(2_FIDELITY_LOGOS)FIDELITY
CONVERTIBLE SECURITIES
FUND
SEMIANNUAL REPORT
MAY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on stock market
cautions.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 10 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 21 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 25 Notes to the financial statements.
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:
The first few months of 1994 were an unsettling time for many investors.
After three years of a nearly perfect environment for stock market
investing, stock prices fell in March and April. Investors disagree about
whether this decline represents only a short-term correction or signals the
beginning of a longer bear market. One can collect statistics to support
either opinion, but of course, nobody knows for sure what will happen to
stock prices in the months ahead.
We do know, however, that market declines are a normal part of stock market
investing. We have historically seen corrections of 10% or more every two
years. That's why I thought this might be a good time to review three basic
investment principles that have proven helpful to successful stock market
investors in every market cycle.
First, take a long-term approach when investing in stocks and stock funds.
If you can afford to leave your money invested through the market's
inevitable ups and downs, you will greatly reduce your vulnerability to any
single decline. Over time, stock prices have gone up - and have
significantly outperformed other types of investments and stayed ahead of
inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED MAY 31, 1994 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Convertible Securities -4.64% .94% 100.76% 154.65%
Merrill Lynch Convertible Securities
Index -3.61% 1.82% 72.34% n/a
Average Convertible Securities Fund -1.42% 4.18% 64.50% n/a
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on January 5, 1987. 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
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 26
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 MAY 31, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Convertible Securities .94% 14.96% 13.45%
Merrill Lynch Convertible Securities Index 1.82% 11.50% n/a
Average Convertible Securities Fund 4.18% 10.32% 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) FB Conv. Secur
01/31/87 10000.00 10000.00
02/28/87 10350.20 10414.00
03/31/87 10437.75 10521.26
04/30/87 10282.10 10523.37
05/31/87 10252.92 10554.94
06/30/87 10429.22 10775.54
07/31/87 10949.70 11215.18
08/31/87 11195.21 11439.48
09/30/87 11119.15 11271.32
10/31/87 9020.63 9151.19
11/30/87 9000.74 8857.43
12/31/87 9253.19 9308.28
01/31/88 9598.15 9567.05
02/29/88 9993.85 10007.13
03/31/88 10126.04 9973.11
04/30/88 10321.56 10179.55
05/31/88 10249.53 10078.77
06/30/88 10675.20 10466.80
07/31/88 10602.15 10357.95
08/31/88 10445.63 10174.61
09/30/88 10582.76 10356.74
10/31/88 10752.08 10488.27
11/30/88 10593.34 10317.31
12/31/88 10723.60 10556.67
01/31/89 11181.78 11030.67
02/28/89 11301.78 11028.46
03/31/89 11630.81 11171.83
04/30/89 12061.99 11547.21
05/31/89 12338.38 11781.61
06/30/89 12437.47 11695.61
07/31/89 12997.21 12031.27
08/31/89 13422.61 12295.96
09/30/89 13433.81 12188.99
10/31/89 13161.96 11803.81
11/30/89 13377.18 11996.22
12/31/89 13542.00 12009.41
01/31/90 13040.01 11531.44
02/28/90 13191.78 11683.65
03/31/90 13450.80 11862.41
04/30/90 13344.42 11597.88
05/31/90 13876.30 12160.38
06/30/90 14031.24 12145.78
07/31/90 13935.54 12037.69
08/31/90 13014.48 11344.32
09/30/90 12372.24 10848.57
10/31/90 12129.89 10442.83
11/30/90 12760.01 10953.49
12/31/90 13150.08 11182.42
01/31/91 13965.01 11684.51
02/28/91 14866.38 12382.07
03/31/91 15261.64 12685.43
04/30/91 15436.49 12813.55
05/31/91 15961.03 13192.84
06/30/91 15657.98 12824.76
07/31/91 16289.35 13312.10
08/31/91 16908.09 13808.64
09/30/91 17190.33 13783.78
10/31/91 17930.53 13982.27
11/30/91 17164.81 13645.30
12/31/91 18244.09 14438.09
01/31/92 19164.97 14838.02
02/29/92 19792.24 15222.33
03/31/92 19458.45 15095.98
04/30/92 19620.15 15268.08
05/31/92 19997.46 15545.96
06/30/92 19878.15 15472.89
07/31/92 20422.38 15898.39
08/31/92 20027.81 15798.23
09/30/92 20504.91 16114.20
10/31/92 20985.60 16152.87
11/30/92 21658.57 16619.69
12/31/92 22261.35 16988.65
01/31/93 23005.78 17518.69
02/28/93 22604.93 17587.02
03/31/93 23729.83 18230.70
04/30/93 23946.74 18227.05
05/31/93 24539.62 18546.03
06/30/93 24511.54 18722.22
07/31/93 24759.72 18915.05
08/31/93 25343.67 19433.33
09/30/93 25638.10 19652.92
10/31/93 26227.48 20116.73
11/30/93 25976.99 19812.97
12/31/93 26221.18 20139.88
01/31/94 26874.72 20717.90
02/28/94 26444.34 20388.48
03/31/94 25286.79 19556.63
04/30/94 24867.76 19200.70
05/31/94 24771.06 19242.94
$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 May 31, 1994, the value of your investment
would have grown to $24,771 - a 147.71% 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 $19,243 - a 92.43% 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
