FIDELITY FINANCIAL TRUST, N-30D, 1995-07-11

FIDELITY FINANCIAL TRUST
N-30D, 1995-07-11

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(2_FIDELITY_LOGOS)FIDELITY

CONVERTIBLE SECURITIES
FUND
SEMIANNUAL REPORT
MAY 31, 1995
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

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

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

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

FINANCIAL STATEMENTS 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
INFORMA-
TION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO IN-
VESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND
NOR FIDELITY
DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY
FUND, INCLUDING
CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE
YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE

DEAR SHAREHOLDER:
Although there have been some positive market indications so far in 1995,
no one can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term, as we witnessed last year. You also can help to manage some
of the risks of investing through diversification. A stock fund is already
diversified because it invests in many issues. You can diversify even
further by placing some of your money in several different types of stock
funds or in other investment categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE

There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. 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 MAY 31, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND

Convertible Securities 8.33% 12.99% 101.71% 187.73%

Merrill Lynch Convertible Securities 11.35% 9.47% 81.83% n/a
Index

Average Convertible Securities Fund 9.02% 8.46% 69.89% n/a

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, the value of your
investment would be $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. To measure how the
fund's performance stacked up against its peers, you can compare it to the
average convertible securities fund, which reflects the performance of 31
convertible securities funds with similar objectives tracked by Lipper
Analytical Services over the past six months. Both benchmarks include
reinvested dividends and capital gains, if any, and exclude the effects of
sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Convertible Securities 12.99% 15.07% 13.39%

Merrill Lynch Convertible Securities Index 9.47% 12.70% n/a

Average Convertible Securities Fund 8.46% 11.04% 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 SecuriFirst Boston Conve
01/31/87 10000.00 10000.00
02/28/87 10350.19 10414.00
03/31/87 10437.74 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 9598.16 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 10602.16 10357.95
08/31/88 10445.63 10174.61
09/30/88 10582.76 10356.74
10/31/88 10752.09 10488.27
11/30/88 10593.35 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 11630.82 11171.83
04/30/89 12062.00 11547.21
05/31/89 12338.39 11781.61
06/30/89 12437.48 11695.61
07/31/89 12997.22 12031.27
08/31/89 13422.63 12295.96
09/30/89 13433.82 12188.99
10/31/89 13161.97 11803.81
11/30/89 13377.19 11996.22
12/31/89 13542.01 12009.41
01/31/90 13040.03 11531.44
02/28/90 13191.79 11683.65
03/31/90 13450.80 11862.41
04/30/90 13344.43 11597.88
05/31/90 13876.31 12160.38
06/30/90 14031.25 12145.78
07/31/90 13935.55 12037.69
08/31/90 13014.49 11344.32
09/30/90 12372.25 10848.57
10/31/90 12129.89 10442.83
11/30/90 12760.02 10953.49
12/31/90 13150.08 11182.42
01/31/91 13965.02 11684.51
02/28/91 14866.39 12382.07
03/31/91 15261.65 12685.43
04/30/91 15436.49 12813.55
05/31/91 15961.04 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 19792.23 15222.33
03/31/92 19458.45 15095.98
04/30/92 19620.16 15268.08
05/31/92 19997.47 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 22261.36 16988.65
01/31/93 23005.79 17518.69
02/28/93 22604.94 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 24511.53 18722.22
07/31/93 24759.71 18915.05
08/31/93 25343.67 19433.33
09/30/93 25638.09 19652.92
10/31/93 26227.47 20116.73
11/30/93 25976.98 19812.97
12/31/93 26221.17 20139.88
01/31/94 26874.71 20717.90
02/28/94 26444.33 20388.48
03/31/94 25286.77 19556.63
04/30/94 24867.74 19200.70
05/31/94 24771.04 19242.94
06/30/94 24752.39 19025.50
07/31/94 25193.23 19562.02
08/31/94 26532.08 19947.39
09/30/94 26366.37 19594.32
10/31/94 26531.68 19762.83
11/30/94 25837.39 19045.44
12/31/94 25760.75 19190.19
01/31/95 25760.75 19165.24
02/28/95 26297.44 19791.94
03/31/95 27074.58 20314.45
04/30/95 27684.52 20775.59
05/31/95 27989.49 21388.47

$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, 1995, the value of your investment
would have grown to $27,989 - a 179.89% 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 $21,388 - a 113.88% 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 Charles Mangum, Portfolio Manager of Fidelity Convertible
Securities Fund
Q. CHARLES, HOW HAS THE FUND PERFORMED?
A. For the six months ended May 31, 1995, the fund had a total return of
8.33%. That was slightly below the total return of 9.02% for the average
convertible securities fund tracked by Lipper Analytical Services over the
same period. For the 12 months ended May 31, the fund returned 12.99%, as
compared to 8.46% for the average convertible securities fund.
Q. WHY DID THE FUND TRAIL THE LIPPER AVERAGE DURING THE PAST SIX MONTHS?
A. Because I kept the fund positioned in what I would call a conservative
way. I focused the fund on convertible securities that were more bond-like
in nature, with less equity exposure. By equity exposure, I mean how
sensitive a security is to changes in the issuing company's common stock
price. The securities with less equity exposure participated less in the
recent stock market rally. But had the market dropped, I think these
securities would have held their own.
Q. WHAT LED YOU TO STRUCTURE THE FUND CONSERVATIVELY?
A. I was concerned that the economy has been slowing down. For the past two
years, the stock market has been driven largely by companies' tremendous
earnings growth. However, I believe that earnings will drop off as the
economy slows. I wanted to position the fund in such a way that earnings
disappointments would affect it as little as possible. At the same time,
falling interest rates have had a very positive effect, because as interest
rates fall, bond prices rise. That's why, in general, I have looked for
securities that are more bond-like in nature during the period.
Q. CAN YOU GIVE US AN EXAMPLE?
A. NovaCare - a company involved with contracting out rehabilitation
services to various sectors of the nursing home industry - is a good
example of the kind of security I'm looking for. The price of the NovaCare
security has been roughly flat for the year, but, as a convertible bond,
its coupon has yielded 7%. It has a 10.5% yield to maturity, which is in
about four and a half years. I figure that after about three years, the
bond will return about 11.5% per year. It's possible more equity-sensitive
bonds may return more. However, I don't think they will. That's why I
believe the fund is well-positioned by focusing on these more conservative
investments.
Q. HAVE YOU COMPLETELY AVOIDED EQUITY-SENSITIVE INVESTMENTS?
A. Not at all. Some investments with equity exposure have shown positive
results for the fund. I even have maintained about 14% of the fund's
investments in common stock. The stock of Becton Dickinson, a health care
products company, has been an excellent performer over the period. So has
Benson Eyecare, which, among other things, owns Foster Grant. Abbey
Healthcare was another successful name. Abbey's stock has gone up about 60%
this year, and the bonds have tracked that advance pretty closely because
they were equity-sensitive. IBM also has performed well. When I took over
the fund in February, I switched most of its IBM investment from common
stock to an IBM convertible preferred stock with roughly the same equity
exposure. It's been a tremendous performer.
Q. AS YOU MENTIONED, YOU TOOK OVER THE FUND IN FEBRUARY. HOW DOES YOUR
INVESTMENT STRATEGY DIFFER FROM THAT OF THE PREVIOUS FUND MANAGER, ANDY
OFFIT?
A. I think my strategy is very similar to Andy's. It's a fundamental
strategy, looking at investment choices security by security. In addition,
Andy and I both followed health care when we were analysts, and I still
have a predisposition toward the sector. I know the names better. At the
same time, Andy and I may have had different opinions on the individual
securities within the fund, and that's why shareholders will see some
changes in the portfolio.
Q. THE FUND'S STAKE IN THE RETAIL AND WHOLESALE SECTOR HAS INCREASED TO
ALMOST 10% OF THE FUND'S INVESTMENTS. WHAT'S THE STORY THERE?
A. I've increased the fund's exposure to this sector because of the
attractiveness of individual securities, and because I find it to be an
undervalued area of the market. One attractive position is Waban. The
company owns BJ's Wholesale Club and Home Base, which is similar to Home
Depot. One of the larger new positions in the fund is a Time Warner bond.
This security actually is convertible into Hasbro common stock. Time Warner
had owned about 12.8% of Hasbro stock, but wanted to liquidate its
position. For tax purposes, Time Warner sold its Hasbro holdings in the
form of convertible bonds. I find the prospects for Hasbro so appealing
that I've invested the fund in its common stock as well.
Q. WHICH INVESTMENTS WOULD YOU CHARACTERIZE AS DISAPPOINTMENTS DURING THE
PERIOD?
A. I would say that RJR Nabisco - a stock position in the fund - was one of
the biggest ones. RJR's stock price has suffered because its earnings
estimates have declined this year. But it is one of the cheapest consumer
stocks, and I believe it has strong underlying value. I think once earnings
estimates stop declining, investors will start to appreciate just how much
earnings and cash flow are going to come out of this company over the next
three years.
Q. WHAT'S YOUR OUTLOOK AND STRATEGY GOING FORWARD?
A. I'm reasonably positive, although my focus will remain conservative in
respect to how I run the fund. With a slowing economy, earnings
disappointments are likely to creep into the market. As that occurs, those
investments in the fund with equity exposure will be hardest hit. I'll be
looking for more stable investments, those that will be more insulated from
the effects of a slowing economy. The stock market has been incredibly
strong lately, and inevitably I believe there will be a correction. In the
face of potential earnings disappointments, I'd rather have the fund
positioned more conservatively than aggressively.

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, 1995,
more than $958 million
MANAGER: Charles Mangum,
since February 1995;
manager, Fidelity Select
Health Care Portfolio, 1992
to February 1995; Fidelity
Select Medical Delivery
Portfolio, 1991 to 1993;
joined Fidelity in 1990
(checkmark)
CHARLES MANGUM ON HIS
INVESTMENT APPROACH:
"First of all, I look at
investments company by
company. Beyond that, I have
a two-pronged strategy for
choosing investments for the
fund. On the equity side, I'm
looking for growth at a
reasonable or fair price. I'm
looking for companies with
strong business prospects,
and whose stock can
appreciate 20% to 30% over
the next 12 to 18 months, with
limited downside.
"On the bond side, I'm looking
to pick up as much yield as
possible, at the same time
focusing on the credit quality
of the company and its
balance sheet. With bonds,
I'm looking for returns of 8%
to 12%, again with limited
downside.
"If interest rates move
appreciably, those
parameters will change. I
need to measure factors
particular to both bonds and
stocks when choosing
investments. I don't
specifically target a level of
bonds versus stocks. The
fund must hold at least 65% of
its assets in convertible
securities, but when looking at
convertibles, you can find
investments that behave very
similarly to stocks or bonds. If
I find an equity-sensitive
security that I like, I might
even buy the common stock if
there are no convertible
securities outstanding."
(solid bullet) As of February 24, 1995,
Charles Mangum became
manager of the fund.
Previously, he was manager
of Fidelity Select Health Care
Portfolio.
INVESTMENT CHANGES

TOP TEN INVESTMENTS AS OF MAY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO

US West, Inc. liquid yield option 6.1 3.5
notes 0%, 6/25/11

RJR Nabisco Holdings Corp. 4.2 6.1

IBM France 5 3/4% 2.9 0.0

Cellular Communications, Inc. 2.4 3.6
0%, 7/27/99

Benson Eyecare Corp. 8%, 5/15/01 2.3 2.6

NovaCare, Inc. 5 1/2%, 1/15/00 2.1 0.0

Time Warner, Inc. liquid yield 2.1 0.0
option notes 0%, 12/17/12

Citicorp depository shares 2.1 0.0
representing 1/2 share, Series
15, $1.217

Hanson America, Inc. 2.39%, 3/1/01 1.8 0.0

WMX Technologies, Inc. 2%, 1.8 0.0
1/24/05

TOP FIVE MARKET SECTORS AS OF MAY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO

Health 20.0 38.1

Utilities 11.7 7.3

Retail & Wholesale 9.9 3.7

Media & Leisure 8.9 9.6

Finance 8.8 5.0

ASSET ALLOCATION
AS OF MAY 31, 1995 * AS OF NOVEMBER 30, 1994 **
Row: 1, Col: 1, Value: 2.2
Row: 1, Col: 2, Value: 7.4
Row: 1, Col: 3, Value: 14.2
Row: 1, Col: 4, Value: 36.2
Row: 1, Col: 5, Value: 40.0
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 3.3
Row: 1, Col: 3, Value: 26.2
Row: 1, Col: 4, Value: 30.5
Row: 1, Col: 5, Value: 40.0
Convertible
Securities 77.2%
Common Stocks 14.2%
Short-term
investments 7.4%
Nonconvertible
Bonds 1.2%
FOREIGN
INVESTMENTS 3.9%
Convertible
Securities 71.5%
Common Stocks 26.2%
Short-term
investments 2.3%
Nonconvertible
Bonds 0.0%
FOREIGN
INVESTMENTS 1.7%
*
**
INVESTMENTS MAY 31, 1995 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 14.2%
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - 0.4%
CHEMICALS & PLASTICS - 0.4%
du Pont (E.I.) de Nemours & Co. 51,500 $ 3,496
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
Bird Corp. (a)(d) 211,700 1,429
DURABLES - 0.2%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Borg-Warner Automotive, Inc. 70,000 1,776
FINANCE - 0.8%
BANKS - 0.3%
Citicorp 58,184 3,113
CREDIT & OTHER FINANCE - 0.5%
American Express Co. 130,000 4,631
TOTAL FINANCE 7,744
HEALTH - 6.5%
DRUGS & PHARMACEUTICALS - 3.2%
Allergan Ligand Retinoid Therapeutics, Inc. (rights) (a) 15,056 13
Allergan, Inc. 478,300 12,735
Genentech, Inc. (redeemable) (a) 169,400 8,216
NeoRx Corp. 28,358 154
Schering-Plough Corp. 130,000 10,238
31,356
MEDICAL EQUIPMENT & SUPPLIES - 2.6%
Advanced Medical, Inc. (d) 1,224,555 2,755
Becton Dickinson & Co. 172,700 9,930
Benson Eyecare Corp. 166,300 1,705
Nellcor, Inc. (a) 236,400 10,283
24,673
MEDICAL FACILITIES MANAGEMENT - 0.7%
Abbey Healthcare Group, Inc. 98,000 3,516
TheraTx, Inc. 216,700 3,034
6,550
TOTAL HEALTH 62,579
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 0.3%
LEISURE DURABLES & TOYS - 0.3%
Coleman, Inc. 20,000 $ 718
Hasbro, Inc. 73,200 2,580
3,298
NONDURABLES - 4.2%
TOBACCO - 4.2%
RJR Nabisco Holdings Corp. 1,416,080 40,358
RETAIL & WHOLESALE - 0.2%
GENERAL MERCHANDISE STORES - 0.2%
Proffitts, Inc. 60,000 1,478
SERVICES - 0.1%
PRINTING - 0.1%
Bowne & Co., Inc. 76,400 1,356
TECHNOLOGY - 1.3%
COMPUTER SERVICES & SOFTWARE - 0.7%
Novell, Inc. (a) 349,000 6,740
COMPUTERS & OFFICE EQUIPMENT - 0.6%
International Business Machines Corp. 59,200 5,520
TOTAL TECHNOLOGY 12,260
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0%
Florida West Airlines, Inc. 18,236 -
UTILITIES - 0.1%
CELLULAR - 0.1%
Cellular Communications, Inc., Series A (redeemable) (a) 20,000 928
TOTAL COMMON STOCKS
(Cost $138,664) 136,702
CONVERTIBLE PREFERRED STOCKS - 19.2%
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - 0.6%
METALS & MINING - 0.1%
Kaiser Aluminum Corp. depositary shares representing
1/10 share, Series A, $.65 145,000 $ 1,323
PAPER & FOREST PRODUCTS - 0.5%
James River Corp. $3.50 60,000 2,700
Stone Container Corp., Series E, exchangeable $1.75 90,600 1,993
4,693
TOTAL BASIC INDUSTRIES 6,016
CONSTRUCTION & REAL ESTATE - 1.1%
BUILDING MATERIALS - 0.4%
Bird Corp. $1.85 (a) 189,700 3,320
REAL ESTATE INVESTMENT TRUSTS - 0.7%
Oasis Residential, Inc. $.75 280,000 7,105
TOTAL CONSTRUCTION & REAL ESTATE 10,425
DURABLES - 2.9%
AUTOS, TIRES, & ACCESSORIES - 2.9%
Chrysler Corp., Series A, $4.625 (f) 90,000 10,890
Ford Motor Co., Series A, $4.20 40,000 3,820
General Motors Corp. $3.25 210,000 13,020
27,730
ENERGY - 3.5%
OIL & GAS - 3.5%
Atlantic Richfield Co. exchangeable $.5575 520,000 13,065
Occidental Petroleum Corp.:
Indexed $3.00 221,400 13,367
$3.875 (f) 130,000 7,361
33,793
FINANCE - 5.5%
BANKS - 2.1%
Citicorp depository shares representing 1/12 share,
Series 15, $1.217 991,187 19,948
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - 1.8%
Alexander & Alexander Services, Inc., Series A,
$3.625 (f) 93,600 $ 4,717
American General LLC, Series A, $.25 211,000 10,814
St. Paul Capital LLC $.25 33,000 1,716
17,247
SAVINGS & LOANS - 1.6%
Glendale Federal Bank, Series E, $2.1875 342,400 12,497
Great Western Financial Corp. 8 3/4% 60,000 3,555
16,052
TOTAL FINANCE 53,247
HEALTH - 0.2%
DRUGS & PHARMACEUTICALS - 0.2%
Neorx Corp., Series 1, $2.44 126,700 1,774
RETAIL & WHOLESALE - 1.1%
RETAIL & WHOLESALE, MISCELLANEOUS - 1.1%
Best Buy Capital LP gtd. 6 1/2% 265,000 10,600
TECHNOLOGY - 2.9%
COMPUTERS & OFFICE EQUIPMENT - 2.9%
IBM France 5 3/4% 272,950 27,756
UTILITIES - 1.4%
TELEPHONE SERVICES - 1.4%
Sprint Corp. $.6573 399,100 13,270
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $173,190) 184,611
CORPORATE BONDS - 59.2%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - 58.0%
BASIC INDUSTRIES - 2.4%
CHEMICALS & PLASTICS - 0.1%
Valhi, Inc. liquid yield option notes
0%, 10/20/07 B1 $ 2,000 $ 705
METALS & MINING - 1.5%
Freeport McMoran, Inc. 6.55%, 1/15/01 Ba3 15,650 14,515
PAPER & FOREST PRODUCTS - 0.8%
Champion International Corp. sinking fund
6 1/2%, 4/15/11 Baa2 4,000 5,280
Stone Container Corp. 8 7/8%, 7/15/00 (f) B2 1,485 2,465
7,745
TOTAL BASIC INDUSTRIES 22,965
CONGLOMERATES - 1.8%
Hanson America, Inc. 2.39%, 3/1/01 (f) A3 22,500 17,775
DURABLES - 1.3%
AUTOS, TIRES, & ACCESSORIES - 0.7%
Amoco Canada Petroleum Co. exchangeable,
7 3/8%, 9/1/13 Aa3 5,157 6,729
CONSUMER ELECTRONICS - 0.6%
Whirlpool Corp. liquid yield option notes
0%, 5/14/11 Baa1 15,000 6,234
TOTAL DURABLES 12,963
ENERGY - 1.7%
ENERGY SERVICES - 1.4%
Baker Hughes, Inc. 0%, 5/5/08 A2 19,000 11,448
Halliburton Co. liquid yield option notes
0%, 3/31/06 A3 5,000 2,625
14,073
OIL & GAS - 0.3%
Garnet Resources Corp. 9 1/2%, 12/21/98 (f) - 3,000 2,850
TOTAL ENERGY 16,923
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
FINANCE - 2.5%
CREDIT & OTHER FINANCE - 0.8%
Elan International Finance Ltd. liquid yield option
notes 0%, 10/16/12 Ba2 $ 19,000 $ 7,909
INSURANCE - 1.7%
Fremont General Corp. liquid yield option notes
0%, 10/12/13 Ba2 19,000 7,339
Horace Mann Educators Corp.
6 1/2%, 12/1/99 Baa3 8,900 8,722
16,061
TOTAL FINANCE 23,970
HEALTH - 12.1%
DRUGS & PHARMACEUTICALS - 2.1%
Chiron Corp. 1.90%, 11/17/00 (f) Ba1 4,740 3,537
Roche Holdings, Inc. liquid yield option notes
0%, 4/20/10 (f) - 42,000 16,170
19,707
MEDICAL EQUIPMENT & SUPPLIES - 3.4%
AMSCO International, Inc. 4 1/2%,
10/15/02 (c) Ba3 8,200 7,175
Benson Eyecare Corp. 8%, 5/15/01 B3 17,375 21,979
Mentor Corp. euro 6 3/4%, 7/22/02 - 2,535 3,353
32,507
MEDICAL FACILITIES MANAGEMENT - 6.6%
Abbey Healthcare Group, Inc. euro
6 1/2%, 12/1/02 B2 7,275 13,350
Medical Care International, Inc.
6 3/4%, 10/1/06 Baa1 11,750 11,133
Meris Labs, Inc. 10%, 11/14/97 (e) - 3,150 3,150
NovaCare, Inc. 5 1/2%, 1/15/00 Ba3 25,000 20,688
TheraTx, Inc. 8%, 2/1/02 B3 17,100 15,689
64,010
TOTAL HEALTH 116,224
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 3.2%
ELECTRICAL EQUIPMENT - 0.4%
Magnetek, Inc. 8%, 9/15/01 B2 $ 3,300 $ 3,465
POLLUTION CONTROL - 2.8%
Browning-Ferris Industries, Inc. 6 3/4%, 7/18/05 A3 7,500 7,406
Riedel Environmental Technologies, Inc.
7%, 10/11/99 - 4,647 2,091
WMX Technologies, Inc. 2%, 1/24/05 A2 21,553 17,673
27,170
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 30,635
MEDIA & LEISURE - 8.6%
BROADCASTING - 3.8%
Comcast Corp. 1 1/8%, 4/15/07 B1 4,500 2,036
Time Warner, Inc. liquid yield option notes
0%, 12/17/12 Ba1 61,000 20,359
Time Warner, Inc. 8 3/4%, 1/10/15 Ba3 14,000 14,490
36,885
ENTERTAINMENT - 0.9%
All American Communications, Inc.
6 1/2%, 10/1/03 (f) - 6,900 5,865
Kushner-Locke Co. 8%, 12/15/00 (f) - 3,000 2,460
8,325
LEISURE DURABLES & TOYS - 1.2%
Coleman Worldwide Corp. 2nd liquid yield
option notes 0%, 5/27/13 B2 40,260 11,474
LODGING & GAMING - 0.8%
WMS Industries, Inc. 5 3/4%, 12/1/02 B1 9,350 7,948
PUBLISHING - 1.9%
News America Holdings, Inc. liquid yield
option notes 0%, 3/11/13 Ba1 28,890 13,253
Score Board, Inc.:
9%, 9/1/02 (f) - 3,500 3,080
9%, 2/1/03 (f) - 3,000 2,430
18,763
TOTAL MEDIA & LEISURE 83,395
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
NONDURABLES - 1.4%
BEVERAGES - 0.2%
Grand Metropolitan PLC 6 1/2%,
1/31/00 (f) - $ 2,000 $ 2,130
FOODS - 0.2%
Chiquita Brands International, Inc. 7%, 3/28/01 B3 2,000 1,740
TOBACCO - 1.0%
American Brands, Inc. euro 7 5/8%, 3/5/01 A2 9,000 9,383
TOTAL NONDURABLES 13,253
RETAIL & WHOLESALE - 8.6%
DRUG STORES - 1.1%
Rite Aid Corp. liquid yield option notes
0%, 7/24/06 Baa1 21,000 10,041
GENERAL MERCHANDISE STORES - 2.6%
General Host Corp. 8%, 2/15/02 B3 8,819 8,246
Proffitts, Inc. 4 3/4%, 11/1/03 B2 21,150 16,920
25,166
RETAIL & WHOLESALE, MISCELLANEOUS - 4.9%
Intertan, Inc. 9%, 8/30/00 - CAD 7,870 6,893
Lowe's Companies, Inc. 3%, 7/22/03 A3 3,000 3,277
Office Depot, Inc. 0%, 11/1/08 Ba2 23,000 13,455
Pier Imports, Inc. exchangeable 8 1/2%,
12/1/00 (e) - 3,350 4,137
Price Co. 6 3/4%, 3/1/01 Baa1 10,000 9,775
Waban, Inc. 6 1/2%, 7/1/02 Ba3 11,000 10,010
47,547
TOTAL RETAIL & WHOLESALE 82,754
SERVICES - 0.1%
ADVERTISING - 0.1%
Pharmaceutical Marketing Services, Inc.
6 1/4%, 2/1/03 - 1,000 650
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 2.5%
COMPUTER SERVICES & SOFTWARE - 1.8%
Automatic Data Processing, Inc. 0%, 2/20/12 Aa3 $ 29,000 $ 12,615
Sapiens International Corp. NV euro 5%,
9/20/03 - 12,535 4,262
16,877
COMPUTERS & OFFICE EQUIPMENT - 0.6%
AST Research, Inc. 0%, 12/14/13 B2 3,500 1,146
Converse Technology, Inc. 5 1/4%, 12/1/03 - 5,000 4,600
5,746
ELECTRONICS - 0.1%
Richardson Electronics, Ltd. 7 1/4%, 12/15/06 B3 1,743 1,394
TOTAL TECHNOLOGY 24,017
TRANSPORTATION - 1.6%
AIR TRANSPORTATION - 0.6%
AMR Corp. 6 1/8%, 11/1/24 Ba2 2,000 1,930
Delta Air Lines, Inc. 3.23%, 6/15/03 Ba3 4,000 3,435
Florida West Airlines, Inc. 8%, 3/18/99 (f) - 2,000 300
5,665
SHIPPING - 0.8%
Seacor Holdings, Inc. 6%, 7/15/03 (f) B3 7,500 7,481
TRUCKING & FREIGHT - 0.2%
Airborne Freight Corp. 6 3/4%, 8/15/01 Ba1 2,000 1,905
TOTAL TRANSPORTATION 15,051
UTILITIES - 10.2%
CELLULAR - 2.4%
Cellular Communications, Inc. 0%,
7/27/99 B1 29,300 23,147
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - 7.8%
CAM-NET Communications Network
10%, 8/15/97 (f) - $ 1,750 $ 875
LDDS Communications, Inc. 5%, 8/15/03 Ba2 16,650 15,485
US West, Inc. liquid yield option notes
0%, 6/25/11 A3 182,000 58,468
74,828
TOTAL UTILITIES 97,975
TOTAL CONVERTIBLE BONDS 558,550
NONCONVERTIBLE BONDS - 1.2%
HEALTH - 1.2%
MEDICAL EQUIPMENT & SUPPLIES - 1.2%
Advanced Medical, Inc. 15%, 7/15/99 - 12,033 12,032
TOTAL CORPORATE BONDS
(Cost $554,834) 570,582
REPURCHASE AGREEMENTS - 7.4%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 6.13% dated
5/31/95 due 6/1/95 $ 71,717 71,705
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $938,393) $ 963,600
CURRENCY ABBREVIATIONS
CAD - Canadian dollar
LEGEND
(a) Non-income producing
(b) Principal amount is stated in United States dollars unless otherwise
noted.
(c) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(d) Affiliated company (see Note 7 of Notes to Financial Statements).
(e) 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 COST
SECURITY DATE (000S)
Meris Labs, Inc.
10%, 11/14/97 11/14/94 $ 3,150
Pier Imports, Inc.
exchangeable 12/08/94 to
8 1/2%, 12/1/00 1/10/95 $ 3,149
(f) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $90,386,000 or 9.4% 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 (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 15.3% AAA, AA, A 14.1%
Baa 5.3% BBB 7.4%
Ba 16.1% BB 11.6%
B 14.5% B 11.5%
Caa 0.0% CCC 3.1%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 8.0%
including long-term debt categorized as other securities. FMR has
determined that unrated debt securities that are lower quality account for
8.0% of the total value of investments.
INCOME TAX INFORMATION
At May 31, 1995, the aggregate cost of investment securities for income tax
purposes was $938,585,000. Net unrealized appreciation aggregated
$25,015,000, of which $52,088,000 related to appreciated investment
securities and $27,073,000 related to depreciated investment securities.
At November 30, 1994, the fund had a capital loss carryforward of
approximately $2,519,000 all of which will expire on November 30, 2002.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) MAY 31, 1995 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 963,600
agreements of $71,705) (cost $938,393) - See
accompanying schedule

Cash 1

Receivable for investments sold 39,729

Receivable for fund shares sold 4,128

Dividends receivable 1,804

Interest receivable 7,107

Other receivables 9

TOTAL ASSETS 1,016,378

LIABILITIES

Payable for investments purchased $ 44,548

Payable for fund shares redeemed 3,830

Accrued management fee 234

Other payables and accrued expenses 273

Collateral on securities loaned, at value 9,422

TOTAL LIABILITIES 58,307

NET ASSETS $ 958,071

Net Assets consist of:

Paid in capital $ 912,584

Undistributed net investment income 4,098

Accumulated undistributed net realized gain (loss) on 16,143
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 25,246
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 58,000 shares outstanding $ 958,071

NET ASSET VALUE, offering price and redemption price per $16.52
share ($958,071 (divided by) 58,000 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1995 (UNAUDITED)

INVESTMENT INCOME $ 5,048
Dividends

Interest (including income on securities loaned of $1) 20,316

TOTAL INCOME 25,364

EXPENSES

Management fee $ 2,294
Basic fee

Performance adjustment (337)

Transfer agent fees 1,007

Accounting and security lending fees 215

Non-interested trustees' compensation 7

Custodian fees and expenses 27

Registration fees 11

Audit 23

Legal 3

Total expenses before reductions 3,250

Expense reductions (22) 3,228

NET INVESTMENT INCOME 22,136

REALIZED AND UNREALIZED GAIN (LOSS) 20,490
Net realized gain (loss) on investment securities
(including realized gain (loss) of $(987) on sales of
investment in affiliated issuers)

Change in net unrealized appreciation (depreciation) on:

Investment securities 31,689

Assets and liabilities in foreign currencies 4 31,693

NET GAIN (LOSS) 52,183

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ 74,319
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, 1995 1994
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 22,136 $ 44,945
Net investment income

Net realized gain (loss) 20,490 1,808

Change in net unrealized appreciation (depreciation) 31,693 (53,553)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 74,319 (6,800)
FROM OPERATIONS

Distributions to shareholders (21,966) (55,183)
From net investment income

From net realized gain - (60,321)

TOTAL DISTRIBUTIONS (21,966) (115,504)

