93 1.000000 17.86
15-Nov-93 1.000000 17.83
16-Nov-93 1.000000 17.80
17-Nov-93 1.000000 17.73
18-Nov-93 1.000000 17.67
19-Nov-93 1.000000 17.68
22-Nov-93 1.000000 17.57
23-Nov-93 1.000000 17.61
24-Nov-93 1.000000 17.64
25-Nov-93 1.000000 17.64
26-Nov-93 1.000000 17.62

Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the Prospectuses
and Statements of Additional Information constituting part of this Post
Effective Amendment No. 26 to the Registration Statement on Form N-1A (the
"Registration Statement") of our reports dated January 5, 1994, January 5,
1994, and January 3, 1994, relating to the financial statements and
financial highlights appearing in the November 30, 1993 Annual Reports to
Shareholders of Fidelity Convertible Securities Fund, Fidelity
Equity-Income II Fund, and Fidelity Retirement Growth Fund, respectively,
comprising Fidelity Financial Trust, which are incorporated by reference in
such Registration Statement. We further consent to the references to us
under the headings "Auditor" in the Statements of Additional Information
and "Financial Highlights" in the Prospectuses.
/s/ PRICE WATERHOUSE
PRICE WATERHOUSE
Boston, Massachusetts
January 11, 1994