An interview with Andrew Offit, Portfolio Manager of Fidelity
Convertible Securities Fund
Q. ANDY, HOW DID THE FUND PERFORM?
A. The fund had a total return of -4.64% for the six months ended May 31,
1994. That was below the total return of -1.42% for the average convertible
securities fund tracked by Lipper Analytical Services during the same
period. For the 12 months ended May 31, the fund returned 0.94%, as
compared with the total return of 4.18% for the average convertible
securities fund. The past six months were clearly out of step with the
fund's good longer term performance.
Q. WHY DID THE FUND TRAIL THE AVERAGE DURING THE PAST SIX MONTHS?
A. One reason was a couple of stocks in the fund. Since taking over the
fund in March of 1992, I have always invested "bottom up." I look first at
the fundamentals of a particular company - sales and earnings, business
prospects, etc. - as opposed to any stock market or interest rate
forecasts. During the past six months, the procedure has been the same, but
some of the investments did not work out. We took positions in Media Vision
and Regal Communications only to find that the information management
provided to investors was less than complete. These investments hurt the
fund during the period. Going forward, however, I will continue to use a
bottom-up approach, and I am excited about the fund's investments and
encouraged by its prospects.
Q. HOW MUCH OF A ROLE DID THE RECENT VOLATILITY IN THE STOCK AND BOND
MARKETS PLAY?
A. It was somewhat of a factor. However, many of the smaller, lower-rated
securities that would have been hurt the most by the decline in the bond
market were sold in mid-1993. Volatility can be an advantage as it creates
opportunities to buy good securities at temporarily depressed prices. If,
through getting to know a company, I've developed conviction about its
prospects, I'll stay with a position and even add to it when the price
dips.
Q. CAN YOU GIVE US AN EXAMPLE?
A. Sure. IVAX. I bought $10 million worth of the company's bonds. The price
went from 128 down to 82 due to the company's disappointing first quarter
earnings. IVAX is a manufacturer of both proprietary and generic drugs. I
talked to management and was encouraged by several new products in the
pipeline, the turnaround of three operating divisions and significant
purchases of IVAX common stock by the CEO. In 1995, I think they can earn
between $1.50 to $1.70 per share. Based on this earnings estimate, the
price/earnings ratio of their stock is about 10 times earnings, which is
low. Consequently, I think the stock has much more upside potential than
downside, which would strengthen the convertibles we own, so I tripled the
fund's investment. IVAX is now the fund's second largest holding.
Q. LET'S TALK ABOUT SOME OF THE OTHER TOP HOLDINGS IN THE FUND. YOU STILL
HAVE A SUBSTANTIAL POSITION IN STONE CONTAINER, AND U.S. SURGICAL IS NOW
THE THIRD LARGEST HOLDING. WHAT IS YOUR THINKING HERE?
A. Stone Container has been a home run for the fund this year, and I still
feel very good about the investment. The company's markets are recovering
nicely, and it has reduced debt and generally cleaned up its balance sheet.
I think Stone can report a profit by the third or fourth quarter of 1994.
As for U.S. Surgical, I think it has the potential to be another Stone
Container for the fund. U.S. Surgical's common stock was down to about $15,
due mainly to intense price competition in the surgical staple and suture
market. The company issued preferred stock carrying a 10% dividend that is
convertible into one share of common stock. The price of the company's
common has recovered somewhat to about $21. But even if the price of the
common goes nowhere over the next year, the fund will still earn 10% due to
the dividend.
Q. TEXAS INSTRUMENTS IS NOW THE LARGEST HOLDING IN THE FUND. WHAT'S THE
STORY HERE?