Share transactions 211,155 529,406
Net proceeds from sales of shares

Reinvestment of distributions 19,920 103,894

Cost of shares redeemed (228,747) (663,888)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,328 (30,588)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 54,681 (152,892)

NET ASSETS

Beginning of period 903,390 1,056,282

End of period (including undistributed net investment $ 958,071 $ 903,390
income of $4,098 and $3,928, respectively)

OTHER INFORMATION
Shares

Sold 13,409 32,841

Issued in reinvestment of distributions 1,299 6,409

Redeemed (14,494) (41,370)

Net increase (decrease) 214 (2,120)

</TABLE>

FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31,1995
(UNAUDITED)

1994 D 1993 1992 1991 1990

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, $ 15.63 $ 17.63 $ 15.77 $ 13.45 $ 10.53 $ 11.81
beginning of period

Income from
Investment
Operations

Net investment .38 .78 .75 .67 .60 .64
income

Net realized and .89 (.86) 2.24 2.66 2.94 (1.15)
unrealized gain
(loss)

Total from 1.27 (.08) 2.99 3.33 3.54 (.51)
investment
operations

Less Distributions (.38) (.91) (.73) (.64) (.62) (.77)
From net investment
income

From net realized - (1.01) (.40) (.37) - -
gain

Total distributions (.38) (1.92) (1.13) (1.01) (.62) (.77)

Net asset value, end of $ 16.52 $ 15.63 $ 17.63 $ 15.77 $ 13.45 $ 10.53
period

TOTAL RETURN B, C 8.33% (.54) 19.94% 26.18% 34.52% (4.61)
% %

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 958 $ 903 $ 1,056 $ 412 $ 126 $ 57
period (in millions)

Ratio of expenses to .71% .85% .92% .96% 1.17% 1.31%
average net assets A

Ratio of expenses to .71% .86% .92% .96% 1.17% 1.31%
average net assets A
before expense
reductions

Ratio of net investment 4.86% 4.61% 4.62% 4.82% 4.99% 5.63%
income to average A
net assets

Portfolio turnover rate 219% 318% 312% 258% 152% 223%
A

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 6 OF NOTES TO FINANCIAL
STATEMENTS).
D 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, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1995 (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 (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
of their purchase date are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS.
Distributions are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, market discount and losses deferred due to wash
sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income (loss) and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The fund may use foreign currency
contracts to facilitate transactions in foreign securities and to manage
the fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR), may
transfer uninvested cash balances into one or more joint trading accounts.
These balances are invested in one or more repurchase agreements that
mature in 60 days or less from the date of purchase, and are collateralized
by U.S. Treasury or Federal Agency obligations.
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. FMR, the fund's
investment adviser, is responsible for determining that the value of these
underlying securities remains at least equal to the resale price.
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 $7,287,000 or 0.8% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $921,430,000 and $954,776,000 respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2700% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .20%. The
basic fee is subject to a performance adjustment (up to a maximum of
(plus/minus) .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 annualized rate of .44% of average
net assets after the performance adjustment.
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 $28,000 for the
period.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
During the period December 1, 1994 to December 31, 1994, FSC received fees
based on the type, size, number of accounts and the number of transactions
made by shareholders. Effective January 1, 1995, the Board of Trustees
approved a revised transfer agent contract pursuant to which FSC receives
account fees and asset-based fees that vary according to account size and
type of account. FSC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements.
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 $105,000 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
$9,413,000 and $9,422,000, 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
$22,000 under this arrangement.
7. TRANSACTIONS WITH
AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of at
least 5% of the voting securities. Transactions with companies which are or
were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASES SALES DIVIDEND MARKET
AFFILIATES COST COST INCOME VALUE
Advanced Medical, Inc. $ 1,469 $ - $ - $ 2,755
Barr Laboratories, Inc. 185 7,223 - -
Bird Corp. (a) - - - 1,429
Sapiens International Corp. NV - 967 - -
TOTALS $ 1,654 $ 8,190 $ - $ 4,184
(a) Non-income producing.
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OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
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Security Transactions
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BOARD OF TRUSTEES
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FIDELITY

(REGISTERED TRADEMARK)
RETIREMENT GROWTH
FUND
SEMIANNUAL REPORT
MAY 31, 1995
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

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

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

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

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

NOTES 27 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. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR
GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE
FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT
RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY
DISTRIBUTORS
CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING
CHARGES
AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU
INVEST OR SEND MONEY.
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 securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1995 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS

Retirement Growth 9.10% 10.57% 87.32% 324.83%

S&P 500(registered trademark) 19.23% 20.19% 71.79% 290.51%

Average Capital Appreciation Fund 11.96% 11.92% 67.81% 225.96%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Standard & Poor's Composite
Index of 500 stocks - a common proxy for the U.S. stock market. To measure
how the fund's performance stacked up against its peers, you can compare it
to the average capital appreciation fund, which reflects the performance of
157 capital appreciation funds with similar objectives tracked by Lipper
Analytical Services over the past six months. Both benchmarks include
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Retirement Growth 10.57% 13.37% 15.56%

S&P 500(registered trademark) 20.19% 11.43% 14.59%

Average Capital Appreciation Fund 11.92% 10.51% 11.80%

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
Fidelity RetirementStandard & Poor's
05/31/85 10000.00 10000.00
06/30/85 10217.55 10157.00
07/31/85 10382.60 10141.76
08/31/85 10262.57 10055.56
09/30/85 9819.95 9740.82
10/31/85 10322.58 10190.85
11/30/85 11162.79 10889.94
12/31/85 11725.43 11417.01
01/31/86 12242.62 11480.95
02/28/86 13448.83 12339.72
03/31/86 14195.53 13028.28
04/30/86 14113.47 12881.06
05/31/86 14540.16 13566.33
06/30/86 14269.38 13795.60
07/31/86 13145.22 13024.43
08/31/86 14105.27 13990.84
09/30/86 13095.99 12833.80
10/31/86 13736.02 13574.31
11/30/86 13891.92 13904.16
12/31/86 13383.18 13549.61
01/31/87 15261.55 15374.74
02/28/87 16282.42 15982.04
03/31/87 16870.20 16443.92
04/30/87 16880.51 16297.57
05/31/87 17210.49 16439.36
06/30/87 17787.95 17269.55
07/31/87 19159.43 18145.11
08/31/87 19736.89 18821.93
09/30/87 19582.22 18409.73
10/31/87 14302.55 14444.27
11/30/87 13343.54 13254.06
12/31/87 14630.69 14262.70
01/31/88 14887.14 14863.16
02/29/88 16155.85 15555.78
03/31/88 16142.35 15075.11
04/30/88 16439.29 15242.44
05/31/88 16358.30 15375.05
06/30/88 17208.61 16080.76
07/31/88 17006.16 16019.66
08/31/88 16533.76 15474.99
09/30/88 17033.15 16134.22
10/31/88 17154.62 16582.76
11/30/88 16938.67 16345.62
12/31/88 16902.15 16631.67
01/31/89 18206.54 17849.11
02/28/89 17835.82 17404.67
03/31/89 18302.65 17810.19
04/30/89 19167.67 18734.54
05/31/89 19538.39 19493.29
06/30/89 19263.78 19382.18
07/31/89 21076.20 21132.39
08/31/89 21323.35 21546.59
09/30/89 21639.15 21458.25
10/31/89 20883.97 20960.41
11/30/89 21446.92 21388.01
12/31/89 22042.23 21901.32
01/31/90 20956.28 20431.74
02/28/90 21175.33 20695.31
03/31/90 21350.58 21243.74
04/30/90 20737.22 20712.64
05/31/90 22679.51 22732.13
06/30/90 23190.64 22577.55
07/31/90 23103.02 22505.30
08/31/90 20737.22 20470.82
09/30/90 18532.07 19473.89
10/31/90 17933.32 19390.15
11/30/90 19174.63 20642.76
12/31/90 19803.79 21218.69
01/31/91 20716.68 22143.82
02/28/91 22424.67 23727.11
03/31/91 23013.63 24301.30
04/30/91 23160.87 24359.63
05/31/91 23926.51 25411.96
06/30/91 22395.22 24248.10
07/31/91 23852.89 25378.06
08/31/91 24868.85 25979.52
09/30/91 25178.06 25545.66
10/31/91 26076.22 25887.97
11/30/91 25340.02 24844.69
12/31/91 28831.34 27686.92
01/31/92 28894.60 27171.94
02/29/92 29305.80 27525.18
03/31/92 28404.33 26988.43
04/30/92 28720.64 27781.89
05/31/92 29258.36 27918.03
06/30/92 28182.91 27502.05
07/31/92 29147.65 28626.88
08/31/92 28356.88 28040.03
09/30/92 28689.01 28370.90
10/31/92 29590.48 28470.20
11/30/92 31266.90 29441.03
12/31/92 31886.38 29803.16
01/31/93 32681.60 30053.51
02/28/93 31653.63 30462.23
03/31/93 32545.83 31104.99
04/30/93 32293.69 30352.25
05/31/93 34000.50 31165.69
06/30/93 34446.60 31256.07
07/31/93 34679.35 31131.04
08/31/93 36618.91 32310.91
09/30/93 36754.68 32062.11
10/31/93 37840.83 32725.80
11/30/93 37355.94 32414.91
12/31/93 38942.65 32807.13
01/31/94 40043.05 33922.57
02/28/94 39632.24 33003.27
03/31/94 37816.03 31564.32
04/30/94 38161.97 31968.35
05/31/94 38421.43 32492.63
06/30/94 37578.19 31696.56
07/31/94 38529.54 32736.21
08/31/94 40388.99 34078.39
09/30/94 39934.94 33243.47
10/31/94 40107.91 33991.45
11/30/94 38940.35 32753.48
12/31/94 38966.45 33239.21
01/31/95 39136.69 34101.11
02/28/95 40033.88 35430.03
03/31/95 40882.57 36475.57
04/30/95 41949.49 37549.77
05/31/95 42482.95 39050.64

$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity
Retirement Growth Fund on May 31, 1985. As the chart shows, by May 31,
1995, the value of your investment would have grown to $42,483 - a 324.83%
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 $39,051 - a 290.51% 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

An interview with Harris Leviton, Portfolio Manager of Fidelity Retirement
Growth Fund
Q. HARRIS, HOW HAS THE FUND PERFORMED?
A. For the six and 12 months ended May 31, 1995, the fund had total returns
of 9.10% and 10.57%, respectively. The average capital appreciation fund
returned 11.96% and 11.92% for the same periods, according to Lipper
Analytical Services.
Q. WHY DID THE FUND'S PERFORMANCE TRAIL THAT OF ITS PEERS?
A. Because, in general, the kinds of stocks I invest in fell out of favor.
I am a value-driven growth investor. That is, I look for inexpensive stocks
of companies with some impetus for earnings growth momentum. Because of
recession fears over the past six months, most investors have favored more
expensive growth stocks, those that show the potential for strong earnings
growth. An example is Coca-Cola. A stock such as Coca-Cola is perceived to
be recession-proof because demand for the product doesn't vary much from
one year to the next, whatever the economic climate. However, these stocks
have been selling at expensive valuations - stock prices compared to other
measures such as earnings and dividends. If you look at the market's
advance over the past several months, it's been very narrow by historical
terms. That is, the more expensive parts of the market have done well, but
other areas have not.
Q. WHY HAVE YOU KEPT THE FUND'S CASH
AND SHORT-TERM INVESTMENTS - 29.3% OF THE FUND AS OF MAY 31 - AT SUCH HIGH
LEVELS?
A. I kept that much invested in cash and short-term investments because I
didn't find attractive stocks at reasonable valuations. Either stocks were
too expensive, or they were cheap but the company's business prospects were
not strong enough to justify my investment. I had a choice: I could have
played along with the strength of the market, investing in some expensive
growth names; or I could have done what I believe in and invested by my
usual parameters. I chose the latter. The fund may have done better with a
smaller cash and short-term investment position, but I stuck to my
investment principles. Since good stock ideas weren't available at
reasonable valuations, I didn't become more fully invested, although the
fund's cash and short-term holdings are earning about a 6% yield at the end
of the period. If growth continues and these companies continue to do well,
people who own these stocks will make money. But if growth doesn't
continue, there's a long way to fall. There's a lot of speculative activity
in the U.S. market right now - I've found many initial public offerings in
the past six to nine months to have been high-flying overvalued technology
stocks - and I don't think it's reinforced by a very strong economy.
Q. AT THE SAME TIME YOU'VE FOUND SOME OPPORTUNITIES . . .
A. One of the top performing sectors over the period has been technology,
the largest sector represented in the fund at 12.8% at the end of the
period. Earnings in this sector have been driven by strong demand, both by
consumers and by businesses seeking to improve productivity. IBM, the
fund's largest position, has grown earnings and generated cash through a
massive restructuring. It should generate $10 per share in free cash flow
this year. Sun Microsystems, manufacturer of networking computers and
workstations, has benefited from the growth of the Internet, since it
provides computers to more than half of the businesses that provide
Internet sites. And SunGard Data Systems, a computer services company, was
attractive because its stock was cheap. All of these have good earnings
potential and are validations of the fund's strategy of looking for
inexpensive stocks with some sort of earnings catalyst.
Q. ARE THERE ANY OTHER AREAS THAT HAVE PERFORMED WELL FOR THE FUND?
A. Another strong area for the fund has been insurance stocks, which have
benefited from declining interest rates as well as an improved competitive
environment. Despite recent rises in their price, stocks such as Allstate,
American Bankers Insurance Group and Mid Ocean remain quite inexpensive and
continue to be attractive investments. I also continue to like the shares
of U.S. regional phone companies, which currently have very strong yields
and I believe should see earnings growth start to accelerate as
deregulation really takes hold. Ameritech, NYNEX, GTE and Bell Atlantic are
all attractive here.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. When investing is popular, it can be more difficult to make money. It's
easier to pinpoint opportunities when there's less interest and stocks of
companies with good growth prospects can be had cheaply. It's been
difficult to find things I like, and I don't see that changing. If it
becomes easier, I'll be happy, but in order for that to happen, the market
will have to decline. For me, it's like mowing the lawn. It's nice to let
the grass grow, but after a while you have to get the mower, otherwise the
weeds take over the lawn. When you go as long as we have without a
correction, that can happen: the dandelions - overpriced stocks -are
everywhere, and speculative initial public offerings and other risky stocks
are chased. Sometimes you just have to let the mower run. Since I'm finding
stock valuations to be expensive, I'll probably have to wait until we see
some sort of correction before I find stocks at what I think are attractive
valuations.

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 May 31, 1995,
more than $3.5 billion
MANAGER: Harris Leviton,
since 1992; manager, Fidelity
Convertible Securities Fund,
1990-1992; Fidelity Select
Electronics Portfolio, 1987-1990;
analyst, 1986-1990; joined
Fidelity in 1986
(checkmark)
HARRIS LEVITON ON INVESTMENT
OPPORTUNITIES IN EUROPE:
"Europe is starting to look
interesting to me. I believe
those markets are where the
U.S. was about five years
ago. Many investors have been
critical of the management of
many European companies in
the past, because they didn't
seem to care about public
shareholders. In addition,
European labor unions and
regulations have tended to be
stronger. However, companies
are starting to realize what they
need to do to be competitive
internationally. Furthermore,
investor interest in Europe has
waned. That's created
attractive valuations and
opportunities.
"For example, Koninklijke
PPT Nederland (KPN), the
privatized Dutch national
telephone and postal
company, has sold surplus
assets and restructured. It's
such an efficient provider of
magazine delivery services
that U.S. magazine
companies are using it instead
of local postal systems to
distribute their product across
Europe.
"Opportunities like this are
tough to find in the U.S.
Europe still has its share of
problems, but a company like
Philips Electronics - one of
the fund's most successful
investments over the past
few years - is a good
example of how earnings can
improve because of
restructuring. The stock has
almost tripled over the past
few years, while most of
Europe was in a recession."
INVESTMENT CHANGES

TOP TEN STOCKS AS OF MAY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

International Business Machines 2.9 1.9
Corp.

NYNEX Corp. 1.9 0.5

Philip Morris Companies, Inc. 1.9 1.0

SunGard Data Systems, Inc. 1.7 1.6

Intel Corp. 1.7 0.0

Sun Microsystems, Inc. 1.7 1.4

Warner-Lambert Co. 1.6 1.8

Koninklijke PPT Nederland 1.5 1.1

Cellular Communications, Inc.
redeemable Class P 1.5 1.8

Viacom, Inc. Class B (non-vtg.) 1.5 0.6

TOP FIVE MARKET SECTORS AS OF MAY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET SECTORS
6 MONTHS AGO

Technology 12.8 9.5

Utilities 10.2 8.6

Basic Industries 9.3 9.8

Health 6.3 6.9

Durables 5.6 6.3

ASSET ALLOCATION
AS OF MAY 31, 1995 * AS OF NOVEMBER 30, 1994 **
Row: 1, Col: 1, Value: 29.3
Row: 1, Col: 2, Value: 2.3
Row: 1, Col: 3, Value: 18.4
Row: 1, Col: 4, Value: 50.0
Row: 1, Col: 1, Value: 26.9
Row: 1, Col: 2, Value: 4.9
Row: 1, Col: 3, Value: 18.2
Row: 1, Col: 4, Value: 50.0
Stocks 68.4%
Bonds 2.3%
Short-term
Investments 29.3%

FOREIGN
INVESTMENTS 13.3%
Stocks 68.2%
Bonds 4.9%
Short-term
Investments 26.9%

FOREIGN
INVESTMENTS 15.2%
*
**
INVESTMENTS MAY 31, 1995 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 67.9%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.3%
McDonnell Douglas Corp. 164,400 $ 11,877
BASIC INDUSTRIES - 7.9%
CHEMICALS & PLASTICS - 2.5%
AKZO NV:
Ord. 124,000 15,068
sponsored ADR 23,600 1,446
du Pont (E.I.) de Nemours & Co. 399,000 27,082
Ferro Corp. 100,000 2,750
Great Lakes Chemical Corp. 20,000 1,220
Indo Gulf Fertilizer and Chemicals Corp. Ltd. GDR (a)(c) 526,000 1,105
JCT Ltd. GDR (a)(c) 497,000 9,319
JCT Ltd. GDR (a) 60,000 1,125
Kemira OY sponsored ADR (a)(c) 364,700 6,701
Methanex Corp. (a) 560,400 4,704
Reliance Industries Ltd.:
GDR (c) 100,000 1,850
GDS (a) 225,000 4,219
Southern Petrochemical Industries Corp. GDS (a) 688,000 5,504
United Phosphorus Ltd. GDR:
(For. Reg.) 134,150 2,750
(For. Reg.)(a) 80,000 1,640
Wellman, Inc. 201,000 5,050
91,533
IRON & STEEL - 0.4%
ACESITA SA:
Ord. 102,207,400 649
(Pfd. Reg.) 38,217,994 307
(Pfd. Reg.) (rights) (a) 20,764,301 6
Allegheny Ludlum Industries, Inc. 87,000 1,718
Cold Metal Products, Inc. (a) 179,900 1,304
ISCOR Ltd. 6,661,000 7,969
Kentucky Electric Steel, Inc. (a)(b) 307,000 2,763
14,716
METALS & MINING - 5.0%
AFC Cable Systems, Inc. (a)(b) 705,300 11,812
Alcan Aluminium Ltd. 500,000 14,779
Alumax, Inc. (a) 1,173,650 34,183
Aluminum Co. of America 695,000 32,318
Belden, Inc. 1,131,500 26,732
Cable Design Technology Corp. (a)(b) 963,000 19,019
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
METALS & MINING - CONTINUED
Castech Aluminum Group (a) 435,400 $ 6,749
Finolex Cables Ltd. GDR (a)(c) 654,000 6,789
Reynolds Metals Co. 644,900 31,842
184,223
TOTAL BASIC INDUSTRIES 290,472
CONGLOMERATES - 1.0%
Tyco International Ltd. 647,328 35,037
CONSTRUCTION & REAL ESTATE - 0.6%
BUILDING MATERIALS - 0.1%
Lafarge Corp. 219,570 4,199
CONSTRUCTION - 0.3%
Lennar Corp. 318,700 6,214
Pulte Corp. 129,300 3,540
Redman Industries 72,700 1,472
Sundance Homes, Inc. (a) 207,000 466
11,692
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Kimco Realty Corp. 41,000 1,584
Liberty Property Trust (SBI) 78,000 1,511
Macerich Co. 92,500 1,827
Storage Equities, Inc. 137,700 2,186
7,108
TOTAL CONSTRUCTION & REAL ESTATE 22,999
DURABLES - 5.5%
AUTOS, TIRES, & ACCESSORIES - 0.3%
Capaco Automotive Products Corp. 296,000 2,442
Edelbrock Corp. (a) 59,800 733
Innovative International Holdings Ltd. 21,589,000 5,386
Tofas Turk Otomobil Fabrikasi AS ADR (c) 1,000,000 3,500
12,061
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
CONSUMER DURABLES - 0.8%
Libbey, Inc. (b) 1,177,600 $ 22,669
Mikasa, Inc. (a) 202,300 2,680
Syratech Corp. (a) 107,200 1,863
27,212
CONSUMER ELECTRONICS - 0.3%
Electrolux AB 142,700 6,587
North American Watch Corp. 220,000 2,888
9,475
HOME FURNISHINGS - 0.2%
Ladd Furniture, Inc. 76,900 1,053
Rhodes, Inc. (a)(b) 620,800 5,354
Winsloew Furniture, Inc. (a) 268,275 1,241
7,648
TEXTILES & APPAREL - 3.9%
Burlington Industries, Inc. (a) 1,062,000 11,417
Converse, Inc. (a) 701,800 4,737
Deckers Outdoor Corp. (a) 385,700 4,339
Fila Holding S.p.A. sponsored ADR 42,200 1,018
Galey & Lord, Inc. (a) 255,900 3,103
Guilford Mills, Inc. 236,900 6,100
High Fashion International Ltd. (a) 3,000,000 283
Image Industries, Inc. (a)(b) 480,000 5,040
Interface, Inc. Class A (b) 503,600 7,050
K-Swiss, Inc. Class A (b) 308,900 4,016
Kellwood Co. 34,200 581
Maxwell Shoe, Inc. Class A (a)(b) 785,000 6,476
Mohawk Industries, Inc. 800 12
NIKE, Inc. Class B 139,400 10,995
Nine West Group, Inc. (a) 246,300 8,590
Pillowtex Corp. (a)(b) 982,700 10,073
Quaker Fabric Corp. (a) 141,000 1,269
Reebok International Ltd. 1,400,000 46,900
Shaw Industries, Inc. 80,000 1,270
Westpoint Stevens, Inc. Class A (a) 559,400 10,139
143,408
TOTAL DURABLES 199,804
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 3.3%
COAL - 0.3%
MAPCO, Inc. 194,100 $ 11,428
ENERGY SERVICES - 0.7%
BJ Services Co. (a) 50,000 1,275
Baker Hughes, Inc. 460,000 10,350
Halliburton Co. 356,000 13,884
25,509
OIL & GAS - 2.3%
Amerada Hess Corp. 504,800 25,618
British Petroleum PLC:
ADR 429,132 36,637
Ord. 849,015 5,985
Louis Dreyfus Natural Gas Corp. (a) 878,500 12,409
NGC Corp. 198,376 1,736
Northstar Energy Corp. (a) 324,200 2,751
85,136
TOTAL ENERGY 122,073
FINANCE - 4.7%
BANKS - 0.0%
BancFirst Corp. 49,600 719
CLOSED END INVESTMENT COMPANY - 0.2%
Jardine Fleming India Fund, Inc. (a) 322,500 3,991
Morgan Stanley India Investment Fund, Inc. 346,000 3,806
7,797
CREDIT & OTHER FINANCE - 0.7%
Beneficial Corp. 480,600 21,387
International Service Systems AS, Series B 100,000 2,987
24,374
FEDERAL SPONSORED CREDIT - 0.4%
Federal National Mortgage Association 99,000 9,207
Student Loan Marketing Association 141,400 6,717
15,924
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - 3.4%
Allstate Corp. 1,130,400 $ 34,053
American Bankers Insurance Group, Inc. (b) 1,633,535 48,189
MBIA, Inc. 290,400 18,332
Mid Ocean Ltd. 655,600 18,603
Penncorp Financial Group, Inc. 287,100 5,311
124,488
TOTAL FINANCE 173,302
HEALTH - 6.3%
DRUGS & PHARMACEUTICALS - 5.2%
Allergan, Inc. 730,500 19,450
Alpha 1 Biomedicals, Inc. (a) 97,500 37
Bristol-Myers Squibb Co. 599,800 39,810
Core Parenterals Ltd. GDR (a) 1,242,000 6,682
Creative Biomolecules, Inc. (a) 845,600 1,797
Cygnus Therapeutics Systems (a)(b) 829,200 6,737
Dr. Reddy's Laboratories Ltd. GDR (a)(c) 269,000 2,556
Insite Vision, Inc. (a) 98,400 271
Liposome Co., Inc. (a) 622,900 4,672
Neurobiological Technologies, Inc. (a) 41,500 145
Ranbaxy Laboratories Ltd. GDR (a)(c) 510,000 11,730
Repligen Corp. (a) 50,000 113
Rhone Poulenc Rorer, Inc. 769,900 31,758
SciClone Pharmaceuticals, Inc. (a) 352,000 2,244
Warner-Lambert Co. 720,000 59,670
187,672
MEDICAL EQUIPMENT & SUPPLIES - 1.1%
Baxter International, Inc. (a) 1,061,100 37,005
Cyberonics, Inc. (a) 104,000 416
Maxxim Medical, Inc. (a) 143,900 1,997
Utah Medical Products, Inc. (a) 194,000 2,086
41,504
TOTAL HEALTH 229,176
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HOLDING COMPANIES - 0.1%
Anglovaal Ltd. Class N (c) 102,000 $ 3,527
INDUSTRIAL MACHINERY & EQUIPMENT - 2.2%
ELECTRICAL EQUIPMENT - 1.6%
Holophane Corp. (a) 166,100 3,447
Philips Electronics NV 306,000 12,278
Philips Electronics NV (Bearer) 856,100 34,049
Reunert Ltd. 1,700,000 7,857
57,631
INDUSTRIAL MACHINERY & EQUIPMENT - 0.6%
Caterpillar, Inc. 50,000 3,013
Deere & Co. 95,800 8,287
Larsen and Toubro Ltd. GDR (a) 100,000 1,950
SKF AB Ord. 500,000 9,737
22,987
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 80,618
MEDIA & LEISURE - 5.0%
BROADCASTING - 2.3%
ACS Enterprises, Inc. (a) 133,100 2,296
American Telecasting, Inc. (a) 240,800 3,371
CAI Wireless Systems, Inc. (a) 351,400 3,602
Cablemaxx, Inc. (a) 374,000 2,618
People's Choice TV Corp. (a)(b) 547,400 13,240
Preferred Entertainment, Inc. (a) 135,500 2,016
Viacom, Inc. (a):
Class A 60,800 2,865
Class B (non-vtg.) 1,159,073 54,042
84,050
ENTERTAINMENT - 0.8%
Cinar Films, Inc. Class B (sub-vtg.) (a) 164,000 1,301
Cinergi Pictures Entertainment, Inc. (a)(b) 1,301,000 9,270
PolyGram NV Ord. 120,000 6,992
Royal Carribean Cruises Ltd. 251,900 6,298
Shaw Brothers Hong Kong Ltd. 2,900,000 5,211
29,072
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 1.2%
Bajaj Auto Ltd. GDR (a)(c) 52,000 $ 1,495
Bajaj Auto Ltd. GDR (a) 50,000 1,450
Hasbro, Inc. 712,800 25,126
Just Toys, Inc. (a)(b) 308,900 386
Mahindra & Mahindra Ltd. GDR 250,000 2,750
Playmate Toys Holdings Ltd. 8,588,000 2,387
Toy Biz, Inc. Class A (a) 542,400 9,831
43,425
LODGING & GAMING - 0.2%
Indian Hotels Co. Ltd. GDR (a)(c) 460,000 7,935
PUBLISHING - 0.1%
Meredith Corp. 67,800 1,780
RESTAURANTS - 0.4%
Bugaboo Creek Steak House, Inc. (a)(b) 478,000 5,855
IHOP Corp. (a) 179,600 4,131
Quantum Restaurant Group, Inc. (a)(b) 414,800 4,563
14,549
TOTAL MEDIA & LEISURE 180,811
NONDURABLES - 4.0%
FOODS - 0.8%
Dole Food, Inc. 410,000 12,094
EID Parry GDR (a)(c) 955,000 3,467
EID Parry GDR 50,000 182
Hormel (George A) & Co. 291,500 7,178
Nabisco Holdings Class A 185,000 4,833
27,754
HOUSEHOLD PRODUCTS - 0.1%
Stanhome, Inc. 88,400 2,796
TOBACCO - 3.1%
Dimon, Inc. 321,300 5,543
Philip Morris Companies, Inc. 950,000 69,231
RJR Nabisco Holdings Corp. 1,249,020 35,597
Universal Corp. 200,100 4,652
115,023
TOTAL NONDURABLES 145,573
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - 3.1%
APPAREL STORES - 0.0%
Designs, Inc. (a) 111,300 $ 974
GENERAL MERCHANDISE STORES - 1.3%
Bradlees, Inc. (b) 1,008,700 4,918
Carson Pirie Scott & Co. (a) 67,659 1,133
Freds, Inc. Class A (b) 916,300 9,392
Lechters, Inc. (a)(b) 1,220,600 18,004
Meyer (Fred), Inc. (a) 460,000 12,305
Wal-Mart Stores, Inc. 100,000 2,500
48,252
GROCERY STORES - 1.4%
Giant Food, Inc. Class A 606,400 17,434
Pepkor Ltd. 1,660,000 10,357
Stop & Shop Companies, Inc. (a) 50,000 1,350
Whole Foods Market, Inc. (a)(b) 1,374,200 19,754
48,895
RETAIL & WHOLESALE, MISCELLANEOUS - 0.4%
Borders Group, Inc. 42,000 613
Brookstone, Inc. (a) 143,200 788
Cole National Corp. Class A (a)(b) 1,001,700 9,767
Natural Wonders, Inc. (a) 46,900 176
Orchard Supply Hardware Corp. (a) 336,000 3,948
15,292
TRADING COMPANIES - 0.0%
Linkful International Holding Ltd. 16,500,000 1,088
TOTAL RETAIL & WHOLESALE 114,501
SERVICES - 0.1%
Cerplex Group, Inc. (a) 216,700 1,679
OroAmerica, Inc. (a)(b) 326,000 1,427
3,106
TECHNOLOGY - 12.7%
COMMUNICATIONS EQUIPMENT - 0.0%
IPC Information Systems, Inc. (a) 116,000 1,625
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - 3.7%
BancTec, Inc. 261,750 $ 4,025
CompUSA, Inc. (a) 59,300 1,557
Gametek, Inc. (a)(b) 571,700 1,501
Integrated Systems, Inc. (a)(b) 420,600 8,727
Maxis, Inc. 41,100 801
Novell, Inc. (a) 801,000 15,469
Sierra On-Line, Inc. (a)(b) 1,331,800 24,139
Spectrum Holobyte, Inc. (a) 1,015,300 14,214
SunGard Data Systems, Inc. (a)(b) 1,255,800 62,633
Walker Interactive Systems, Inc. (a) 124,800 725
133,791
COMPUTERS & OFFICE EQUIPMENT - 5.7%
Digital Equipment Corp. (a) 705,400 31,478
International Business Machines Corp. 1,147,400 106,995
Sun Microsystems, Inc. (a) 1,353,900 60,926
TSL Holding, Inc. (a) 1,082 -
Tandem Computers, Inc. (a) 603,500 7,996
207,395
ELECTRONICS - 3.3%
Advanced Micro Devices, Inc. 745,000 24,492
Augat, Inc. 388,900 7,972
Integrated Device Technology, Inc. (a) 205,200 8,926
Intel Corp. 550,000 61,738
Thomas & Betts Corp. 245,300 16,527
119,655
TOTAL TECHNOLOGY 462,466
TRANSPORTATION - 0.9%
AIR TRANSPORTATION - 0.3%
AMR Corp. (a) 155,400 10,606
TRUCKING & FREIGHT - 0.6%
Airborne Freight Corp. 852,900 16,098
Hunt (J.B.) Transport Services, Inc. 320,100 5,602
21,700
TOTAL TRANSPORTATION 32,306
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 10.2%
CELLULAR - 1.5%
Cellular Communications, Inc. redeemable Class P (a) 1,094,300 $ 54,518
ELECTRIC UTILITY - 0.0%
CESC Ltd. GDR (a)(c) 250,000 1,063
TELEPHONE SERVICES - 8.7%
Ameritech Corp. 746,800 33,139
Bell Atlantic Corp. 810,400 45,180
BellSouth Corp. 416,500 25,563
Comsat Corp., Series 1 840,600 16,392
GTE Corp. 1,070,000 35,711
Koninklijke PPT Nederland 1,547,367 55,877
Koninklijke PPT Nederland (a)(c) 183,000 6,608
NYNEX Corp. 1,705,400 71,200
Pakistan Telecommunications Voucher GDR (a)(c) 73,300 8,063
SBC Communications, Inc. 449,100 20,210
317,943
TOTAL UTILITIES 373,524
TOTAL COMMON STOCKS
(Cost $2,137,144) 2,481,172
CONVERTIBLE PREFERRED STOCKS - 0.5%
BASIC INDUSTRIES - 0.1%
METALS & MINING - 0.1%
Alumax, Inc., Series A, $4.00 (a) 22,000 2,703
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Chrysler Corp., Series A, $4.625 (a)(c) 32,500 3,933
ENERGY - 0.3%
OIL & GAS - 0.3%
Unocal Corp. $3.50 (a)(c) 200,000 11,100
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $13,252) 17,736
CORPORATE BONDS - 2.3%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - 2.3%
BASIC INDUSTRIES - 1.3%
CHEMICALS & PLASTICS - 0.4%
Reliance Industries Ltd. 3 1/2%, 11/3/99 (c) - $ 12,000 $ 12,960
IRON & STEEL - 0.3%
Essar Gujarat Ltd.:
euro 5 1/2%, 8/5/98 - 3,500 4,112
5 1/2%, 8/5/98 - 250 294
NTS Steel Groups Co. Ltd. euro 4%, 12/16/08 - 5,400 3,645
Nippon Denro Ispat 3%, 4/1/01 (c) - 1,830 1,112
Sterlite Industry India Ltd. 3 1/2%, 6/30/99 (c) - 1,600 1,376
10,539
PAPER & FOREST PRODUCTS - 0.6%
Aokam Perdana BHD 3 1/2%, 6/13/04 (c) - 5,000 4,488
Repap Enterprises, Inc. 8 1/2%, 8/1/97 - 15,880 17,309
21,797
TOTAL BASIC INDUSTRIES 45,296
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
Gujarat Ambuja Cement Ltd. 3 1/2%,
6/30/99 (c) - 2,780 3,753
FINANCE - 0.3%
CREDIT & OTHER FINANCE - 0.3%
SCICI Ltd. euro 3 1/2%, 4/1/04 - 11,900 11,066
HOLDING COMPANIES - 0.4%
JG Summit Cayman Ltd. 3 1/2%,
12/23/03 (c) - 20,000 15,000
MEDIA & LEISURE - 0.1%
LODGING & GAMING - 0.1%
Argosy Gaming Co. 12%, 6/1/01 B3 5,000 5,075
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - 0.1%
COMPUTER SERVICES & SOFTWARE - 0.0%
Sierra On-Line, Inc. 6 1/2%, 4/1/01 (c) B3 $ 1,100 $ 1,491
ELECTRONICS - 0.1%
Microsemi Corp. 5 7/8%, 3/1/12 Caa 596 392
Richardson Electronics Ltd. 7 1/4%, 12/15/06 B3 2,382 1,906
2,298
TOTAL TECHNOLOGY 3,789
TOTAL CONVERTIBLE BONDS 83,979
NONCONVERTIBLE BONDS - 0.0%
RETAIL & WHOLESALE - 0.0%
GENERAL MERCHANDISE STORES - 0.0%
Carson Pirie Scott & Co. 13%, 3/28/05 B 803 805
TOTAL CORPORATE BONDS
(Cost $93,222) 84,784
U.S. TREASURY OBLIGATIONS - 19.9%
U.S. Treasury Bills, yields at date of purchase
5.63% to 5.71%, 6/29/95 to 7/20/95
(Cost $726,232) 730,000 726,278
REPURCHASE AGREEMENTS - 9.4%
MATURITY
AMOUNT
(000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 6.13% dated
5/31/95 due 6/1/95 $ 344,472 344,413
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,314,263) $ 3,654,383
LEGEND
(g) Non-income producing
(h) Affiliated company (see Note 8 of Notes to Financial Statements).
(i) 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 $130,921,000 or 3.6% of net
assets.
(j) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 86.7%
Netherlands 3.6
India 3.1
United Kingdom 1.2
Canada 1.1
Others (individually less than 1%) 4.3
TOTAL 100.0%
INCOME TAX INFORMATION
At May 31, 1995, the aggregate cost of investment securities for income tax
purposes was $3,314,333,000. Net unrealized appreciation aggregated
$340,050,000, of which $499,718,000 related to appreciated investment
securities and $159,668,000 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, 1995 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 3,654,383
agreements of $344,413) (cost $3,314,263) -
See accompanying schedule