A. The TI 2.75% is a convertible that can be sold back to the company at
the par value of 100 on October 29, 1994. It's currently trading at 107.
Regardless of what happens to the price of TI common stock, the price of
the bond can't go below 100, because it can be sold at that price to a
company that has the cash to buy it back. So, it's really a defensive
holding. However, I'm very excited about TI's prospects and I think the
price of the common has the potential to do very well. It is currently
selling at around $84 per share. If the price goes up between now and the
put date of the bond - which I think is likely - the fund can realize a
very nice gain. I believe the bond has good upside potential, with limited
downside.
Q. THERE HAS BEEN A LOT OF TALK LATELY ABOUT DERIVATIVES. DO YOU USE THEM?
A. The fund has the authority to use derivatives, but so far I haven't made
much use of them.
Q. HOW DO YOU SEE THE REST OF THE YEAR SHAPING UP?
A. Looking ahead, I'm optimistic about the fund and about what I'm doing. I
like the securities we own and I know a lot about the companies. The
challenge is the same as it always is: to make sure that I take positions
in the right companies. Admittedly, performance has been below expectations
over the past six months. But I remain flexible, searching for the best
securities to buy.
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 May 31, 1994,
more than $910 million
MANAGER: Andrew Offit,
since March 1992; manager,
Select Health Care, May
1990 - March 1992, Select
Biotechnology, May 1989 -
May 1990; analyst,
1987-1989; joined Fidelity in
1987
(checkmark)
ANDY OFFIT ON THE CONVERTIBLE
MARKETPLACE:
"Convertibles are often issued
by smaller companies that
need the money for working
capital or to keep growing.
They're also issued by
companies that might be in
financial trouble. Given either
of these profiles, it's easy to
see how, if something goes
wrong at the issuing
company, the securities can
suffer a pretty sharp
downturn. So, in general, the
convert market can
sometimes lend itself to
mishaps. The idea is to try to
avoid them. At the same time,
however, the market is very
dynamic, with many excellent
opportunities developing all
the time. We research
companies intensively and try
to steer clear of questionable
situations. I follow the
principle that I will not make a
new investment for the fund
unless I've developed the
conviction that, should the
security's price decline, I'm
prepared to buy more."
(bullet) The fund manager attempts
to maintain a balance
between equity-sensitive
convertibles - the prices of
which respond to improving
common stock prices- and
convertibles with substantial
yields. The average yield of
the fund's securities
continues to move higher.
INVESTMENT CHANGES
TOP TEN INVESTMENTS AS OF MAY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Texas Instruments, Inc. euro
2 3/4%, 9/29/02 8.6 1.4
IVAX Corp. 6 1/2%, 11/15/01 2.8 1.0
U.S. Surgical Corp. $2.20 2.6 -
Stone Container Corp. 8 7/8%,
7/15/00 2.4 3.4
International Business Machines 2.2 -
Corp.
Bank of Boston Corp. 7 3/4%,
6/15/11 2.0 1.4
WMS Industries, Inc. 5 3/4%,
12/1/02 2.0 1.3
Mentor Corp. euro 6 3/4%, 7/22/02 2.0 1.9
RJR Nabisco Holdings Corp.,
Series A, depositary shares
representing 1/4 share cv. pfd. 2.0 -
US West, Inc. liquid yield option
notes 0%, 6/25/11 2.0 -