Receivable for investments sold 19,817

Receivable for fund shares sold 7,078

Dividends receivable 5,194

Interest receivable 1,884

Other receivables 125

TOTAL ASSETS 3,688,481

LIABILITIES

Payable for investments purchased $ 55,543

Payable for fund shares redeemed 3,599

Accrued management fee 2,195

Other payables and accrued expenses 3,107

Collateral on securities loaned, at value 24,850

TOTAL LIABILITIES 89,294

NET ASSETS $ 3,599,187

Net Assets consist of:

Paid in capital $ 3,158,966

Undistributed net investment income 31,718

Accumulated undistributed net realized gain (loss) on 68,388
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 340,115
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 205,468 shares outstanding $ 3,599,187

NET ASSET VALUE, offering price and redemption price per $17.52
share ($3,599,187 (divided by) 205,468 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1995 (UNAUDITED)

INVESTMENT INCOME $ 21,751
Dividends (including $952 received from
affiliated issuers)

Interest (including income on securities loaned of $74) 31,961

TOTAL INCOME 53,712

EXPENSES

Management fee $ 10,317
Basic fee

Performance adjustment 2,359

Transfer agent fees 3,747

Accounting and security lending fees 386

Non-interested trustees' compensation 39

Custodian fees and expenses 54

Registration fees 106

Legal 11

Interest 1

Miscellaneous 9

Total expenses before reductions 17,029

Expense reductions (67) 16,962

NET INVESTMENT INCOME 36,750

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:

Investment securities (including realized gain of $546 64,758
on sales of investment in affiliated issuers)

Foreign currency transactions (114) 64,644

Change in net unrealized appreciation (depreciation) 193,765
on investment securities

NET GAIN (LOSS) 258,409

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 295,159
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30,
1995 1994
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 36,750 $ 33,797
Net investment income

Net realized gain (loss) 64,644 310,379

Change in net unrealized appreciation (depreciation) 193,765 (231,486)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 295,159 112,690
FROM OPERATIONS

Distributions to shareholders (38,775) (19,614)
From net investment income

From net realized gain (306,471) (265,688)

TOTAL DISTRIBUTIONS (345,246) (285,302)

Share transactions 460,278 800,429
Net proceeds from sales of shares

Reinvestment of distributions 344,637 284,994

Cost of shares redeemed (318,461) (438,259)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 486,454 647,164
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 436,367 474,552

NET ASSETS

Beginning of period 3,162,820 2,688,268

End of period (including undistributed net investment $ 3,599,187 $ 3,162,820
income of $31,718 and $33,743, respectively)

OTHER INFORMATION
Shares

Sold 27,475 46,345

Issued in reinvestment of distributions 21,377 16,081

Redeemed (19,005) (26,386)

Net increase (decrease) 29,847 36,040

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX YEARS ENDED NOVEMBER 30,
MONTHS
ENDED
MAY 31,
1995

(UNAUDITED 1994 C 1993 1992 1991 1990
)

SELECTED PER-SHARE DATA

Net asset value, $ 18.01 $ 19.26 $ 19.77 $ 17.21 $ 13.13 $ 15.62
beginning of period

Income from Investment
Operations

Net investment .18 .19 .09 .14 .27 .34
income

Net realized and 1.27 .58 3.09 3.66 3.92 (1.88)
unrealized gain
(loss)

Total from investment 1.45 .77 3.18 3.80 4.19 (1.54)
operations

Less Distributions (.22) (.14) (.16) (.20) (.11) (.45)
From net investment
income

From net realized (1.72) (1.88) (3.53) (1.04) - (.50)
gain

Total distributions (1.94) (2.02) (3.69) (1.24) (.11) (.95)

Net asset value, end $ 17.52 $ 18.01 $ 19.26 $ 19.77 $ 17.21 $ 13.13
of period

TOTAL RETURN B 9.10% 4.24% 19.47 23.39 32.15 (10.59)
% % % %

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 3,599 $ 3,163 $ 2,688 $ 2,166 $ 1,577 $ 1,292
period (in millions)

Ratio of expenses to 1.03% 1.07% 1.05 1.02 .83 .98%
average net assets A % % %

Ratio of net investment 2.23% 1.13% .80 1.01 1.56 2.34%
income to average A % % %
net assets

Portfolio turnover rate 54% 72% 101 138 119 127%
A % % %

</TABLE>

A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C 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, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1995 (Unaudited)

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 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 of their purchase date are
valued at amortized cost or original cost plus accrued interest, both of
which approximate current value.
FOREIGN CURRENCY TRANSLATION.
The accounting records of the fund are maintained in U.S. dollars.
Investment securities and other assets and liabilities denominated in a
foreign currency are translated into U.S. dollars at the prevailing rates
of exchange at period end. Purchases and sales of securities, income
receipts, and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts and foreign currency options, disposition of foreign currencies,
currency gains and losses realized between the trade and settlement dates
on securities transactions, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or loss
on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for
litigation, foreign currency transactions, non-taxable dividends, and
losses deferred due to wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY
CONTRACTS. The fund may use foreign currency contracts to facilitate
transactions in foreign securities and to manage the fund's currency
exposure. Contracts to buy generally are used to acquire exposure to
foreign currencies, while contracts to sell are used to hedge the fund's
investments against currency fluctuations. Also, a contract to buy or sell
can offset a previous contract. Losses may arise from changes in the value
of the foreign currency or if the counterparties do not perform under the
contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
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. FMR, the fund's
investment adviser, is responsible for determining that the value of these
underlying securities remains at least equal to the resale price.
3. PURCHASES AND SALES
OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $663,680,000 and $633,192,000, respectively, of which U.S.
government and government agency obligations aggregated $24,906,000 and
$75,637,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
basic fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2700% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .30%. The
basic fee is subject to a performance adjustment (up to a maximum of
(plus/minus) .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 annualized rate of .76% of average
net assets after the performance adjustment.
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 $28,000 for the
period.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
During the period December 1, 1994 to December 31, 1994, FSC received fees
based on the type, size, number of accounts and the number of transactions
made by shareholders. Effective January 1, 1995, the Board of Trustees
approved a revised
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
TRANSFER AGENT FEES - CONTINUED
transfer agent contract pursuant to which FSC receives account fees and
asset-based fees that vary according to account size and type of account.
FSC pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements.
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 $413,000 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 $23,759,000 and
$24,850,000, respectively.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The fund has established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. The
maximum loan and the average daily loan balances during the periods for
which loans were outstanding amounted to $1,638,000. The weighted average
interest rate was 6.44%.
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
$67,000 under this arrangement.
8. 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 PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
AFC Cable Systems, Inc. (a) $ 2,309 $ - $ - $ 11,812
American Bankers Insurance Group, Inc. - - 604 48,189
Bradlees, Inc. 4,495 - 116 4,918
Bugaboo Creek Steak House, Inc. (a) 884 - - 5,855
Cable Design Technology Corp. (a) 357 - - 19,019
Cinergi Pictures Entertainment, Inc. (a) 2,992 - - 9,270
China Southern Glass Co. Ltd. Class B - - - -
Cole National Corp. Class A (a) 574 - - 9,767
Cygnus Therapeutics Systems (a) 386 - - 6,737
Freds, Inc. Class A - - 46 9,392
Gametek, Inc. (a) 446 36 - 1,501
Image Industries, Inc. (a) - 200 - 5,040
Integrated Systems, Inc. (a) - 384 - -
Interface, Inc. Class A - - - -
Just Toys, Inc. (a) - 195 - 386
K-Swiss, Inc. Class A - - 12 4,016
Kentucky Electric Steel, Inc. (a) - - - 2,763
Lechters, Inc. (a) 3,110 - - 18,004
Libbey, Inc. 1,057 - 174 22,669
Maxwell Shoe, Inc. Class A (a) 221 - - 6,476
OroAmerica, Inc. (a) - 112 - 1,427
People's Choice TV Corp. (a) 1,201 - - 13,240
Pillowtex Corp. (a) - 314 - 10,073
Quantum Restaurant Group, Inc. (a) 312 - - 4,563
Rhodes, Inc. (a) 268 - - 5,354
Shoe Carnival, Inc. - 635 - -
Sierra On-Line, Inc. (a) 344 - - 24,139
SunGard Data Systems, Inc. (a) - 2,604 - 62,633
Whole Foods Market, Inc. (a) - - - 19,754
TOTALS $ 18,956 $ 4,480 $ 952 $ 326,997
(a) Non-income producing

INVESTMENT ADVISER
Fidelity Management &
Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Harris Leviton, Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export Fund
Fidelity Fifty Fund
Growth Company Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Stock Fund
Stock Selector
Trend Fund
Value 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)
(registered trademark)

(2_FIDELITY_LOGOS)FIDELITY

EQUITY-INCOME II
FUND
SEMIANNUAL REPORT
MAY 31, 1995
CONTENTS

PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.

PERFORMANCE 4 How the fund has done over time.

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

INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.

INVESTMENTS 11 A complete list of the fund's
investments with their market
values.

FINANCIAL STATEMENTS 27 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 31 Notes to the financial statements.

THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMA-
TION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,
AND ARE
SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUND NOR
FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY
FIDELITY FUND,
INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS.
READ IT
CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
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 pro-
fits the fund earns when it sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1995 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND

Equity-Income II 12.60% 12.74% 150.47%

S&P 500(registered trademark) 19.23% 20.19% 87.59%

Average Equity Income Fund 13.83% 12.27% n/a

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, 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, the value of your investment would
be $1,050. You can compare the fund's returns to the performance of the
Standard & Poor's Composite Index of 500 stocks - a common proxy for the
U.S. stock market. To measure how the fund's performance stacked up against
its peers, you can compare it to the average equity income fund, which
reflects the performance of 129 equity income funds with similar objectives
tracked by Lipper Analytical Services over the past six months. Both
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1995 PAST 1 LIFE OF
YEAR FUND

Equity-Income II 12.74% 21.17%

S&P 500(registered trademark) 20.19% 14.06%

Average Equity Income Fund 12.27% n/a

AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and it shows 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 FuStandard & Poor's 5
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 12424.99 11674.06
04/30/91 12770.41 11702.07
05/31/91 13420.62 12207.60
06/30/91 13105.67 11648.49
07/31/91 13833.74 12191.31
08/31/91 14361.43 12480.25
09/30/91 14456.53 12271.83
10/31/91 14904.71 12436.27
11/30/91 14456.53 11935.09
12/31/91 15320.99 13300.46
01/31/92 15754.68 13053.08
02/29/92 16262.56 13222.77
03/31/92 16199.86 12964.92
04/30/92 16550.87 13346.09
05/31/92 16731.70 13411.49
06/30/92 16626.27 13211.65
07/31/92 17139.50 13752.01
08/31/92 16786.65 13470.10
09/30/92 17001.04 13629.04
10/31/92 17140.75 13676.74
11/30/92 17807.03 14143.12
12/31/92 18240.51 14317.08
01/31/93 18739.36 14437.34
02/28/93 19071.82 14633.69
03/31/93 19793.85 14942.46
04/30/93 19849.55 14580.86
05/31/93 20150.30 14971.62
06/30/93 20341.51 15015.04
07/31/93 20543.02 14954.98
08/31/93 21214.73 15521.77
09/30/93 21136.47 15402.26
10/31/93 21530.18 15721.08
11/30/93 21203.96 15571.73
12/31/93 21685.43 15760.15
01/31/94 22723.07 16296.00
02/28/94 22286.55 15854.37
03/31/94 21374.40 15163.12
04/30/94 21955.29 15357.21
05/31/94 22216.10 15609.07
06/30/94 22047.50 15226.65
07/31/94 22643.38 15726.08
08/31/94 23418.02 16370.85
09/30/94 22879.58 15969.77
10/31/94 23274.88 16329.08
11/30/94 22244.70 15734.38
12/31/94 22370.95 15967.72
01/30/95 22345.60 16381.76
02/28/95 23154.03 17020.16
03/31/95 23916.45 17522.43
04/30/95 24475.31 18038.46
05/31/95 25046.86 18759.46

$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 May 31, 1995, the value of your investment would have grown
to $25,047 - a 150.47% 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 $18,759 - an
87.59% 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

An interview with Brian S. Posner, Portfolio Manager of Fidelity
Equity-Income II Fund
Q. HOW DID THE FUND PERFORM, BRIAN?
A. For the six months ended May 31, 1995, the fund had a total return of
12.60%. That compared to total returns of 13.83% and 19.23% for the average
equity income fund tracked by Lipper Analytical Services and the Standard &
Poor's 500 stock index, respectively. During the 12 months ended May 31,
the fund returned 12.74%, compared to 12.27% for the average equity income
fund and 20.19% for the S&P 500. Although the fund beat its peer group
average for the 12-month period, it trailed the performance of the broad
market during both periods, which I find disappointing.
Q. WHAT FACTORS INFLUENCED THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
A. You might say there were issues of both style and substance. First, I've
mentioned in the past that my goal is to achieve positive absolute, rather
than relative, returns. That simply means that my long-term objective is to
have the fund outperform the S&P 500 in a rising market and not lose money
in a down market. For example, if the market were to fall 10%, I wouldn't
be satisfied even if the fund declined only 1%; again, my goal is absolute
returns. Because I focus very closely on preserving shareholders' capital,
I manage the fund to be less volatile than the broad market. While this
approach has been successful in providing superior returns over the long
term, certain market conditions - like those we've seen thus far in 1995 -
can prove difficult. Over the past several months, the market has
experienced a rapid, but relatively narrow advance. Because the fund should
have less volatility than the overall market, it occasionally won't keep
pace during a sudden, steep ascent in stock prices.
Q. AND THE SUBSTANCE?
A. This had to do both with what the fund owned and what it didn't own.
First, the fund maintained roughly a 6% stake in Japanese stocks over the
past six months, which hurt performance. The stocks of Japanese exporters
such as Hitachi, Matsushita and Sony suffered from a variety of problems
including a very strong yen - which increased their cost of doing business
- - and the Kobe earthquake. Despite this adversity, many of these companies
have reported earnings gains thus far in 1995, have strong prospects for
the current fiscal year, and their stocks remain extremely cheap. That's
why I'm maintaining the fund's Japanese stake for the time being.
Q. HOW ABOUT WHAT THE FUND DIDN'T OWN?
A. The fund was underweighted relative to the broad market in consumer
nondurable stocks in categories such as food, beverages and health care.
Because many of these companies tend to offer steady earnings growth in the
face of higher interest rates, they became the favorites of
defensive-minded investors beginning in the second half of 1994. However,
six months ago, I didn't feel that many of these stocks were particularly
cheap, nor did I feel that they had a lot of upside potential. I generally
invest in stocks because I think they're going to rise in value, not
because they may not fall as far as other stocks should the market take a
downward turn. Ironically, investors who may have been looking to
nondurables for downside protection received plenty of upside performance.
Q. TECHNOLOGY STOCKS ALSO PERFORMED WELL DURING THE PERIOD. WHY DID THE
FUND MAINTAIN A RELATIVELY SMALL INVESTMENT IN TECHNOLOGY?
A. The fund had a 3.5% stake in technology on May 31, which is
substantially lower than the sector's market weighting. The fund's total
return was lifted by selected technology stocks such as IBM, which has
benefited from improving sales and continued cost cutting. In fact, sales
and earnings growth have been outstanding throughout the sector. The main
reason why I haven't invested more heavily in technology has to do with an
ongoing debate about whether these stocks have more in common with growth
stocks - those with consistent earnings growth - or cyclical stocks - those
whose earnings tend to move up and down with economic cycles. It's my
belief that there is a greater cyclical element to technology stocks than
is reflected in their current valuations - prices relative to earnings -
which have risen substantially. Because I don't find the potential
risk/reward trade-off for many technology stocks particularly attractive,
I'm sitting tight for now.
Q. THE MARKET AS A WHOLE HAS BEEN PARTICULARLY STRONG OVER THE PAST SIX
MONTHS. WHERE DID YOU FIND OPPORTUNITIES?
A. Beginning in late 1994, the banking sector offered a significant
opportunity. Sentiment was generally negative, but the business
fundamentals continued to improve and valuations were very attractive. Over
the course of the period, stocks of companies such as Bank of New York,
Bank of Boston and Standard Federal Bancorp of Michigan performed very
well. Typical of the extremely rapid sector rotation that the market has
experienced, this group has become less attractive following this recent
rise. As a result, I've begun to reduce the fund's investments in this
sector.
Q. THE FUND'S OVERALL STAKE IN FINANCIAL STOCKS WAS 16.6% ON MAY 31. THERE
MUST HAVE BEEN SIGNIFICANT INVESTMENTS OUTSIDE OF THE BANKS . . .
A. Definitely. The fund's largest holding at the end of the period was
American Express, which has done quite well. The company's restructuring
efforts have translated into improving profitability. In addition, The
Federal National Mortgage Association (Fannie Mae) was an excellent
performer over the past six months. Last fall, the stock was selling at
depressed valuations. Rising interest rates had slowed the pace at which
Fannie Mae was able to purchase mortgages from lenders and resell them to
investors. However, as rates leveled and then fell during the period, the
company's portfolio growth began to re-accelerate, which should be
reflected in future earnings growth and has already begun to benefit its
stock price.
Q. HAVE YOU MADE ANY OTHER SIGNIFICANT CHANGES TO THE PORTFOLIO?
A. There hasn't been much change in the overall weightings of individual
market sectors from six months ago, but I have made adjustments within some
sectors. Energy - 15.5% of the fund on May 31 - is a good example. I've
shifted the mix of energy stocks in favor of energy service companies.
Going back to 1993, this industry has experienced significant
consolidation, which has led to improved profit margins. In addition, I
feel that strong worldwide demand for oil coupled with a tight supply could
provide an additional boost to earnings. Finally, energy service stock
valuations were extremely depressed six months ago. Although stocks such as
Schlumberger, Western Atlas and Baker-Hughes have performed well recently,
I feel these companies continue to have excellent prospects.
Q. ARE THERE ANY OTHER SECTORS THAT SHOW SIGNIFICANT POTENTIAL OVER THE
NEXT SIX MONTHS TO A YEAR?
A. I'm excited about retail stocks. This is a group that has been beaten
down for a long time, and the stocks of quality companies such as Wal-Mart,
the Gap, the Limited and Federated Department Stores are some of the
cheapest in the market. Some argue that the sector is overbuilt - that
there are simply too many stores and too much competition to ensure
profitability. However, I believe well-run retailers that are gathering
market share and carefully managing their balance sheets could provide some
upside earnings surprises. There have been down cycles in the past; good
retailers tend to figure out what people want to buy and provide it.
Q. WHAT'S THE LATEST ON THE FUND'S CYCLICAL INVESTMENTS - THOSE THAT TEND
TO RISE AND FALL WITH THE ECONOMY?
A. Many of the fund's cyclical stocks have rebounded recently after falling
out of favor over the winter. Through February and March, investors
increasingly believed that slower, but steady, economic growth with low
inflation was indeed possible. That outlook, combined with very strong
earnings growth, has boosted the stocks of cyclical commodity companies
such as chemical producer duPont, aluminum manufacturers Alcan and Aluminum
Company of America, and paper producer Champion International. Despite
these gains, many cyclical stocks remain cheap relative to current and
prospective profits. I've also added General Motors to the fund's top 10
investments. The stock was attractively valued, and the company's
restructuring and cost-cutting efforts appear to be proceeding at a strong
pace.
Q. BRIAN, LET'S DISCUSS YOUR OUTLOOK FOR THE NEXT SIX MONTHS.
A. Stock valuations are higher than they were six months ago, which beckons
a fair amount of caution. In this type of environment, the market tends to
harshly penalize companies that turn in disappointing earnings, especially
if their stocks are on the expensive side. That's why I plan to focus on
quality companies, those that are generating strong cash flows and
achieving sustainable high levels of profitability. The market may be
volatile over the next six months. While it will be important to invest in
those companies with strong earnings growth, it may be more important to
avoid those that don't live up to expectations.

FUND FACTS
GOAL: to provide current
income and increase the
value of the fund's shares
START DATE: August 21, 1990
SIZE: as of May 31, 1995,
more than $9.8 billion
MANAGER: Brian S. Posner,
since April 1992; manager,
Fidelity Value Fund, 1990 -
1992; Fidelity Select Energy
Portfolio, 1990; Fidelity
Select Insurance Portfolio,
1987 - 1990; joined Fidelity
in 1987
(checkmark)
BRIAN S. POSNER ON STOCK
MARKET STRATEGY:
"Right now, the stock market
is at a crossroads. Which way
the economy turns -whether
we can sustain economic
growth or enter into a
recession - will be
paramount going forward.
And the extent to which a
slower economy affects
corporate earnings will be
critical.
"Investors will keep a very
close eye on earnings reports
that emerge over the next
several months. Because
stocks are more expensive
than they were six months
ago, they are likely to be more
sensitive to any hint of bad
news. Companies that don't
meet earnings expectations
may see their stocks suffer
inordinately. In this
environment, detailed
fundamental analysis
and regular company
contacts are absolutely
critical."
(solid bullet) The fund's stake in
short-term investments -
mostly cash equivalents -
rose from 12.6% six months
ago to 15.3% on May 31.
Generally, the increase was a
result of the strong cash
inflows the fund has experienced
recently. Its net assets have
risen from $7.6 billion six
months ago to $9.8 billion on
May 31.
(solid bullet) The fund's investment in
foreign stocks has decreased
over the past six months, from
21.8% to 15.5%. This has
mirrored a significant over- all
move in investor capital from
overseas markets to the United
States. During the six-month
period, foreign stocks
generally have
underperformed domestic
stocks.
INVESTMENT CHANGES

TOP TEN STOCKS AS OF MAY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

American Express Co. 3.5 3.6

British Petroleum PLC ADR 3.1 3.1

Federal National Mortgage
Association 2.7 2.0

Schlumberger Ltd. 2.5 2.5

du Pont (E.I) de Nemours & Co. 1.8 1.0

Alcan Aluminium Ltd. 1.6 1.6

RJR Nabisco Holdings Corp. 1.5 1.4

Great Lakes Chemical Corp. 1.5 1.2

General Motors Corp. 1.4 0.9

NYNEX Corp. 1.4 1.2

TOP FIVE MARKET SECTORS AS OF MAY 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO

Finance 16.9 18.3

Energy 15.5 15.7

Basic Industries 12.5 12.3

Retail & Wholesale 8.5 6.7

Durables 5.1 6.1

ASSET ALLOCATION
AS OF MAY 31, 1995* AS OF NOVEMBER 30, 1994 **
Row: 1, Col: 1, Value: 15.3
Row: 1, Col: 2, Value: 3.2
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 5, Value: 39.5
Row: 1, Col: 1, Value: 12.6
Row: 1, Col: 2, Value: 4.1
Row: 1, Col: 3, Value: 3.9
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 5, Value: 39.4
Stocks 79.5%
Bonds 2.0%
Convertible
securities 3.2%
Short-term
investments 15.3%
FOREIGN
INVESTMENTS 15.5%
Stocks 79.4%
Bonds 3.9%
Convertible
securities 4.1%
Short-term
investments 12.6%
FOREIGN
INVESTMENTS 21.8%
*
**
INVESTMENTS MAY 31, 1995 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 79.4%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.5%
Flightsafety International, Inc. 879,300 $ 41,217
Lockheed Martin Corp. 1,719,554 102,313
143,530
BASIC INDUSTRIES - 11.6%
CHEMICALS & PLASTICS - 6.7%
Betz Laboratories, Inc. 682,400 29,002
Dow Chemical Co. 501,200 36,776
du Pont (E.I.) de Nemours & Co. 2,585,100 175,464
Ethyl Corp. 100,000 1,163
Ferro Corp. (c) 1,417,700 38,987
Geon Co. 394,000 9,752
Great Lakes Chemical Corp. 2,450,100 149,456
Nalco Chemical Co. 1,838,700 69,411
Potash Corp. of Saskatchewan 908,900 43,284
Shin-Etsu Chemical Co. Ltd. 919,000 16,527
Union Carbide Corp. 3,288,400 96,186
666,008
IRON & STEEL - 0.0%
Armco, Inc. (a) 326,000 2,078
METALS & MINING - 3.0%
Alcan Aluminium Ltd. 5,270,970 155,804
Aluminum Co. of America 2,520,200 117,189
Reynolds Metals Co. 435,600 21,508
294,501
PACKAGING & CONTAINERS - 0.3%
Sonoco Products Co. 1,194,480 29,563
PAPER & FOREST PRODUCTS - 1.6%
Champion International Corp. 692,900 32,133
International Paper Co. 613,500 48,236
Jefferson Smurfit Corp. (a) 480,000 6,360
Temple-Inland, Inc. 1,229,600 53,180
Union Camp Corp. 308,400 15,998
155,907
TOTAL BASIC INDUSTRIES 1,148,057
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONGLOMERATES - 1.5%
Allied-Signal, Inc. 1,236,000 $ 49,904
Tomkins PLC Ord. 2,729,670 10,553
United Technologies Corp. 1,203,600 91,323
151,780
CONSTRUCTION & REAL ESTATE - 1.4%
BUILDING MATERIALS - 0.5%
Masco Corp. 953,000 27,518
Sherwin-Williams Co. 40,100 1,474
United Dominion Industries Ltd. 1,233,000 26,435
55,427
CONSTRUCTION - 0.1%
Lennar Corp. 383,300 7,474
ENGINEERING - 0.3%
EG & G, Inc. 798,400 14,471
Foster Wheeler Corp. 522,500 17,177
31,648
REAL ESTATE INVESTMENT TRUSTS - 0.5%
Bradley Real Estate Trust (c) 439,950 6,929
CBL & Associates Properties 14,600 283
Cali Realty Corp. 54,300 964
Crown American Realty Trust (SBI) 1,020,400 12,117
Developers Diversified Realty 86,400 2,441
Duke Realty Investors, Inc. 196,600 5,505
Excel Realty Trust, Inc. 17,000 329
Haagen Alexander Properties, Inc. 112,000 1,232
LTC Properties, Inc. 263,100 3,387
Simon Properties Group, Inc. 309,900 7,709
Storage Equities, Inc. 398,000 6,318
47,214
TOTAL CONSTRUCTION & REAL ESTATE 141,763
DURABLES - 4.5%
AUTOS, TIRES, & ACCESSORIES - 2.2%
General Motors Corp. 2,978,423 142,964
Honda Motor Co. Ltd. 1,433,000 21,193
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
AUTOS, TIRES, & ACCESSORIES - CONTINUED
Johnson Controls, Inc. 733,800 $ 42,010
PACCAR, Inc. 226,300 10,891
217,058
CONSUMER ELECTRONICS - 1.1%
Matsushita Electric Industrial Co. Ltd. 4,073,000 63,129
Sony Corp. 944,000 45,569
108,698
TEXTILES & APPAREL - 1.2%
Burlington Industries, Inc. 1,666,800 17,918
Nisshinbo Industries 1,344,000 12,133
Reebok International Ltd. 475,100 15,916
Russell Corp. (c) 1,986,100 57,597
Unifi, Inc. 401,700 9,791
Westpoint Stevens, Inc. Class A 255,000 4,622
117,977
TOTAL DURABLES 443,733
ENERGY - 14.5%
ENERGY SERVICES - 6.3%
BJ Services Co. (a) 446,300 11,381
Baker Hughes, Inc. 3,323,400 74,777
ENSCO International, Inc. 1,053,400 17,513
Enterra Corp. (a) 1,017,400 19,458
Halliburton Co. 1,154,700 45,033
Helmerich & Payne, Inc. 850,000 25,394
Hornbeck Offshore Services, Inc. (a)(c) 876,200 13,581
Marine Drilling Cos., Inc. 886,000 3,655
McDermott International, Inc. 1,288,700 33,828
Nabors Industries, Inc. (a) 1,372,900 11,841
Noble Drilling Corp. 1,553,746 11,459
Nowsco Well Service Ltd. 601,700 6,477
Offshore Logistics, Inc. (a) 455,300 6,545
Reading & Bates Corp. 1,967,900 17,219
Schlumberger Ltd. 3,745,300 243,445
Sonat Offshore Drilling, Inc. 160,600 4,577
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
ENERGY SERVICES - CONTINUED
Tidewater, Inc. 2,387,900 $ 59,697
Weatherford International, Inc. (a) 1,097,600 12,348
618,228
OIL & GAS - 8.2%
Amerada Hess Corp. 1,646,900 83,580
Atlantic Richfield Co. 131,300 15,247
British Petroleum PLC:
Ord. 3,387,222 23,879
ADR 3,529,148 301,301
Burlington Resources, Inc. (a) 984,100 40,840
Canada Occidental Petroleum Ltd. 150,000 4,744
Coastal Corp. (The) 1,157,200 36,307
Exxon Corp. 1,072,100 76,521
Murphy Oil Corp. 1,104,800 48,335
Newfield Exploration Co. (a) 755,300 20,582
Occidental Petroleum Corp. 1,165,000 26,795
Total SA:
Class B 1,901,933 117,571
sponsored ADR 534,008 16,554
812,256
TOTAL ENERGY 1,430,484
FINANCE - 16.3%
BANKS - 1.8%
Banc One Corp. 1,232,800 42,840
Bank of New York Co., Inc. 2,066,064 84,192
Deutsche Bank AG 100,000 4,891
Republic New York Corp. 814,800 41,657
173,580
CREDIT & OTHER FINANCE - 4.2%
American Express Co. 9,728,712 346,585
Beneficial Corp. 1,619,800 72,081
418,666
FEDERAL SPONSORED CREDIT - 3.2%
Federal Home Loan Mortgage Corporation 669,500 45,610
Federal National Mortgage Association 2,853,900 265,413
311,023
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - 4.8%
ACE Ltd. 920,600 $ 23,360
Alexander & Alexander Services, Inc. 1,670,550 42,390
Allstate Corp. 3,523,700 106,151
Berkley (W.R.) Corp. 594,000 21,830
Chubb Corp. (The) 387,900 31,953
General Re Corp. 25,000 3,384
Gryphon Holdings, Inc. (a)(c) 547,900 7,671
Loews Corp. 1,048,400 124,629
MBIA, Inc. 50,000 3,156
Mid Ocean Ltd. (a)(d) 300,000 6,384
NAC Re Corp. 846,100 24,854
Old Republic International Corp. 562,100 14,334
SAFECO Corp. 238,700 14,024
Travelers, Inc. (The) 1,233,324 52,108
476,228
SAVINGS & LOANS - 0.9%
Ahmanson (H.F.) & Co. 1,571,500 35,752
Golden West Financial Corp. 856,180 42,060
Standard Federal Bancorporation, Inc. 450,000 14,906
92,718
SECURITIES INDUSTRY - 1.4%
Daiwa Securities Co. Ltd. 653,000 7,247
Lehman Brothers Holdings, Inc. 1,508,580 29,794
Morgan Stanley Group, Inc. 632,200 48,126
Nikko Securities Co. Ltd. 787,000 6,984
Nomura Securities Co. Ltd. 2,537,000 45,625
137,776
TOTAL FINANCE 1,609,991
HEALTH - 0.6%
DRUGS & PHARMACEUTICALS - 0.6%
American Home Products Corp. 605,200 44,558
Bristol-Myers Squibb Co. 147,400 9,784
54,342
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HOLDING COMPANIES - 0.3%
Christies International PLC 5,862,900 $ 15,266
PMI Group, Inc. 144,000 5,886
U.S. Industries, Inc. (f) 500,000 7,313
28,465
INDUSTRIAL MACHINERY & EQUIPMENT - 2.6%
ELECTRICAL EQUIPMENT - 0.5%
Mitsubishi Electric Co. Ord. 6,131,000 42,435
Omron Corp. 676,000 12,637
55,072
INDUSTRIAL MACHINERY & EQUIPMENT - 1.0%
Cooper Industries, Inc. 1,428,300 52,847
Exide Corp. 568,700 20,473
Goulds Pumps, Inc. 525,900 12,293
Keystone International, Inc. 484,900 10,486
96,099
POLLUTION CONTROL - 1.1%
Safety Kleen Corp. 800,000 13,600
WMX Technologies, Inc. 3,419,000 93,168
106,768
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 257,939
MEDIA & LEISURE - 0.2%
LEISURE DURABLES & TOYS - 0.1%
Hasbro, Inc. 272,200 9,595
RESTAURANTS - 0.1%
Brinker International, Inc. 533,700 9,006
TOTAL MEDIA & LEISURE 18,601
NONDURABLES - 2.8%
BEVERAGES - 0.5%
PepsiCo, Inc. 264,700 12,970
Seagram Co. Ltd. 1,025,800 30,696
43,666
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
TOBACCO - 2.3%
Philip Morris Companies, Inc. 1,069,000 $ 77,903
RJR Nabisco Holdings Corp. 5,319,020 151,592
229,495
TOTAL NONDURABLES 273,161
PRECIOUS METALS - 0.6%
Barrick Gold Corp. 1,100,000 27,698
Santa Fe Pacific Gold Corp. 2,552,600 31,908
59,606
RETAIL & WHOLESALE - 8.5%
APPAREL STORES - 1.9%
Charming Shoppes, Inc. 2,304,600 10,083
Edison Brothers Stores, Inc. 710,600 9,327
Gap, Inc. 1,696,100 58,303
Limited, Inc. (The) 3,832,100 85,264
TJX Companies, Inc. 2,004,900 26,816
189,793
GENERAL MERCHANDISE STORES - 4.3%
Dayton Hudson Corp. 1,200,800 85,107
Dillard Department Stores, Inc. Class A 2,824,000 81,190
Federated Department Stores, Inc. (Del.) (a) 3,314,700 76,238
Ito-Yokado Co. Ltd. 656,000 34,771
May Department Stores Co. (The) 1,193,800 46,857
Price/Costco, Inc. 1,035,200 14,622
Wal-Mart Stores, Inc. 3,350,000 83,750
422,535
GROCERY STORES - 0.9%
Fleming Companies, Inc. 709,951 18,370
Great Atlantic & Pacific Tea Co., Inc. 1,078,400 26,825
Supervalu, Inc. 1,374,500 39,001
84,196
RETAIL & WHOLESALE, MISCELLANEOUS - 1.4%
Duty Free International, Inc. 837,900 8,484
Fingerhut Companies, Inc. 2,096,100 28,821
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Sotheby's Holdings, Inc. Class A 1,245,900 $ 16,041
Tiffany & Co., Inc. 604,500 19,495
Toys "R" Us, Inc. 2,753,000 69,513
142,354
TOTAL RETAIL & WHOLESALE 838,878
SERVICES - 1.9%
ADVERTISING - 0.3%
WPP Group:
PLC 3,390,100 6,674
PLC (e) 9,300,000 18,310
PLC ADR 341,400 1,323
26,307
PRINTING - 0.1%
New England Business Service, Inc. 499,708 10,556
Standard Register Co. 217,900 4,304
14,860
SERVICES - 1.5%
ADT Ltd. (a) 3,956,800 45,009
Ideon Group, Inc. 436,300 4,254
Jostens, Inc. 274,500 5,524
Western Atlas, Inc. (a) 2,104,069 94,946
149,733
TOTAL SERVICES 190,900
TECHNOLOGY - 3.5%
COMPUTER SERVICES & SOFTWARE - 0.0%
Computer Sciences Corp. 111,400 5,904
COMPUTERS & OFFICE EQUIPMENT - 2.1%
Canon, Inc. 2,137,000 33,375
Fujitsu Ltd. 1,300,000 12,459
International Business Machines Corp. 1,108,900 103,405
Pitney Bowes, Inc. 1,057,300 39,120
Stratus Computer, Inc. 67,500 2,067
Wang Laboratories, Inc. 1,211,200 15,746
206,172
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - 0.7%
Hitachi Ltd. 5,800,000 $ 56,065
Nitto Denko Corp. 892,000 13,825
69,890
PHOTOGRAPHIC EQUIPMENT - 0.7%
Fuji Photo Film Co. Ltd. 787,000 18,902
Polaroid Corp. 1,284,300 47,359
66,261
TOTAL TECHNOLOGY 348,227
TRANSPORTATION - 2.8%
RAILROADS - 2.2%
Burlington Northern, Inc. 1,024,500 62,623
CSX Corp. 445,800 33,992
Canadian Pacific Ltd. Ord. 2,864,900 48,614
Illinois Central Corp., Series A 1,524,000 53,911
Southern Pacific Rail Corp. 1,407,600 22,346
221,486
TRUCKING & FREIGHT - 0.6%
Hunt (J.B.) Transport Services Inc. 1,011,900 17,708
Roadway Services, Inc. 815,000 38,101
55,809
TOTAL TRANSPORTATION 277,295
UTILITIES - 4.3%
ELECTRIC UTILITY - 0.9%
Fuji Electric Co. Ltd. 7,741,000 38,742
Veba AG Ord. 131,500 49,943
88,685
GAS - 0.2%
Williams Companies, Inc. 351,400 11,948
TELEPHONE SERVICES - 3.2%
Ameritech Corp. 1,618,000 71,799
Frontier Corp. 1,201,200 27,327
Koninklijke PPT Nederland (e) 389,200 14,054
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Koninklijke PPT Nederland 1,216,163 $ 43,917
NYNEX Corp. 3,356,600 140,138
SBC Communications, Inc. 455,000 20,475
317,710
TOTAL UTILITIES 418,343
TOTAL COMMON STOCKS
(Cost $6,982,063) 7,835,095
PREFERRED STOCKS - 2.1%
CONVERTIBLE PREFERRED STOCKS - 2.0%
BASIC INDUSTRIES - 0.5%
METALS & MINING - 0.5%
Reynolds Metals Co. $3.31 950,600 44,441
ENERGY - 0.7%
OIL & GAS - 0.7%
Atlantic Richfield Co. exchangeable $.5575 2,121,200 53,295
Occidental Petroleum Corp. $3.875 (e) 305,000 17,271
70,566
FINANCE - 0.2%
INSURANCE - 0.2%
Alexander & Alexander Services, Inc., Series A,
$3.625 (e) 151,100 7,630
Allstate Corp. exchangeable $.575 195,000 7,581
15,211
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
ELECTRICAL EQUIPMENT - 0.5%
Westinghouse Electric Corp. $1.30 (e) 3,703,600 54,165
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
NONDURABLES - 0.1%
TOBACCO - 0.1%
RJR Nabisco Holdings Corp., Series C, depositary shares
representing 1/10 pfd. 1,650,000 $ 10,106
TOTAL CONVERTIBLE PREFERRED STOCKS 194,489
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
ENERGY - 0.0%
OIL & GAS - 0.0%
Gulf Canada Resources Ltd. (a) (d) 11,768 31
Gulf Canada Resources Ltd. Series 1, adj. rate 410,232 1,154
1,185
FINANCE - 0.1%
SAVINGS & LOANS - 0.1%
Ahmanson (H.F.) & Co., Series B, depositary shares
representing 1/2 share, 9.60% 543,761 14,070
TOTAL NONCONVERTIBLE PREFERRED STOCKS 15,255
TOTAL PREFERRED STOCKS
(Cost $209,928) 209,744
CORPORATE BONDS - 3.2%
MOODY'S PRINCIPAL
RATINGS AMOUNT (000S)
CONVERTIBLE BONDS - 1.2%
CONGLOMERATES - 0.2%
Hanson America, Inc. 2.39%, 3/1/01 (e) A3 $ 19,054 15,053
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Centerpoint Properties 8.22%, 1/15/04 - 1,030 1,102
Sizeler Property Investors, Inc. 8%, 7/15/03 - 1,000 900
2,002
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (B) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
DURABLES - 0.2%
TEXTILES & APPAREL - 0.2%
Unifi, Inc. 6%, 3/15/02 Baa1 $ 19,000 $ 18,976
HEALTH - 0.4%
DRUGS & PHARMACEUTICALS - 0.4%
Roche Holdings, Inc. liquid yield option notes
0%, 4/20/10 (e) - 108,000 41,580
HOLDING COMPANIES - 0.1%
Amer Group Ltd. 6 1/4%, 6/15/03 (e) - 5,000 4,775
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
Cooper Industries, Inc. 7.05%, 1/1/15 A3 30,262 30,565
TOTAL CONVERTIBLE BONDS 112,951
NONCONVERTIBLE BONDS - 2.0%
BASIC INDUSTRIES - 0.4%
CHEMICALS & PLASTICS - 0.1%
IMC Fertilizer Group, Inc.:
9 1/4%, 10/1/00 B1 2,750 2,805
10 1/8%, 6/15/01 B1 10,000 10,675
9.45%, 12/15/11 B1 3,000 3,045
16,525
PAPER & FOREST PRODUCTS - 0.3%
Stone Container Corp.:
11 1/2%, 9/1/99 B2 2,000 2,080
9 7/8%, 2/1/01 B1 20,000 19,900
10 3/4%, 4/1/02 B2 5,000 5,156
27,136
TOTAL BASIC INDUSTRIES 43,661
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONGLOMERATES - 0.2%
Coltec Industries, Inc. 10 1/4%, 4/1/02 B1 $ 6,750 $ 6,953
Sequa Corp. 9 3/8%, 12/15/03 B3 12,110 11,565
18,518
DURABLES - 0.4%
TEXTILES & APPAREL - 0.4%
Westpoint Stevens, Inc.:
8 3/4%, 12/15/01 B1 14,790 14,568
9 3/8%, 12/15/05 B3 29,750 29,081
43,649
ENERGY - 0.3%
ENERGY SERVICES - 0.2%
Global Marine, Inc. 12 3/4%, 12/15/99 B1 16,520 18,213
TransTexas Gas Corp. 10 1/2%, 9/1/00 B1 3,360 3,629
21,842
OIL & GAS - 0.1%
Atlantic Richfield Co. 10 3/8%, 7/15/95 A2 500 502
BP America, Inc. gtd. 10.15%, 3/15/96 A1 1,500 1,542
Chevron Corp. Profit Sharing/Savings Plan Trust
Fund gtd. 6.92%, 1/1/96 Aa2 2,000 2,008
4,052
TOTAL ENERGY 25,894
FINANCE - 0.3%
CREDIT & OTHER FINANCE - 0.1%
Mesa Capital Corp.:
0%, 6/30/96 (b) Caa 485 466
secured 0%, 6/30/98 (b) Caa 7,500 7,200
7,666
INSURANCE - 0.2%
ITT Hartford Group, Inc. 7 1/4%, 12/1/96 A1 1,500 1,517
Phoenix Real Estate Corp. 9 3/4%, 8/15/03 Ba2 5,300 5,552
Reliance Group 9%, 11/15/00 Ba3 16,000 15,680
22,749
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (B) (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
FINANCE - CONTINUED
SAVINGS & LOANS - 0.0%
Coast Savings Financial, Inc. 10%, 4/1/00 Ba2 $ 4,000 $ 4,080
TOTAL FINANCE 34,495
MEDIA & LEISURE - 0.0%
LODGING & GAMING - 0.0%
Host Marriott Corp. 9 1/8%, 12/1/00 B1 652 661
Host Marriott Hospitality, Inc. 10 7/8%, 11/1/01 B1 2,131 2,195
2,856
NONDURABLES - 0.1%
BEVERAGES - 0.0%
Coca-Cola Company (The) 12 1/8%, 6/15/95 Aa3 1,000 1,010
FOODS - 0.1%
Chiquita Brands International, Inc.
11 1/2%, 6/1/01 B3 3,997 4,137
TOTAL NONDURABLES 5,147
TRANSPORTATION - 0.3%
AIR TRANSPORTATION - 0.3%
AMR Corp. 7 3/4%, 12/1/97 Baa3 26,000 26,570
TOTAL NONCONVERTIBLE BONDS 200,790
TOTAL CORPORATE BONDS
(Cost $310,538) 313,741
U.S. TREASURY OBLIGATIONS - 4.8%
U.S. Treasury Bill, yield at date of purchase 5.71%,
6/29/95 (Cost $472,920) Aaa 475,000 472,962
REPURCHASE AGREEMENTS - 10.5%
MATURITY VALUE
AMOUNT (NOTE 1)
(000S) (000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 6.13% dated
5/31/95 due 6/1/95 $ 1,039,787 $ 1,039,610
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $9,015,059) $ 9,871,152
FORWARD FOREIGN CURRENCY CONTRACTS
AMOUNTS IN THOUSANDS SETTLEMENT UNREALIZED
DATE(S) VALUE GAIN/(LOSS)
CONTRACTS TO BUY
12,073,556 JPY 6/16/95 to 7/18/95 $ 143,637 $ (6,096)
(Payable amount $149,733)
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.5%
CONTRACTS TO SELL
43,837,563 JPY 6/16/95 to 7/15/95 $ 522,437 $ (4,945)
(Receivable amount $517,492)
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 5.3%
$ (11,041)
CURRENCY ABBREVIATIONS
JPY - Japanese yen
LEGEND
(b) Non-income producing
(c) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(d) Affiliated company (see Note 6 of Notes to Financial Statements).
(e) 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 COST SECURITY DATE (000S)
Gulf Canada
Resources Ltd. 10/15/93 $ 29
Mid Ocean Ltd. 11/4/92 $ 5,000
(f) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $172,838,000 or 1.8% of net
assets.
(g) A portion of the security was purchased on a delayed delivery basis
(see Note 2 of Notes to Financial Statements).
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of total
value of investment in securities, is as follows:
United States 84.5%
Japan 4.9
United Kingdom 3.8
Canada 3.5
France 1.4
Others (individually less than 1%) 1.9
TOTAL 100.0%
INCOME TAX INFORMATION
At May 31, 1995, the aggregate cost of investment securities for income tax
purposes was $9,015,292,000. Net unrealized appreciation aggregated
$855,860,000, of which $1,056,130,000 related to appreciated investment
securities and $200,270,000 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, 1995 (UNAUDITED)