TOP FIVE INDUSTRIES AS OF MAY 31, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE INDUSTRIES
6 MONTHS AGO
Health 15.5 13.8
Technology 14.7 11.0
Finance 11.7 8.9
Basic Industries 8.8 7.8
Durables 8.5 1.7
ASSET ALLOCATION
AS OF MAY 31, 1994* AS OF NOVEMBER 30, 1993**
Row: 1, Col: 1, Value: 10.5
Row: 1, Col: 2, Value: 1.9
Row: 1, Col: 3, Value: 18.3
Row: 1, Col: 4, Value: 69.59999999999999
Row: 1, Col: 1, Value: 11.6
Row: 1, Col: 2, Value: 1.9
Row: 1, Col: 3, Value: 10.1
Row: 1, Col: 4, Value: 76.40000000000001
Convertible
Securities 69.6%
Common Stocks 19.3%
Nonconvertible
Bonds 0.9%
Short-term
investments 10.2%
FOREIGN
INVESTMENTS 9.5%
Convertible
Securities 76.4%
Common Stocks 11.1%
Nonconvertible
Bonds 0.9%
Short-term
investments 11.6%
FOREIGN
INVESTMENTS 5.3%
*
*
*
INVESTMENTS MAY 31, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 19.3%
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - 1.5%
CHEMICALS & PLASTICS - 1.5%
Park Electrochemical Corp. 536,956 $ 13,894
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
Bird Corp. 132,600 1,425
DURABLES - 2.7%
AUTOS, TIRES, & ACCESSORIES - 1.6%
Honda Motor Co. Ltd. 283,000 5,076
Nissan Motor Co. Ltd. Ord. 414,000 3,464
Suzuki Motor Corp. 495,000 6,586
15,126
TEXTILES & APPAREL - 1.1%
Burlington Industries, Inc. (a) 407,700 5,606
Westpoint Stevens, Inc. Class A (a) 264,100 4,028
9,634
TOTAL DURABLES 24,760
ENERGY - 0.8%
OIL & GAS - 0.8%
British Petroleum PLC ADR 100,000 7,025
FINANCE - 3.6%
CREDIT & OTHER FINANCE - 1.4%
American Express Co. 475,000 13,122
INSURANCE - 1.0%
Travelers, Inc. (The) 270,000 8,843
SAVINGS & LOANS - 0.4%
Great Western Financial Corp. 207,100 3,831
SECURITIES INDUSTRY - 0.8%
Nomura Securities Co. Ltd. 231,000 5,334
Lehman Brothers Holdings, Inc. 95,000 1,746
7,080
TOTAL FINANCE 32,876
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 3.3%
DRUGS & PHARMACEUTICALS - 1.8%
Barr Laboratories, Inc. (a) 489,000 $ 8,802
Carter-Wallace, Inc. 75,300 1,854
IVAX Corp. 330,000 6,229
16,885
MEDICAL EQUIPMENT & SUPPLIES - 0.7%
Datascope Corp. 149,000 2,486
Mentor Corp. 150,400 2,030
Moore Medical Corp. (a) 154,400 1,930
6,446
MEDICAL FACILITIES MANAGEMENT - 0.8%
Charter Medical Corp. (a) 310,000 7,673
TOTAL HEALTH 31,004
INDUSTRIAL MACHINERY & EQUIPMENT - 0.9%
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Komatsu Ltd. Ord. 249,000 2,295
POLLUTION CONTROL - 0.7%
Attwoods PLC ADR 5,400 52
Browning-Ferris Industries, Inc. 210,100 6,093
6,145
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 8,440
MEDIA & LEISURE - 0.4%
LODGING & GAMING - 0.1%
WMS Industries, Inc. (a) 50,000 1,119
PUBLISHING - 0.3%
Score Board, Inc. (a) 337,300 2,741
TOTAL MEDIA & LEISURE 3,860
RETAIL & WHOLESALE - 1.1%
DRUG STORES - 1.1%
Rite Aid Corp. 485,100 9,763
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - 3.1%
COMPUTERS & OFFICE EQUIPMENT - 2.2%
Electro Brain International Corp. (a) 342,500 $ 385
International Business Machines Corp. 321,500 20,335
20,720
ELECTRONICS - 0.9%
Hitachi Ltd. 477,000 4,915
Toshiba Corp. 390,000 3,124
8,039
TOTAL TECHNOLOGY 28,759
TRANSPORTATION - 1.8%
AIR TRANSPORTATION - 1.8%
AMR Corp. (a) 300,000 16,575
TOTAL COMMON STOCKS
(Cost $172,238) 178,381
CONVERTIBLE PREFERRED STOCKS - 17.3%
BASIC INDUSTRIES - 1.8%
IRON & STEEL - 0.5%
Armco, Inc. Class A $3.625 92,000 4,899
METALS & MINING - 1.3%
Freeport-McMoran Copper & Gold, Inc.
$1.75 212,500 5,844
Reynolds Metals Co. $3.31 120,000 5,865
11,709
TOTAL BASIC INDUSTRIES 16,608
CONSTRUCTION & REAL ESTATE - 0.2%
BUILDING MATERIALS - 0.2%
Bird Corp. $1.85 149,900 2,436
DURABLES - 1.7%
TEXTILES & APPAREL - 1.7%
Fieldcrest Cannon, Inc., Series A, $3.00 (d) 301,900 15,548
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 3.3%
OIL & GAS - 3.3%
Ashland Oil, Inc. $3.125 200,000 $ 12,350
Diamond Shamrock, Inc. 5% (d) 225,000 11,531
Tosco Corp., Series F, $4.375 100,000 6,250
30,131
FINANCE - 1.2%
CREDIT & OTHER FINANCE - 0.7%
Attwoods Finance 8 1/2% 4,635,500 6,722
SAVINGS & LOANS - 0.5%
Glendale Federal Bank, Series E, $2.1875 154,800 4,180
TOTAL FINANCE 10,902
HEALTH - 4.2%
DRUGS & PHARMACEUTICALS - 0.3%
Neorx Corp., Series 1, $2.44 (a) 126,700 2,629
MEDICAL EQUIPMENT & SUPPLIES - 2.6%
U.S. Surgical Corp. $2.20 (d) 1,077,300 23,970
MEDICAL FACILITIES MANAGEMENT - 1.3%
FHP International Corp., Series A, $1.25 100,000 2,150
IVF America, Inc., Series A, $.80 260,500 912
Maxicare Health Plans, Inc., Series A, $2.25 (d) 250,000 8,687
11,749
TOTAL HEALTH 38,348
INDUSTRIAL MACHINERY & EQUIPMENT - 0.6%
Cooper Industries, Inc. $8.00 exchangeable (a) 225,000 5,231
NONDURABLES - 2.6%
FOODS - 0.6%
Conagra, Inc. Class E 206,100 6,440
TOBACCO - 2.0%
RJR Nabisco Holdings Corp., Series A, depositary
shares representing 1/4 share cv. pfd. 3,000,000 18,000
TOTAL NONDURABLES 24,440
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - 1.2%
GENERAL MERCHANDISE STORES - 1.2%
Sears Roebuck & Co. depositary shares
representing 1/4 share pfd., Series A 200,000 $ 11,125
TRANSPORTATION - 0.5%
AIR TRANSPORTATION - 0.5%
UAL, Inc. cumulative 6 1/4% (d) 55,000 4,400
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $167,698) 159,169
CORPORATE BONDS - 53.2%
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (B) (000S)
CONVERTIBLE BONDS - 52.3%
BASIC INDUSTRIES - 4.6%
CHEMICALS & PLASTICS - 0.2%
Shin-Etsu Chemical Co. Ltd. 1.30%,
3/31/99 - JPY 208,000 2,401
METALS & MINING - 0.8%
Freeport McMoran, Inc. 6.55%,
1/15/01 Ba3 8,000 7,200
PAPER & FOREST PRODUCTS - 3.6%
Champion International Corp. sinking fund
6 1/2%, 4/15/11 Baa2 10,500 10,920
Stone Container Corp. 8 7/8%, 7/15/00 (d) B2 15,000 22,350
33,270
TOTAL BASIC INDUSTRIES 42,871
DURABLES - 4.1%
AUTOS, TIRES, & ACCESSORIES - 2.9%
Amoco Canada Petroleum Co.
exchangeable, 7 3/8%, 9/19/13 Aa3 10,000 11,900
Bridgestone 3.70%, 12/31/98 - JPY 200,000 2,481
Toyota Motor Corp. 1 1/5%, 1/28/98 - JPY 776,000 8,389
Volvo B Free shares 12 1/2%, 3/31/95 - SEK 18,500 3,792
26,562
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
DURABLES - CONTINUED
CONSUMER ELECTRONICS - 1.2%
Makita Corp. 3 3/5%, 3/31/99 A+ JPY 300,000 $ 3,392
Sony Corp. 1 2/5%, 9/30/03 - JPY 686,000 7,789
11,181
TOTAL DURABLES 37,743
ENERGY - 2.2%
INDEPENDENT POWER - 1.7%
Thermo Electron Corp. 4 5/8%, 8/1/97 (d) Ba1 12,500 15,813
OIL & GAS - 0.5%
Box Energy Corp. 8 1/4%, 12/1/02 B3 1,650 1,807
Garnet Resources Corp. 9 1/2%, 12/21/98 (d) - 3,000 3,000
4,807
TOTAL ENERGY 20,620
FINANCE - 6.9%
BANKS - 3.0%
Bank of Boston Corp. 7 3/4%, 6/15/11 Baa2 15,500 18,832
West One Bancorp 7 3/4%, 6/30/06 Baa1 5,000 8,613
27,445
INSURANCE - 3.9%
Chubb Corp. (The) 6%, 5/15/98 Aa3 8,600 9,008
Cigna Corp. 8 1/5%, 7/10/10 A3 15,000 15,825
USF&G Corp. 0%, 3/3/09 Ba2 24,000 11,310
36,143
TOTAL FINANCE 63,588
HEALTH - 8.0%
DRUGS & PHARMACEUTICALS - 2.8%
IVAX Corp. 6 1/2%, 11/15/01 (d) - 29,947 25,979
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 4.2%
Advanced Medical, Inc. 7 1/4%, 1/15/02 CCC- $ 22,604 $ 11,641
Benson Eyecare Corp. 8%, 5/15/01 B3 6,000 5,970
MEDIQ, Inc. 7 1/4%, 6/1/06 B3 4,145 2,943
Mentor Corp. euro 6 3/4%, 7/22/02 - 18,500 18,315
38,869
MEDICAL FACILITIES MANAGEMENT - 1.0%
Mediplex Group, Inc. 6 1/2%, 8/1/03 B- 4,000 4,620
Sun Healthcare Group, Inc. 6%, 3/1/04 (d) - 4,000 4,200
8,820
TOTAL HEALTH 73,668
INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%
ELECTRICAL EQUIPMENT - 0.6%
Matsushita Electric Works Co. Ltd. 2.70%,
5/31/02 - JPY 175,175 5,130
INDUSTRIAL MACHINERY & EQUIPMENT - 0.2%
Hitachi Zosen Corp. 1 2/5%, 3/30/01 - JPY 184,000 1,955
POLLUTION CONTROL - 0.4%
Riedel Environmental Technologies, Inc.
7%, 10/11/99 - 4,647 1,719
Sanifill, Inc. 7 1/2%, 6/1/06 B2 2,300 2,289
4,008
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 11,093
MEDIA & LEISURE - 6.2%
BROADCASTING - 1.6%
Time Warner, Inc. 8 3/4%, 1/10/15 Ba3 15,000 15,187
ENTERTAINMENT - 1.1%
All American Communications, Inc. 6 1/2%,
10/1/03 (d) - 6,200 5,394
Kushner-Locke Co. 8%, 12/15/00 (d) - 3,000 4,320
9,714
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 2.4%
Argosy Gaming Co. 12%, 6/1/01 B3 $ 3,500 $ 3,544
WMS Industries, Inc. 5 3/4%, 12/1/02 B1 18,950 18,381
21,925
PUBLISHING - 1.1%
Nelson Thomas, Inc. 5 3/4%, 11/30/99 (d) - 3,000 3,285
Score Board, Inc. (d):
9%, 9/1/02 - 3,500 4,148
9%, 2/1/03 - 3,000 2,775
10,208
TOTAL MEDIA & LEISURE 57,034
NONDURABLES - 0.5%
FOODS - 0.5%
Chock Full-O-Nuts Corporation 7%, 4/1/12 B2 5,000 4,575
RETAIL & WHOLESALE - 2.5%
APPAREL STORES - 1.2%
Petrie Stores Corp. sinking fund 8%,
12/15/10 Ba2 9,500 11,091
GENERAL MERCHANDISE STORES - 1.0%
Federated Department Stores, Inc. 0%,
2/15/04 Ba3 10,000 9,300
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
Intertan, Inc. 9%, 8/30/00 - CAD 3,000 2,279
TOTAL RETAIL & WHOLESALE 22,670
SERVICES - 1.5%
ADVERTISING - 0.7%
Omnicom Group, Inc. 4 1/2%, 9/1/00 (d) Baa3 5,500 5,610
Pharmaceutical Marketing Services, Inc.
6 1/4%, 2/1/03 - 1,000 700
6,310
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
SERVICES - CONTINUED
SERVICES - 0.8%
ADT Ltd. euro 6%, 10/3/02 - $ 5,500 $ 7,480
TOTAL SERVICES 13,790
TECHNOLOGY - 11.6%
COMMUNICATIONS EQUIPMENT - 0.3%
Porta Systems Corp. euro 6%, 7/1/02 - 4,110 2,466
COMPUTER SERVICES & SOFTWARE - 0.3%
Sapiens International Corp. NV euro 5%,
9/20/03 - 6,460 3,036
COMPUTERS & OFFICE EQUIPMENT - 1.2%
Canon, Inc. 1.30%, 12/19/08 A JPY 270,000 3,014
EMC Corp. Mass. 4 1/4%, 1/1/01 B2 7,500 7,763
10,777
ELECTRONICS - 9.8%
Computer Products Inc. 9 1/2%, 5/15/07 - 7,961 8,120
LSI Logic Corp. 5 1/2%, 3/15/01 (d) B2 3,000 3,225
Texas Instruments, Inc. euro 2 3/4%, 9/29/02 Baa1 73,750 78,913
90,258
TOTAL TECHNOLOGY 106,537
TRANSPORTATION - 0.9%
AIR TRANSPORTATION - 0.1%
Florida West Airlines, Inc. 8%, 3/18/99 (d) - 2,000 1,200
SHIPPING - 0.8%
Seacor Holdings, Inc. 6%, 7/15/03 (d) B3 7,500 7,200
TOTAL TRANSPORTATION 8,400
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (C) AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
UTILITIES - 2.1%
TELEPHONE SERVICES - 2.1%
CAM-NET Communications Network 10%,
8/15/97 (d) - $ 1,750 $ 1,715
US West, Inc. liquid yield option notes 0%,
6/25/11 A3 60,000 18,000
19,715
TOTAL CONVERTIBLE BONDS 482,304
NONCONVERTIBLE BONDS - 0.9%
BASIC INDUSTRIES - 0.9%
PAPER & FOREST PRODUCTS - 0.9%
Stone Container Corp.:
10 3/4%, 6/15/97 B2 4,000 3,960
11 1/2%, 9/1/99 B2 4,000 3,980
TOTAL NONCONVERTIBLE BONDS 7,940
TOTAL CORPORATE BONDS
(Cost $489,678) 490,244
REPURCHASE AGREEMENTS - 10.2%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account at 4.26%
dated 5/31/94 due 6/1/94 $ 93,748 93,737
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $923,351) $ 921,531
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE VALUE GAIN/(LOSS)
CONTRACTS TO SELL
5,734,995 JPY 8/15/94 $ 55,003 $ 538
(Receivable amount $55,541)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 6.0%
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
JPY - Japanese yen
SEK - Swedish krona
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(d) 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 $174,350,000 or 19.2% of net
assets.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 7.1% AAA, AA, A 15.2%
Baa 13.3% BBB 7.7%
Ba 7.6% BB 4.7%
B 10.4% B 9.4%
Caa 0.0% CCC 1.9%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 12.4% .
FMR has determined that unrated debt securities that are lower quality
account for 12.4% of the total value of investment in securities.
INCOME TAX INFORMATION
At May 31, 1994, the aggregate cost of investment securities for income tax
purposes was $923,840,000. Net unrealized depreciation aggregated
$2,309,000, of which $35,632,000 related to appreciated investment
securities and $37,941,000 related to depreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) MAY 31, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 921,531
agreements of $93,737) (cost $923,351) (Notes 1 and
2) - See accompanying schedule
Short foreign currency contracts (Note 2) $ (55,003)
Contracts held, at value
Receivable for contracts held 55,541 538
Cash 19
Receivable for investments sold 40,643
Receivable for fund shares sold 2,829
Dividends receivable 1,965
Interest receivable 8,951
Other receivables 27
TOTAL ASSETS 976,503
LIABILITIES
Payable for investments purchased 61,491
Payable for fund shares redeemed 4,138
Accrued management fee 400
Other payables and accrued expenses 293
TOTAL LIABILITIES 66,322
NET ASSETS $ 910,181
Net Assets consist of (Note 1):
Paid in capital $ 932,546
Undistributed net investment income 8,801
Accumulated undistributed net realized gain (loss) on (29,884)
investments
Net unrealized appreciation (depreciation) on:
Investment securities (1,820)
Foreign currency contracts 538
NET ASSETS, for 59,211 shares outstanding $ 910,181
NET ASSET VALUE, offering price and redemption price per $15.37
share ($910,181 (divided by) 59,211 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1994 (UNAUDITED)
INVESTMENT INCOME $ 6,513
Dividends
Interest (including security lending fees of $26) (Note 5) 20,695
TOTAL INCOME 27,208
EXPENSES
Management fee (Note 4) $ 2,653
Transfer agent fees (Note 4) 1,376
Accounting and security lending fees (Note 4) 234
Non-interested trustees' compensation 4
Custodian fees and expenses 29
Registration fees 74
Audit 20
Legal 5
Interest (Note 6) 15
Miscellaneous 26
Total expenses before reductions 4,436
Expense reductions (Note 7) (62) 4,374
NET INVESTMENT INCOME 22,834
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1, 2 AND 3)
Net realized gain (loss) on:
Investment securities (20,483)
Foreign currency contracts (317) (20,800)
Change in net unrealized appreciation (depreciation) on:
Investment securities (48,926)
Foreign currency contracts 538 (48,388)
NET GAIN (LOSS) (69,188)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ (46,354)
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1994 1993
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 22,834 $ 36,160
Net investment income
Net realized gain (loss) on investments (20,800) 76,755
Change in net unrealized appreciation (depreciation) (48,388) 16,159
on
investments
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (46,354) 129,074
FROM OPERATIONS
Distributions to shareholders: (26,071) (30,010)
From net investment income
From net realized gain (65,356) (10,919)
TOTAL DISTRIBUTIONS (91,427) (40,929)
Share transactions 301,147 999,266
Net proceeds from sales of shares
Reinvestment of distributions 81,809 37,828
Cost of shares redeemed (391,276) (481,320)
Net increase (decrease) in net assets resulting from (8,320) 555,774
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS (146,101) 643,919
NET ASSETS
Beginning of period 1,056,282 412,363
End of period (including undistributed net investment $ 910,181 $ 1,056,282
income of $8,801 and $9,921, respectively)
OTHER INFORMATION
Shares
Sold 18,416 60,275
Issued in reinvestment of distributions 5,000 2,359
Redeemed (24,111) (28,876)
Net increase (decrease) (695) 33,758
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED NOVEMBER 31,
ENDED
MAY 31,1994
(UNAUDITED)
1993 1992 1991 1990 1989
SELECTED PER-SHARE
DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 17.63 $ 15.77 $ 13.45 $ 10.53 $ 11.81 $ 10.01
beginning of period
Income from
Investment
Operations
Net investment .38 .75 .67 .60 .64 .80
income
Net realized and (1.12) 2.24 2.66 2.94 (1.15) 1.72
unrealized gain
(loss) on
investments
Total from (.74) 2.99 3.33 3.54 (.51) 2.52
investment
operations
Less Distributions
From net investment (.43) (.73) (.64) (.62) (.77) (.72)
income
From net realized (1.09) (.40) (.37) - - -
gain
Total distributions (1.52) (1.13) (1.01) (.62) (.77) (.72)
Net asset value, end of $ 15.37 $ 17.63 $ 15.77 $ 13.45 $ 10.53 $ 11.81
period
TOTAL RETURN(dagger)(double dagger) (4.64)% 19.94% 26.18% 34.52% (4.61) 26.28%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 910 $ 1,056 $ 412 $ 126 $ 57 $ 60
period (in millions)
Ratio of expenses to .87%* .92% .96% 1.17% 1.31% 1.38%
average net assets
Ratio of expenses to .88%* .92% .96% 1.17% 1.31% 1.38%
average net assets
before expense
reductions
Ratio of net investment 4.55%* 4.62% 4.82% 4.99% 5.63% 7.48%
income to average
net assets
Portfolio turnover rate 401%* 312% 258% 152% 223% 207%
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
(double dagger) THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN
EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. (SEE NOTE 7 OF NOTES TO
FINANCIAL STATEMENTS.)
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1994 (Unaudited)
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 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 and 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 practicable 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. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign currency transactions, market discount and losses deferred due to
wash sales. The fund also utilized earnings and profits distributed to
shareholders on redemption of shares as a part of the dividends paid
deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income may include temporary book and tax
basis differences which will reverse in a subsequent period. Any taxable
income or gain remaining at fiscal year end is distributed in the following
year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective December
1, 1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of November 30, 1993 have been reclassified to
reflect an increase in paid in capital of $9,026,000, an increase in
undistributed net investment income of $2,117,000 and a decrease in
accumulated net realized gain on investments of $11,143,000.
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 sup-
plied 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.
2. OPERATING POLICIES -
CONTINUED
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.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
fund to borrow from, or lend money to, other participating funds.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,758,820,000 and $1,775,351,000, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (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%. The basic fee is 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. The fund's performance adjustment will not take
effect until November, 1994. For the period, the management fee was
equivalent to an annualized 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
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES -
CONTINUED
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 $36,000 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 $309,000 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, there were no
loans outstanding.
6. INTERFUND LENDING
PROGRAM.
The fund participated in the interfund lending program as a borrower. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $26,973,000 and $24,896,000,
respectively. The weighted average interest rate was 3.62%.
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
$62,000 under this arrangement.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
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
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(Registered trademark) 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