ASSETS

Investment in securities, at value (including repurchase $ 9,871,152
agreements of $1,039,610) (cost $9,015,059) -
See accompanying schedule

Receivable for investments sold 24,618

Unrealized appreciation on foreign currency contracts 4,067

Receivable for fund shares sold 38,900

Dividends receivable 27,271

Interest receivable 7,792

Other receivables 29

TOTAL ASSETS 9,973,829

LIABILITIES

Payable for investments purchased $ 96,090
Regular delivery

Delayed delivery 3,120

Unrealized depreciation on foreign currency contracts 15,108

Payable for fund shares redeemed 20,682

Accrued management fee 4,148

Other payables and accrued expenses 2,325

TOTAL LIABILITIES 141,473

NET ASSETS $ 9,832,356

Net Assets consist of:

Paid in capital $ 8,859,254

Undistributed net investment income 43,442

Accumulated undistributed net realized gain (loss) on 84,494
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 845,166
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 498,714 shares outstanding $ 9,832,356

NET ASSET VALUE, offering price and redemption price per $19.72
share ($9,832,356 (divided by) 498,714 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1995 (UNAUDITED)

INVESTMENT INCOME $ 90,889
Dividends (including $627 received from affiliated
issuers)

Interest 52,616

TOTAL INCOME 143,505

EXPENSES

Management fee $ 21,983

Transfer agent fees 9,602

Accounting fees and expenses 385

Non-interested trustees' compensation 39

Custodian fees and expenses 252

Registration fees 580

Audit 46

Legal 25

Miscellaneous 37

Total expenses before reductions 32,949

Expense reductions (326) 32,623

NET INVESTMENT INCOME 110,882

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:

Investment securities 110,294

Foreign currency transactions (28,992) 81,302

Change in net unrealized appreciation (depreciation) on:

Investment securities 856,262

Assets and liabilities in foreign currencies (12,010) 844,252

NET GAIN (LOSS) 925,554

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 1,036,436
FROM 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, 1995 1994
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 110,882 $ 147,656
Net investment income

Net realized gain (loss) 81,302 386,890

Change in net unrealized appreciation (depreciation) 844,252 (332,125)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,036,436 202,421
FROM OPERATIONS

Distributions to shareholders (87,066) (144,019)
From net investment income

From net realized gain (351,729) (183,813)

TOTAL DISTRIBUTIONS (438,795) (327,832)

Share transactions 2,358,629 4,818,748
Net proceeds from sales of shares

Reinvestment of distributions 423,647 317,638

Cost of shares redeemed (1,152,745) (2,220,685)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,629,531 2,915,701
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 2,227,172 2,790,290

NET ASSETS

Beginning of period 7,605,184 4,814,894

End of period (including undistributed net investment $ 9,832,356 $ 7,605,184
income of $43,442 and $19,626, respectively)

OTHER INFORMATION
Shares

Sold 127,526 255,446

Issued in reinvestment of distributions 23,963 17,182

Redeemed (62,403) (118,388)

Net increase (decrease) 89,086 154,240

</TABLE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED NOVEMBER 30, AUGUST 21,
ENDED 1990
MAY 31, 1995 (COMMENCEME
NT
OF OPERATIONS)
TO
NOVEMBER 30,

(UNAUDITED) 1994 F 1993 1992 1991 1990

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA

Net asset value, $ 18.57 $ 18.85 $ 16.57 $ 13.87 $ 10.18 $ 10.00
beginning of period

Income from
Investment
Operations

Net investment income .24 .37 .44 .40 .45 E .03

Net realized and 1.97 .53 2.62 2.75 3.76 .15
unrealized gain
(loss)

Total from investment 2.21 .90 3.06 3.15 4.21 .18
operations

Less Distributions (.20) (.47) (.41) (.32) (.44) -
From net investment
income

From net realized (.86) (.71) (.37) (.13) (.08) -
gain

Total distributions (1.06) (1.18) (.78) (.45) (.52) -

Net asset value, end of $ 19.72 $ 18.57 $ 18.85 $ 16.57 $ 13.87 $ 10.18
period

TOTAL RETURN B, C 12.60% 4.91% 19.08% 23.18% 42.01% 1.80%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of $ 9,832 $ 7,605 $ 4,815 $ 1,942 $ 292 $ 3
period (in millions)

Ratio of expenses to .78% .81% .88% 1.01% 1.52% 2.50% A,
average net assets A D

Ratio of expenses to .78% .83% .89% 1.01% 1.52% 2.50% A,
average net assets A D
before expense
reductions

Ratio of net investment 2.64% 2.36% 2.69% 3.09% 3.83% 3.89% A
income to average A
net assets

Portfolio turnover rate 51% 75% 55% 89% 206% 167% A
A

</TABLE>

A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D LIMITED IN ACCORDANCE WITH A STATE EXPENSE LIMITATION.
E 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.
F 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, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1995 (Unaudited)

9. 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
of their purchase date are valued at amortized cost or original cost plus
accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION.
The accounting records of the fund are maintained in U.S. dollars.
Investment securities and other assets and liabilities denominated in a
foreign currency are translated into U.S. dollars at the prevailing rates
of exchange at period end. Purchases and sales of securities, income
receipts, and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Net realized gains and losses on foreign currency transactions represent
net gains and losses from sales and maturities of forward currency
contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions,
and the difference between the amount of net investment income accrued and
the U.S. dollar amount actually received. The effects of changes in foreign
currency exchange rates on investments in securities are included with the
net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for foreign
currency transactions, market discount, non-taxable dividends and losses
deferred due to wash sales. The fund also utilized earnings and profits
distributed to shareholders on redemption of shares as a part of the
dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain loss. Undistributed net investment income (loss) and
accumulated undistributed net realized gain (loss) on investments and
foreign currency transactions may include temporary book and tax basis
differences which will reverse in a subsequent period. Any taxable income
or gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
10. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY
CONTRACTS. The fund may use foreign currency contracts to facilitate
transactions in foreign securities and to manage the fund's currency
exposure. Contracts to buy generally are used to acquire exposure to
foreign currencies, while contracts to sell are used to hedge the fund's
investments against currency fluctuations. Also, a contract to buy or sell
can offset a previous contract. These contracts involve market risk in
excess of the unrealized gain or loss reflected in the fund's Statement of
Assets and Liabilities. The U.S. dollar value of the currencies the fund
has committed to buy or sell is shown in the schedule of investments under
the caption "Forward Foreign Currency Contracts." This amount represents
the aggregate exposure to each currency the fund has acquired or hedged
through currency contracts at period end. Losses may arise from changes in
the value of the foreign currency or if the counterparties do not perform
under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement
2. OPERATING POLICIES -
CONTINUED
FORWARD FOREIGN CURRENCY
CONTRACTS - CONTINUED
date and broker are offset and any realized gain (loss) is recognized on
the date of offset; otherwise, gain (loss) is recognized on settlement
date. Contracts that have been offset with different counterparties are
reflected as both a contract to buy and a contract to sell in the schedule
of investments under the caption "Forward Foreign Currency Contracts."
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
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. FMR, the fund's
investment adviser, is responsible for determining that the value of these
underlying securities remains at least equal to the resale price.
DELAYED DELIVERY TRANSACTIONS.
The fund may purchase or sell securities on a when-issued or forward
commitment basis. Payment and delivery may take place a month or more after
the date of the transaction. The price of the underlying securities and the
date when the securities will be delivered and paid for are fixed at the
time the transaction is negotiated. The market value of the securities
purchased or sold on a when-issued or forward commitment basis are
identified as such in the fund's schedule of investments. With respect to
purchase commitments, the fund identifies securities as segregated in its
custodial records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under the
contract.
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 $6,415,000 or 0.07% of net assets.
11. PURCHASES AND SALES
OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,639,507,000 and $1,835,328,000, respectively, of which sales
of U.S. government and government agency obligations aggregated
$4,076,000.
12. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates and is based on
the monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .2700% to .5200% for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR voluntarily implemented the above rates, as they resulted in the same
or a lower management fee. The annual individual fund fee rate is .20%. For
the period, the management fee was equivalent to an annualized rate of .52%
of average net assets.
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
$46,000 for the period.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
During the period December 1, 1994 to December 31, 1994, FSC received fees
based on the type, size, number of accounts and the number of transactions
made by shareholders. Effective January 1, 1995, the Board of Trustees
approved a revised transfer agent contract pursuant to which FSC receives
account fees and asset-based fees that vary according to account size and
type of account. FSC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $1,636,000 for the period.
13. 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
$326,000 under this arrangement.
14. 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
PURCHASE SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Bradley Real Estate Trust $ - $ - $ 436 $ 6,929
Ferro Corp. 622 - 191 38,987
Gryphon Holdings, Inc. (a) - - - 7,671
Hornbeck Offshore Services, Inc. (a) 2,823 - - 13,581
Russell Corp. - - - 57,597
TOTALS $ 3,445 $ - $ 627 $ 124,765

(a) Non-income producing
TO CALL FIDELITY

For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East 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
6300 Canoga Avenue
Woodland Hills, 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
90 Alhambra Plaza
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
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
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
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, 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
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State 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
Brian S. Posner, Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
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(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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE