FIDELITY FINANCIAL TRUST, N-30D, 1997-07-15

FIDELITY FINANCIAL TRUST
N-30D, 1997-07-15

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(2_FIDELITY_LOGOS)FIDELITY

CONVERTIBLE SECURITIES
FUND
SEMIANNUAL REPORT
MAY 31, 1997
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
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, FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
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.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE

(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Through the first five months of 1997, stock and bond markets experienced
the kind of short-term volatility that can affect them from time to time.
After climbing steadily upward for more than two years, stock prices saw a
sharp correction in late March and early April. Returns in the bond market
were essentially stagnant as the Federal Reserve Board implemented a
long-expected increase in short-term interest rates at the end of March.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories 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, it's important to
remember that there is no assurance that a money market fund will achieve
its goal of maintaining a stable net asset value of $1.00 per share, and
that these types of funds are neither insured nor guaranteed by any agency
of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are available
24 hours a day, seven days a week to provide you 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. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS

Fidelity Convertible Securities 4.96% 9.69% 85.66% 262.11%

Merrill Lynch Convertible Securities 4.85% 9.93% 84.92% n/a
Index

Convertible Securities Funds 6.99% 13.12% 80.61% 167.96%
Average

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 10
years. For example, if you had 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 market capitalization weighted index of
over 450 non-mandatory domestic corporate convertible securities. To
measure how the fund's performance stacked up against its peers, you can
compare it to the convertible securities funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 50 mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Fidelity Convertible Securities 9.69% 13.17% 13.73%

Merrill Lynch Convertible Securities Index 9.93% 13.08% n/a

Convertible Securities Funds Average 13.12% 12.42% 10.25%

$10,000 OVER 10 YEARS
1987/05/31 10000.00 10000.00
1987/06/30 10171.95 10209.00
1987/07/31 10679.59 10625.53
1987/08/31 10919.05 10838.04
1987/09/30 10844.86 10678.72
1987/10/31 8798.11 8670.05
1987/11/30 8778.71 8391.74
1987/12/31 9024.93 8818.88
1988/01/31 9361.39 9064.05
1988/02/29 9747.33 9480.99
1988/03/31 9876.25 9448.76
1988/04/30 10066.95 9644.35
1988/05/31 9996.69 9548.87
1988/06/30 10411.87 9916.50
1988/07/31 10340.62 9813.37
1988/08/31 10187.96 9639.67
1988/09/30 10321.71 9812.22
1988/10/31 10486.86 9936.84
1988/11/30 10332.03 9774.87
1988/12/31 10459.07 10001.64
1989/01/31 10905.95 10450.72
1989/02/28 11022.99 10448.63
1989/03/31 11343.91 10584.46
1989/04/30 11764.45 10940.10
1989/05/31 12034.03 11162.18
1989/06/30 12130.67 11080.70
1989/07/31 12676.61 11398.71
1989/08/31 13091.52 11649.49
1989/09/30 13102.44 11548.13
1989/10/31 12837.30 11183.21
1989/11/30 13047.20 11365.50
1989/12/31 13207.96 11378.00
1990/01/31 12718.36 10925.16
1990/02/28 12866.38 11069.37
1990/03/31 13119.00 11238.73
1990/04/30 13015.25 10988.11
1990/05/31 13534.01 11521.03
1990/06/30 13685.13 11507.21
1990/07/31 13591.79 11404.79
1990/08/31 12693.45 10747.88
1990/09/30 12067.05 10278.19
1990/10/31 11830.67 9893.79
1990/11/30 12445.25 10377.59
1990/12/31 12825.70 10594.49
1991/01/31 13620.53 11070.18
1991/02/28 14499.66 11731.07
1991/03/31 14885.17 12018.48
1991/04/30 15055.71 12139.87
1991/05/31 15567.31 12499.21
1991/06/30 15271.73 12150.48
1991/07/31 15887.52 12612.20
1991/08/31 16491.00 13082.63
1991/09/30 16766.28 13059.08
1991/10/31 17488.22 13247.13
1991/11/30 16741.39 12927.88
1991/12/31 17794.05 13678.99
1992/01/31 18692.21 14057.90
1992/02/29 19304.00 14422.00
1992/03/31 18978.45 14302.29
1992/04/30 19136.17 14465.34
1992/05/31 19504.17 14728.61
1992/06/30 19387.79 14659.38
1992/07/31 19918.60 15062.52
1992/08/31 19533.77 14967.62
1992/09/30 19999.10 15266.98
1992/10/31 20467.93 15303.62
1992/11/30 21124.30 15745.89
1992/12/31 21712.22 16095.45
1993/01/31 22438.28 16597.63
1993/02/28 22047.32 16662.36
1993/03/31 23144.46 17272.20
1993/04/30 23356.02 17268.75
1993/05/31 23934.28 17570.95
1993/06/30 23906.88 17737.87
1993/07/31 24148.94 17920.57
1993/08/31 24718.49 18411.60
1993/09/30 25005.65 18619.65
1993/10/31 25580.49 19059.07
1993/11/30 25336.18 18771.28
1993/12/31 25574.35 19081.01
1994/01/31 26211.77 19628.63
1994/02/28 25792.00 19316.54
1994/03/31 24663.00 18528.42
1994/04/30 24254.30 18191.20
1994/05/31 24159.99 18231.22
1994/06/30 24141.80 18025.21
1994/07/31 24571.77 18533.52
1994/08/31 25877.59 18898.63
1994/09/30 25715.97 18564.13
1994/10/31 25877.20 18723.78
1994/11/30 25200.04 18044.10
1994/12/31 25125.29 18181.24
1995/01/31 25125.29 18157.60
1995/02/28 25648.73 18751.36
1995/03/31 26406.70 19246.39
1995/04/30 27001.60 19683.29
1995/05/31 27299.04 20263.94
1995/06/30 27981.87 21001.55
1995/07/31 28716.04 21747.11
1995/08/31 29049.75 21975.45
1995/09/30 29601.14 22302.89
1995/10/31 28877.11 21618.19
1995/11/30 29735.84 22370.50
1995/12/31 29994.70 22493.54
1996/01/31 30605.39 22990.64
1996/02/29 31342.22 23609.09
1996/03/31 31742.95 23807.41
1996/04/30 32486.64 24362.12
1996/05/31 33012.67 24905.40
1996/06/30 32647.52 24315.14
1996/07/31 31108.58 23366.85
1996/08/31 31969.66 24236.10
1996/09/30 32667.53 24868.66
1996/10/31 33056.21 25022.84
1996/11/30 34499.88 25100.91
1996/12/31 34507.70 24819.78
1997/01/31 35627.83 25609.05
1997/02/28 34959.68 25475.89
1997/03/31 33746.25 24948.54
1997/04/30 34223.22 25200.52
1997/05/30 36210.64 26367.30
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Convertible Securities Fund on May 31, 1987. As the chart
shows, by May 31, 1997, the value of the investment would have grown to
$36,211 - a 262.11% increase on the initial investment. For comparison,
look at how the First Boston Convertible Securities Index - a market
capitalization weighted index of over 250 convertible bonds and preferred
stocks - 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 $26,367 - a 163.67% 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
long-term growth and
short-term volatility. 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

NOTE TO SHAREHOLDERS: Effective July 1, 1997, after the period ended, David
Felman (right) became Portfolio Manager of Fidelity Convertible Securities
Fund. The following is an interview with Stephen DuFour (left), who managed
the fund during most of the period covered by this report, and David
Felman, who discusses his outlook and provides additional comments.
Q. STEVE, HOW DID THE FUND PERFORM?
S.D. The fund performed in line with the index but underperformed its
competitors. The fund returned 4.96% over the six-month period and 9.69%
over the one-year period ending May 31, 1997. This compares to the Merrill
Lynch Convertible Securities Index, which had total returns of 4.85% over
the past six months and 9.93% over the past year. The average convertible
securities fund returned 6.99% and 13.12% over the same periods, according
to Lipper Analytical Services.
Q. WHY DID THE FUND UNDERPERFORM ITS PEER GROUP OVER THE PAST SIX MONTHS?
S.D. Early in the period, I moved the fund's investments out of several
areas that were not performing well - such as securities in the lower
credit quality lending industry and tobacco companies such as RJR Nabisco -
and into securities that I knew very well. This approach began paying off
over the last few months of the period, which helped the fund beat the
index. However, it hurt the fund's performance during the early part of
1997. That's because the convertible securities market is less liquid than
the regular stock market. When you buy convertibles, there are transaction
costs to get in and to get out. So, for several months the fund incurred
some high transaction costs, while we were adjusting the portfolio, which
affected its overall performance. In addition, I had more sell ideas than
buy ideas during the period, so I ended up holding relatively high levels
of cash while I was looking for the right securities to buy. This resulted
in a lower return over the period than if the fund had been fully invested.
At the end of the period, the fund's cash levels, while still high, were
beginning to drop and the fund looked well-positioned for future growth.
Q. YOU MENTIONED THAT SOME CONVERTIBLE SECURITIES IN THE FINANCIAL INDUSTRY
DID POORLY IN THE EARLY PART OF THIS PERIOD. WHY DID THESE SECURITIES TURN
IN A WEAK PERFORMANCE WHEN MOST FINANCIAL STOCKS DID WELL?
S.D. Financial convertible securities typically have lower credit ratings
than common stocks in that industry, and they tend not to perform as well
as established banks such as Citibank. In addition, there were two major
bankruptcies/frauds in February that negatively affected several financial
convertible securities. Some fund holdings, including Cityscape, a top 10
holding six months ago that I no longer hold, were hit hard.
Q. WHAT ABOUT TOBACCO COMPANIES?
S.D. As I also mentioned, the fund was somewhat hurt early in the period by
its holding in RJR Nabisco. The stock of RJR Nabisco, the owner of a
tobacco company, was negatively affected by fears of pending litigation
against that industry.
Q. HOW HAVE YOU POSITIONED THE FUND SINCE YOU TOOK OVER AT THE BEGINNING OF
1997?
S.D. While I know some sectors - such as media and retail - very well and
may have favored them somewhat, my goal has been to select strong
individual securities and to focus on buying the best companies at the most
attractive prices. Each convertible security is a story unto itself, and I
was trying to learn as many of these stories as I could. I do my own fund
research, meet each company's management team and check my opinions with
the prevailing thought on Wall Street. Then, I tend to own larger positions
in individual names so I can get a payoff for all my work. Ultimately, my
goal was to invest in established companies that I knew very, very well. A
good example of one of these companies is top 10 fund holding Home Depot.
This company has done a great job growing sales as well as earnings over
the past five to 10 years even when the market thought its growth would
end.
Q. OVER THE PAST SIX MONTHS, NEARLY ALL OF THE FUND'S TOP 10 HOLDINGS HAVE
CHANGED. WHAT ARE SOME OF THE NEW HOLDINGS THAT HELPED THE FUND OVER THE
PERIOD?
S.D. I just mentioned Home Depot. Another excellent company was Worldcom,
the fund's largest holding at the end of the period. This uniquely
positioned telephone company, which provides telephone and Internet
services to businesses, is growing its cash flow well above 30% a year.
Another top 10 holding that performed well was refining and marketing
company Tosco. This company has done a good job of acquiring assets in the
U.S. The fund also benefited from holding Time Warner because it appeared
that the company was starting to focus on financial returns for the first
time in the past six to seven years. Ted Turner, a new management player,
has started to look closely at the cost structure, a strategy not favored
by prior management.
Q. DO YOU HAVE ANY REGRETS OVER THE PERIOD?
S.D. Sure. I wish I had been able to invest the fund's relatively high cash
level more quickly. As I mentioned, I found more opportunities to sell than
buy convertible securities over the period. Still, I wish I could have
bought the quality names I wanted earlier.
Q. TURNING TO YOU, DAVID, HOW DO YOU THINK THE FUND LOOKS GOING FORWARD?
D.F. My strategy will be to pick the best companies at the best valuations.
Over time, the fund may look like it's positioned bearishly or, on the
other hand, bullishly
based on the amount of convertible securities I hold that behave like
equities or bonds, but that isn't a conscious effort.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.

FUND FACTS
GOAL: high total return
through a combination of
current income and capital
appreciation by investing
mainly in securities that are
convertible into common
stock
FUND NUMBER: 308
TRADING SYMBOL: FCVSX
START DATE: January 5, 1987
SIZE: as of May 31, 1997,
more than $1 billion
MANAGER: David Felman,
since July 1997; manager,
Fidelity Select
Telecommunications
Portfolio, 1994-1996;
Fidelity Select Chemicals
Portfolio, January 1995-July
1995; joined Fidelity in 1993
(checkmark)
DAVID FELMAN ON CONVERTIBLE
SECURITIES THAT ACT LIKE
EQUITIES OR BONDS:
"Brokerage firms have come
up with dozens of different
kinds of convertible securities,
most of which are bonds, all
with unique names. But no
matter how complicated they
seem, they all share the same
underlying principle: All
convertible debt securities are
basically bonds that have an
option to be converted to
common stock. In previous
reports, we've discussed that
sometimes convertible
securities behave like equities
and sometimes like bonds.
Whether a convertible security
is equity-like or bond-like is
based on the performance and
price of the underlying stock of
the company. Convertible
securities that are issued by
companies whose underlying
stocks perform well tend to
trade more on the option
value than on the bond value.
That is to say, they trade more
like equities. On the other
hand, convertible securities of
companies whose stock does
not do well start to trade like
bonds.
"Depending on how bullish or
bearish you are, you can buy a
particular convertible security
that is 100% equity-like, 100%
bond-like or something in the
middle. During the past
six-month period, the fund was
positioned somewhat toward
equity-like convertibles in
order to own more quality
names. As I've noted,
convertible securities of
poorer-quality companies
tend to behave more like
bonds than equities."
INVESTMENT CHANGES

TOP TEN INVESTMENTS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

Worldcom, Inc. 8% depositary shares 4.9 0.0

EMC Corp. 3 1/4%, 3/15/02 3.0 0.0

Tenet Healthcare Corp. 6%, 12/1/05 2.5 1.8

Tosco Financing Trust $2.875 2.5 0.0

Sandoz Capital BVI Ltd. 2%, 10/6/02 2.3 1.0

Time Warner, Inc. liquid yield option notes 2.2 0.2
0%, 6/22/13

Federated Department Stores, Inc. 2.2 0.0
5%, 10/1/03

Home Depot, Inc. 3 1/4%, 10/1/01 2.0 0.9

USA Waste Services, Inc. 4%, 2/1/02 1.9 0.0

U.S. Office Products Co. 5 1/2%, 2/1/01 1.9 0.0

TOP FIVE MARKET SECTORS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO

Media & Leisure 12.3 6.0

Retail & Wholesale 11.4 5.3

Finance 10.8 13.8

Industrial Machinery & Equipment 9.7 6.4

Utilities 9.1 4.5

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF MAY 31, 1997 * AS OF NOVEMBER 30, 1996 **
12
Row: 1, Col: 1, Value: 1.5
Row: 1, Col: 2, Value: 9.5
Row: 1, Col: 3, Value: 12.0
Row: 1, Col: 4, Value: 40.0
Row: 1, Col: 5, Value: 37.0
Convertible
securities 75.5%
Stocks 16.0%
Short-term
investments 7.5%
Nonconvertible
bonds 1.0%
FOREIGN
INVESTMENTS 7.3%
Convertible
securities 78.2%
Stocks 12.1%
Short-term
investments 9.5%
Nonconvertible
bonds 0.2%
FOREIGN
INVESTMENTS 4.1%
Row: 1, Col: 1, Value: 2.0
Row: 1, Col: 2, Value: 7.5
Row: 1, Col: 3, Value: 16.0
Row: 1, Col: 4, Value: 37.0
Row: 1, Col: 5, Value: 37.5
*
**
INVESTMENTS MAY 31, 1997 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

CORPORATE BONDS - 43.7%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - 43.5%
BASIC INDUSTRIES - 0.3%
IRON & STEEL - 0.3%
Quanex Corp. 6.88%, 6/30/07 B1 $ 3,480 $ 3,567
CONSTRUCTION & REAL ESTATE - 0.9%
BUILDING MATERIALS - 0.9%
Hexcel Corp. 7%, 8/1/03 B2 7,550 9,815
DURABLES - 1.2%
AUTOS, TIRES, & ACCESSORIES - 0.9%
Mascotech, Inc. 4 1/2%, 12/15/03 B1 10,000 9,300
TEXTILES & APPAREL - 0.3%
Converse, Inc. 7%, 6/1/04 - 2,712 2,956
TOTAL DURABLES 12,256
ENERGY - 0.9%
ENERGY SERVICES - 0.6%
Baker Hughes, Inc. 0%, 5/5/08 A2 4,000 3,095
Diamond Offshore Drilling, Inc.
3 3/4%, 2/15/07 Baa2 3,000 3,248
6,343
OIL & GAS - 0.3%
Pogo Producing Co. 5 1/2%, 6/15/06 (f) B2 3,050 3,442
TOTAL ENERGY 9,785
FINANCE - 2.3%
CREDIT & OTHER FINANCE - 2.3%
Sandoz Capital BVI Ltd. 2%, 10/6/02 - 18,600 24,320
HEALTH - 6.0%
DRUGS & PHARMACEUTICALS - 2.0%
Roche Holdings, Inc. (f):
0%, 9/23/08 - 15,000 13,875
0%, 5/6/12 - 20,000 8,175
22,050
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
Thermo Cardiosystems, Inc. 4 3/4%, 5/15/04 (f) - $ 4,000 $ 4,220
MEDICAL FACILITIES MANAGEMENT - 3.6%
Beverly Enterprises, Inc. 5 1/2%, 8/1/18 B3 3,080 3,457
Healthsource, Inc. 5%, 3/1/03 (f) B1 4,000 3,980
Integrated Health Services, Inc.:
5 3/4%, 1/1/01 B2 2,000 2,295
6%, 1/1/03 B2 2,000 2,310
Tenet Healthcare Corp. 6%, 12/1/05 B1 22,490 27,213
39,255
TOTAL HEALTH 65,525
INDUSTRIAL MACHINERY & EQUIPMENT - 5.2%
INDUSTRIAL MACHINERY & EQUIPMENT - 1.0%
Robbins & Myers, Inc. 6 1/2%, 9/1/03 - 4,000 5,845
United States Filter Corp. 4 1/2%,
12/15/01 B2 5,000 5,150
10,995
POLLUTION CONTROL - 4.2%
Sanifill, Inc. 5%, 3/1/06 Ba2 8,730 12,091
Thermo Instrument Systems, Inc. 4 1/2%,
10/15/03 (f) Baa2 1,000 1,025
USA Waste Services, Inc. 4%, 2/1/02 Ba2 20,000 20,700
United Waste Systems, Inc. 4 1/2%, 6/1/01 B1 4,800 6,294
WMX Technologies, Inc. 2%, 1/24/05 A3 5,260 4,813
44,923
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 55,918
MEDIA & LEISURE - 8.9%
BROADCASTING - 2.6%
Home Shopping Network, Inc. 5 7/8%,
3/1/06 (f) B- 3,495 4,456
Time Warner, Inc. liquid yield option notes
0%, 6/22/13 Ba1 52,000 23,693
28,149
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 1.2%
Coleman Worldwide Corp. second liquid yield
option notes 0%, 5/27/13 B2 $ 38,000 $ 12,872
LODGING & GAMING - 3.2%
HFS, Inc. 4 1/2%, 10/1/99 A3 5,000 14,850
Hilton Hotels Corp. 5%, 5/15/06 Baa2 16,940 18,464
WMS Industries, Inc. 5 3/4%, 12/1/02 B1 1,350 1,401
34,715
PUBLISHING - 1.9%
News America Holdings, Inc. liquid yield
option notes 0%, 3/11/13 Baa3 27,500 11,825
Scholastic Corp. 5%, 8/15/05 (f) Baa3 10,875 8,809
20,634
TOTAL MEDIA & LEISURE 96,370
NONDURABLES - 0.6%
HOUSEHOLD PRODUCTS - 0.6%
Alberto Culver Co. 5 1/2%, 6/30/05 (f) - 4,200 6,631
PRECIOUS METALS - 0.9%
Stillwater Mining Co. 7%, 5/1/03 (f) - 9,500 9,999
RETAIL & WHOLESALE - 9.4%
APPAREL STORES - 0.4%
Baker (J.), Inc. 7%, 6/1/02 B3 1,350 1,185
Saks Holdings, Inc. 5 1/2%, 9/15/06 B2 3,000 2,666
3,851
GENERAL MERCHANDISE STORES - 2.2%
Federated Department Stores, Inc.
5%, 10/1/03 Baa3 19,000 23,417
RETAIL & WHOLESALE, MISCELLANEOUS - 6.8%
Comcast Corp. 1 1/8%, 4/15/07 B1 33,000 17,614
Corporate Express, Inc. 4 1/2%,
7/1/00 (f) B3 1,000 877
Home Depot, Inc. 3 1/4%, 10/1/01 A1 20,000 21,450
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - CONTINUED
Pier 1 Imports, Inc. 5 3/4%, 10/1/03 B1 $ 5,580 $ 7,505
Staples, Inc. 4 1/2%, 10/1/00 (f) Ba2 5,265 6,055
U.S. Office Products Co. 5 1/2%, 2/1/01 B3 18,500 19,980
73,481
TOTAL RETAIL & WHOLESALE 100,749
SERVICES - 0.5%
Career Horizons, Inc. 7%, 11/1/02 B1 2,150 4,945
TECHNOLOGY - 6.2%
COMPUTER SERVICES & SOFTWARE - 1.6%
Automatic Data Processing, Inc. 0%, 2/20/12 Aa3 21,000 13,309
CUC International 3%, 2/15/02 (f) Baa2 4,000 4,000
17,309
COMPUTERS & OFFICE EQUIPMENT - 3.9%
Data General Corp. 6%, 5/15/04 (f) - 2,000 2,150
EMC Corp. 3 1/4%, 3/15/02 (f) Ba3 30,000 32,700
SCI Systems, Inc. 5%, 5/1/06 (f) BB+ 1,000 1,465
Silicon Graphics, Inc. 0%, 11/2/13 (f) B1 12,000, 5,955
42,270
ELECTRONICS - 0.7%
Intevac, Inc. 6 1/2%, 3/1/04 (f) - 1,000 919
Photronics, Inc. 6%, 6/1/04 B2 3,000 3,157
Texas Instruments, Inc. euro 2 3/4%, 9/29/02 Baa1 1,600 3,386
7,462
TOTAL TECHNOLOGY 67,041
UTILITIES - 0.2%
CELLULAR - 0.1%
Rogers Communications, Inc. liquid yield
option notes 0%, 5/20/13 B2 2,000 810
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - 0.1%
Cam-Net Communications Network, Inc.
11 1/2%, 4/4/98 (c)(e) - $ 2,275 $ 796
TOTAL UTILITIES 1,606
TOTAL CONVERTIBLE BONDS 468,527
NONCONVERTIBLE BONDS - 0.2%
TRANSPORTATION - 0.2%
AIR TRANSPORTATION - 0.2%
Trans World Airlines, Inc. 12%, 4/1/02
unit (f) - 2,000 2,420
TOTAL CORPORATE BONDS
(Cost $448,340) 470,947
COMMON STOCKS - 12.1%
SHARES
BASIC INDUSTRIES - 0.2%
IRON & STEEL - 0.2%
Quanex Corp. 77,000 2,098
DURABLES - 4.5%
AUTOS, TIRES, & ACCESSORIES - 4.5%
Chrysler Corp. 150,000 4,763
Cummins Engine Co., Inc. 68,300 4,354
Eaton Corp. 240,000 19,140
Ford Motor Co. 50,000 1,875
Navistar International Corp. (a) 547,500 9,102
PACCAR, Inc. 136,000 6,154
Scania AB Class B 100,000 2,763
48,151
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - 2.3%
OIL & GAS - 2.3%
Santa Fe Energy Resources, Inc. (a) 338,960 $ 5,127
Tosco Corp. 449,000 14,649
Total SA sponsored ADR 100,000 4,562
24,338
FINANCE - 1.6%
FEDERAL SPONSORED CREDIT - 1.6%
Federal National Mortgage Association 400,000 17,450
INDUSTRIAL MACHINERY & EQUIPMENT - 0.9%
Westinghouse Electric Corp. 442,500 8,961
MEDIA & LEISURE - 0.4%
PUBLISHING - 0.4%
Meredith Corp. 171,200 4,430
TRANSPORTATION - 2.2%
AIR TRANSPORTATION - 0.0%
Florida West Airlines, Inc. (a) 18,236 -
RAILROADS - 2.2%
Burlington Northern Santa Fe Corp. 86,100 7,146
Wisconsin Central Transportation Corp. (a) 466,600 16,856
TOTAL TRANSPORTATION 24,002
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
Cam-Net Communications Network, Inc. (a)(e) 875,935 175
TOTAL COMMON STOCKS
(Cost $111,906) 129,605
CONVERTIBLE PREFERRED STOCKS - 34.7%
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - 3.1%
METALS & MINING - 0.4%
Freeport McMoRan Copper & Gold, Inc. $1.25 149,800 $ 4,120
PACKAGING & CONTAINERS - 0.1%
Crown Cork & Seal, Inc. $1.88 24,000 1,302
PAPER & FOREST PRODUCTS - 2.6%
Boise Cascade Corp. $1.58 440,700 13,496
International Paper Capital Trust $2.625 125,000 6,328
James River Corp. $3.50 153,300 8,317
28,141
TOTAL BASIC INDUSTRIES 33,563
CONSTRUCTION & REAL ESTATE - 1.0%
REAL ESTATE - 0.3%
Rouse Co., Series B, $3.00 75,000 3,487
REAL ESTATE INVESTMENT TRUSTS - 0.7%
Felcor Suite Hotels, Inc., Series A, $1.95 250,000 7,281
Vornado Realty Trust, Series A, $3.25 6,500 332
7,613
TOTAL CONSTRUCTION & REAL ESTATE 11,100
DURABLES - 1.1%
AUTOS, TIRES, & ACCESSORIES - 1.0%
Mascotech, Inc. $1.20 (dividend enhanced) 328,700 6,533
Republic Industries, Inc. $1.55 200,000 4,775
11,308
ENERGY - 4.0%
OIL & GAS - 4.0%
Tosco Financing Trust $2.875 (f) 459,000 26,966
Ultramar Diamond Shamrock Corp. $2.50 (f) 61,800 3,963
Unocal Capital Trust $3.125 200,000 11,725
42,654
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 6.9%
BANKS - 1.0%
National Australia Bank Ltd. 405,200 $ 10,940
CREDIT & OTHER FINANCE - 1.8%
Continental Airlines Finance Trust $4.25 (f) 246,000 19,342
INSURANCE - 2.2%
Aetna, Inc. Class C 6.25% 75,000 6,937
American Bankers Insurance Group, Inc., Series B, $3.125 120,000 7,950
Pennsylvania Corp. Financial Group, Inc.,
Series II, $3.50 (f) 145,080 8,415
23,302
SAVINGS & LOANS - 1.1%
Glendale Federal Bank, Series E, $2.1875 195,000 12,334
SECURITIES INDUSTRY - 0.8%
Salomon, Inc.:
$2.03 197,600 6,249
$3.484 37,800 2,296
8,545
TOTAL FINANCE 74,463
HEALTH - 1.1%
DRUGS & PHARMACEUTICALS - 0.1%
Neorx Corp., Series 1, $2.44 94,500 1,347
MEDICAL EQUIPMENT & SUPPLIES - 0.6%
McKesson Financing Trust $2.50 (f) 102,200 6,106
MEDICAL FACILITIES MANAGEMENT - 0.4%
PacifiCare Health Systems, Inc. 4% 150,000 4,744
TOTAL HEALTH 12,197
INDUSTRIAL MACHINERY & EQUIPMENT - 3.6%
ELECTRICAL EQUIPMENT - 1.2%
Loral Space & Communications Ltd. $3.00 (f) 220,000 11,330
QUALCOMM Financial Trust I $2.875 (f) 25,000 1,175
12,505
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 2.0%
Case Corp., Series A, $4.50 89,500 $ 12,687
Cooper Industries, Inc. $0.81 448,200 9,076
21,763
POLLUTION CONTROL - 0.4%
Browning-Ferris Industries, Inc. 136,300 4,583
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 38,851
MEDIA & LEISURE - 3.0%
BROADCASTING - 0.9%
Chancellor Broadcasting Co. $3.50 (f) 165,000 10,106
LODGING & GAMING - 1.8%
Host Marriott Financial Trust $3.375 (f) 345,000 19,665
PUBLISHING - 0.3%
Hollinger Inernational, Inc. $0.95 300,000 3,300
TOTAL MEDIA & LEISURE 33,071
RETAIL & WHOLESALE - 2.0%
APPAREL STORES - 1.6%
AnnTaylor Finance Trust $4.25 221,000 14,531
TJX Companies, Inc., Series E, $7.00 7,900 2,054
16,585
GENERAL MERCHANDISE STORES - 0.4%
K mart Financing I $3.875 75,000 4,425
TOTAL RETAIL & WHOLESALE 21,010
UTILITIES - 8.9%
CELLULAR - 1.7%
AirTouch Communications, Inc. Class B $1.74 500,000 14,750
Mobile Telecommunication Technologies Corp. $2.25 (f) 193,000 4,198
18,948
ELECTRIC UTILITY - 0.7%
Citizens Utilities Trust $2.50 174,300 7,691
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
GAS - 0.9%
MCN Corp. $4.00 176,600 $ 9,293
TELEPHONE SERVICES - 5.6%
Enhance Financial Services Group, Inc. $7.625 201,400 7,351
Worldcom, Inc. 8% depositary shares 499,900 52,521
59,872
TOTAL UTILITIES 95,804
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $329,330) 374,021
CASH EQUIVALENTS - 9.5%
Taxable Central Cash Fund (b) 102,381,014 102,381
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $991,957) $ 1,076,954
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.54%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
4. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
5. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Cam-Net Communications
Network, Inc.
11 1/2%, 4/4/98 4/12/96 $ 1,838
Cam-Net Communications
Network, Inc. 4/12/96 $ 684
6. 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 $232,419,000 or 21.5% of net
assets.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows:
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 5.3% AAA, AA, A 5.7%
Baa 6.9% BBB 8.5%
Ba 8.8% BB 9.9%
B 14.5% B 10.8%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by both S&P and Moody's amounted to 7.6%.
INCOME TAX INFORMATION
At May 31, 1997, the aggregate cost of investment securities for income tax
purposes was $992,287,000. Net unrealized appreciation aggregated
$84,667,000, of which $99,649,000 related to appreciated investment
securities and $14,982,000 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, 1997 (UNAUDITED)

ASSETS

Investment in securities, at value (cost $991,957) - $ 1,076,954
See accompanying schedule

Cash 1,384

Receivable for investments sold 869

Receivable for fund shares sold 12,445

Dividends receivable 2,369

Interest receivable 4,614

Other receivables 181

TOTAL ASSETS 1,098,816

LIABILITIES

Payable for investments purchased $ 10,685

Payable for fund shares redeemed 6,033

Accrued management fee 471

Other payables and accrued expenses 272

TOTAL LIABILITIES 17,461

NET ASSETS $ 1,081,355

Net Assets consist of:

Paid in capital $ 961,712

Undistributed net investment income 8,870

Accumulated undistributed net realized gain (loss) on 25,776
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 84,997
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 59,360 shares outstanding $ 1,081,355

NET ASSET VALUE, offering price and redemption price per $18.22
share ($1,081,355 (divided by) 59,360 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)

INVESTMENT INCOME $ 11,015
Dividends

Interest 14,517

TOTAL INCOME 25,532

EXPENSES

Management fee $ 2,744
Basic fee

Performance adjustment 132

Transfer agent fees 1,160

Accounting fees and expenses 241

Non-interested trustees' compensation 2

Custodian fees and expenses 31

Registration fees 49

Audit 25

Legal 18

Interest 1

Miscellaneous 8

Total expenses before reductions 4,411

Expense reductions (52) 4,359

NET INVESTMENT INCOME 21,173

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

Investment securities 26,440

Foreign currency transactions 3 26,443

Change in net unrealized appreciation (depreciation) on:

Investment securities 3,781

Assets and liabilities in foreign currencies (35) 3,746

NET GAIN (LOSS) 30,189

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 51,362
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED MAY NOVEMBER 30,
31,1997 1996
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 21,173 $ 49,676
Net investment income

Net realized gain (loss) 26,443 70,841

Change in net unrealized appreciation (depreciation) 3,746 41,980

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 51,362 162,497
FROM OPERATIONS

Distributions to shareholders (27,678) (46,048)
From net investment income

From net realized gain (49,453) (53,549)

TOTAL DISTRIBUTIONS (77,131) (99,597)

Share transactions 203,679 445,945
Net proceeds from sales of shares

Reinvestment of distributions 70,893 92,396

Cost of shares redeemed (314,975) (503,046)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (40,403) 35,295
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS (66,172) 98,195

NET ASSETS

Beginning of period 1,147,527 1,049,332

End of period (including undistributed net investment $ 1,081,355 $ 1,147,527
income of $8,870 and $15,316, respectively)

OTHER INFORMATION
Shares

Sold 11,512 25,384

Issued in reinvestment of distributions 4,108 5,440

Redeemed (17,827) (28,688)

Net increase (decrease) (2,207) 2,136

</TABLE>

FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED MAY 31,
1997

(UNAUDITED) 1996 1995 1994 E 1993 1992

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

Net asset value, $ 18.64 $ 17.66 $ 15.63 $ 17.63 $ 15.77 $ 13.45
beginning of period

Income from Investment
Operations

Net investment income .34 D .83 .79 .78 .75 .67

Net realized and .50 1.79 1.94 (.86) 2.24 2.66
unrealized gain (loss)

Total from investment .84 2.62 2.73 (.08) 2.99 3.33
operations

Less Distributions

From net (.45) (.74) (.70) (.91) (.73) (.64)
investment income

From net realized gain (.81) (.90) - (1.01) (.40) (.37)

Total distributions (1.26) (1.64) (.70) (1.92) (1.13) (1.01)

Net asset value, $ 18.22 $ 18.64 $ 17.66 $ 15.63 $ 17.63 $ 15.77
end of period

TOTAL RETURN B, C 4.96% 16.02% 18.00% (.54)% 19.94% 26.18%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 1,081 $ 1,148 $ 1,049 $ 903 $ 1,056 $ 412
(in millions)

Ratio of expenses to .81% A .85% .70% .86% .92% .96%
average net assets

Ratio of expenses to .80% A, .83% F .70% .85% F .92% .96%
average net assets after F
expense reductions

Ratio of net investment 3.90% A 4.48% 4.59% 4.61% 4.62% 4.82%
income to average net
assets

Portfolio turnover rate 175% A 175% 203% 318% 312% 258%

Average commission rate G $ .0459 $ .0436

</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 NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E 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.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 6 OF
NOTES TO FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1997 (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 financial
statements have been prepared in conformity with generally accepted
accounting principles which permit management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Equity securities for which quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Debt securities for which quotations are readily
available are valued by a pricing service at their market values as
determined by their most recent bid prices in the principal market (sales
prices if the principal market is an exchange) in which such securities are
normally traded. Securities (including restricted securities) for which
market quotations are not readily available are valued 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 with
remaining maturities of sixty days or less for which quotations are not
readily available 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. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
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, 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."
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. Interest
income, which includes accretion of original issue discount, is accrued as
earned. Investment income is recorded net of foreign taxes withheld where
recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
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, passive foreign investment companies (PFIC), 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.
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.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
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 foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
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
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
in one or more repurchase agreements that mature in 60 days or less from
the date of purchase for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR. The Cash Fund is an open-end money market fund available
only to investment companies and other accounts managed by FMR and its
affiliates. The Cash Fund seeks preservation of capital, liquidity, and
current income by investing in U.S. Treasury securities and repurchase
agreements for these securities, and may be utilized by the fund as an
additional cash management option. Dividends from the Cash Fund are
declared daily and paid monthly from net interest income. Income
distributions received by the fund are recorded as interest income in the
accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally 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 $971,000 or 0.1%
of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $817,914,000 and $938,860,000, 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 .2500% to .5200%for the period. In the event that these
rates were lower than the contractual rates in effect during the period,
FMR
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
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 ".15%
of the fund's average net assets over the performance period) 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 .53% of average net assets after the performance
adjustment.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, is the fund's transfer, dividend disbursing and shareholder servicing
agent. FSC receives account fees and asset-based fees that vary according
to account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annualized rate of
.21% of average net assets.
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 $64,000 for the period.
5. 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 balance during the period for which
the loan was outstanding amounted to $5,232,000. The weighted average
interest rate was 5.81%.
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
$39,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of the fund's expenses. During the
period, the fund's custodian and transfer agent fees were reduced by $6,000
and 7,000, respectively, under these arrangements.
MANAGING YOUR INVESTMENTS

Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate the
service, and on your first call, the system will help you create a personal
identification number (PIN) for security.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
1
For quotes.*
2
For account balances and holdings.
3
To review orders and mutual
fund activity.
4
To change your PIN.
5
To speak to a Fidelity representative.
*
0
BY PC
Fidelity's Web site on the Internet provides a wide range of information,
including daily financial news, fund performance, interactive planning
tools and news about Fidelity products and services.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at 1-800-544-7272
for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity at
1-800-544-7272 or visit our Web site for more information on how to manage
your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO VISIT FIDELITY

For directions and hours,
please call 1-800-544-9797.
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Seattle, WA
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595 North Barker Road
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INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, 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 *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH AND INCOME FUNDS
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Spartan Market Index Fund
Puritan(registered trademark) Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
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(8 a.m. - 9 p.m.)
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for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE

(2_FIDELITY_LOGOS)FIDELITY

EQUITY-INCOME II
FUND
SEMIANNUAL REPORT
MAY 31, 1997
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 22 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.

NOTES 26 Notes to the financial statements.

Fidelity Equity-Income II 9.82% 20.07% 122.46% 272.21%

S&P 500(registered trademark) 13.15% 29.42% 132.50% 211.81%

Equity Income Funds 10.11% 22.43% 102.02% n/a
Average

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 August 21, 1990. For example, if you had 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 500 Index - a widely recognized,
unmanaged index of common stocks. To measure how the fund's performance
stacked up against its peers, you can compare it to the equity income funds
average, which reflects the performance of mutual funds with similar
objectives tracked by Lipper Analytical Services, Inc. The past six months
average represents a peer group of 185 mutual funds. These benchmarks
include reinvested dividends and capital gains, if any, and exclude the
effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

Fidelity Equity-Income II 20.07% 17.34% 21.38%

S&P 500 29.42% 18.38% 18.25%

Equity Income Funds Average 22.43% 14.98% n/a

$10,000 OVER LIFE OF FUND
REPORT TYPE: SEMI-ANNUAL REPORT
CHART PAGE

FOR PERIOD ENDING: 05/31/97

FUND NAME: Equity-Income II FUND NUMBER: 319
COMMENCEMENT DATE: Aug 21 1990

START DATE: 08/21/90 (commencement of fund's operations)
END DATE: 05/31/97
LOAD: no-load
INITIAL INVESTMENT: $10,000

END VALUE
______________ PERCENT CHANGE
($) (%)
Equity-Income II 37,221 272.21
SP Standard & Poor 500 31,181 211.81

09-Jun-97
07:29 AM
Page 00319_CHART_SUM_1

$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Fidelity Equity-Income II Fund on August 21, 1990, when the
fund started. As the chart shows, by May 31, 1997, the value of the
investment would have grown to $37,221 - a 272.21% increase on the 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 $31,181 - a 211.81% 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
long-term growth and
short-term volatility. 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 Bettina Doulton, Portfolio Manager of Fidelity
Equity-Income II Fund
Q. HOW DID THE FUND PERFORM, BETTINA?
A. For the six months that ended May 31, 1997, the fund's total return was
9.82%. During the same period, the equity-income funds average tracked by
Lipper Analytical Services returned 10.11%, and the Standard & Poor's 500
Index returned 13.15%. For the 12 months that ended May 31, 1997, the fund
returned 20.07%, while the Lipper average and the S&P 500 returned 22.43%
and 29.42%, respectively.
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE DURING THE PAST SIX MONTHS?
A. Looking beyond the strong 13.15% six-month return for the S&P 500 -
which substantially exceeded its historical average ANNUAL return of about
11% - one of the most noticeable trends has been a dramatic rise in the
stock market's volatility. Interestingly, the bull market during much of
the `90s has been accompanied by below-average volatility; only over the
past few months has volatility reached levels last seen during 1990- 1991.
One of the most significant reasons for the recent upswing in volatility
has been rising uncertainty over the direction of interest rates. Remarks
by Federal Reserve Board Chairman Alan Greenspan warning of "irrational
exuberance" in the stock market - widely interpreted as an indication that
the Fed would take action to increase interest rates to slow growth and
head off inflation - were largely responsible for a 5% correction in the
S&P 500 during December. Another more significant correction, just short of
10%, followed in March and April as interest rate concerns again became a
focus of attention. This correction came in anticipation of and following
the Fed's March 25 decision to raise the rate banks charge each other for
overnight loans - known as the fed funds target rate - by 0.25% to 5.50%.
Notably, the market rebounded strongly from both corrections and recently
reached record levels, helped in part by strong corporate earnings and a
general lack of inflation at both the producer and consumer levels.
However, with the ongoing specter of Fed interest rate hikes that could
result from any indication of incipient inflation, I believe it's likely
that market volatility will remain above-trend.
Q. WHILE THE FUND GENERATED STRONG ABSOLUTE RETURNS FOR THE PERIOD, IT
NEVERTHELESS TRAILED THE S&P 500 AND THE LIPPER AVERAGE. WHY WAS THAT?
A. There were a couple of reasons. Relative to the S&P 500, one of the more
significant detractors, particularly earlier in the period, was the fund's
emphasis on smaller-capitalization companies as compared to the index. This
detracted from performance because larger-capitalization stocks strongly
outperformed their smaller-capitalization counterparts during the period.
Looking at specific industries, the fund was underexposed to a number of
larger nondurables and technology stocks - including Coca-Cola and
Microsoft - that recently have dominated the index's return. However, given
the high relative valuations for some of these stocks, I didn't feel they
were appropriate investments for an equity-income fund. Another detractor
was the fund's underweighting in bank stocks early in 1997, which as a
group was very strong during January.
Q. WHAT STRATEGIES - IN TERMS OF INDIVIDUAL STOCK SELECTION AND SECTORS -
BENEFITED PERFORMANCE?
A. There were several strategies that proved helpful. Among the most
significant was my decision to more heavily emphasize selected finance,
consumer nondurables and pharmaceutical stocks - stocks that turned out to
be among the best performers for the period. Within these industries,
diversified financial-services company American Express and pharmaceuticals
firm Bristol-Myers Squibb were particularly strong contributors.
Q. OVER THE PAST SIX MONTHS, THERE HAVE BEEN SOME SIGNIFICANT SHIFTS IN THE
FUND, BOTH IN TERMS OF INDIVIDUAL HOLDINGS AND SECTOR WEIGHTINGS. WHY WAS
THAT?
A. The changes in the fund since I took it over just after the beginning of
the period were based on my approach to selecting individual stocks one at
a time, not on any sector-based strategy. I've looked for companies with
competitive advantages or catalysts for positive change - including
dominant market positions, cost structure reductions or new products - as
well as outstanding, shareholder-friendly management. The combination of
some or all of these attributes typically translates into solid earnings
and substantial free cash flow. Of course, my decision to invest in a
particular stock is also contingent on an attractive valuation. Over the
past six months, a significant proportion of companies meeting these
criteria have been large-capitalization diversified financials or consumer
growth companies - mainly pharmaceuticals and nondurables firms. Two stocks
that I found particularly attractive were BankAmerica and Unilever.
BankAmerica, a stock in which I created a substantial position during the
past few months, exemplifies many of the fund's finance investments. This
bank is in the process of aggressively reducing its cost structure,
achieving improving returns on capital and utilizing excess capital to
repurchase its stock. In addition, the firm has been the beneficiary of an
improving California economy. Unilever, the large consumer-products
company, is a restructuring story. Under the direction of a new CEO, it has
focused on improving its historically lackluster returns by redeploying
capital away from weak businesses and into strong-performing ones,
particularly those in rapidly growing emerging markets.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. In terms of the overall U.S. economy, I believe it's likely there will
be more of the same - moderate growth and low inflation - although the
duration of the current economic expansion already has exceeded all but two
post-war expansions. Many companies that I've recently met with have
indicated that the business environment continues to be more competitive
than ever. Given continuous pressure from shareholders to enhance returns
and an almost complete lack of pricing power, company managements' interest
in cost-reducing restructurings and other self-help measures appears to be
rising again. Increasingly, improvements in productivity, outstanding
execution, market-share gains, globalization and capital redeployment will
be the critical success factors. In addition, mergers and acquisitions are
likely to accelerate as companies seek to bolster their positions and
exploit both cost-reducing and revenue-enhancing synergies. Given the
scenario I just outlined, I think it's quite probable that the same stocks
that have recently been market leaders - larger-capitalization financials,
pharmaceuticals and consumer nondurables - will continue to outperform.
FUND FACTS
GOAL: Reasonable income.
The fund also considers the
potential for capital
appreciation.
FUND NUMBER: 319
TRADING SYMBOL: FEQTX
START DATE: August 21, 1990
SIZE: as of May 31, 1997,
more than $15.7 billion
MANAGER: Bettina Doulton,
since December 1996;
manager, Fidelity Puritan
Fund, Fidelity Advisor
Balanced Fund and VIP
III: Balanced, since 1996;
joined Fidelity in 1986
(checkmark)
BETTINA DOULTON ON
LARGE-CAPITALIZATION STOCKS:
"Over the past year, there has
been heated debate over why
large-cap stocks have
outperformed their small-cap
counterparts. Many analysts
have contended that the
indexing phenomenon - a
"virtuous circle" of S&P 500
index fund outperformance
begetting increasing
investments in large-cap
companies that comprise the
index, thereby driving their
stocks higher - is
responsible for this
outperformance. However,
part of the reality -
overlooked to some extent -
is that larger companies have
generated significantly better
earnings growth recently.
Even within the large-cap
S&P 500, there has been a
wide disparity in earnings
growth rates by capitalization.
Between 1993 and 1996, the
largest 100 companies in the
S&P 500 grew their operating
earnings approximately 2.5
times more than the index's
smallest 400 companies. I
believe this earnings
differential has been at the
heart of the recent large-cap
outperformance. More
importantly, I see little on the
horizon that is likely to alter
this trend. Globalization and
the resulting need to leverage
strong market positions and
brands continue to favor
larger enterprises. In addition,
many larger firms have been
leaders in cost containment
over recent years, which is
now bearing fruit in terms of
margin expansion and rising
free cash flows."
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
INVESTMENT CHANGES

TOP TEN STOCKS AS OF MAY 31,1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

General Electric Co. 3.6 0.0

American Express Co. 3.6 2.8

Philip Morris Companies, Inc. 3.2 1.6

Citicorp 2.3 0.0

British Petroleum PLC ADR 2.2 2.9

Bristol-Myers Squibb Co. 2.0 1.0

Procter & Gamble Co. 1.9 0.1

Bank of New York Co., Inc. 1.8 1.5

Unilever NV ADR 1.7 0.1

Allstate Corp. 1.6 1.3

TOP FIVE MARKET SECTORS AS OF MAY 31,1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO

Finance 17.9 15.1

Nondurables 11.8 4.7

Health 10.6 6.2

Energy 10.1 13.2

Industrial Machinery & Equipment 8.1 3.8

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF MAY 31, 1997 * AS OF NOVEMBER 30, 1996 **
Row: 1, Col: 1, Value: 5.9
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 1.2
Row: 1, Col: 4, Value: 45.0
Row: 1, Col: 5, Value: 46.4
Stocks 85.8%
Bonds 1.4%
Convertible
securities 5.2%
Short-term
investments 7.6%
FOREIGN
INVESTMENTS 10.2%
Stocks 91.4%
Bonds 1.2%
Convertible
securities 1.5%
Short-term
investments 5.9%
FOREIGN
INVESTMENTS 9.0%
Row: 1, Col: 1, Value: 7.6
Row: 1, Col: 2, Value: 5.2
Row: 1, Col: 3, Value: 1.4
Row: 1, Col: 4, Value: 42.0
Row: 1, Col: 5, Value: 43.8
*
**
INVESTMENTS MAY 31, 1997 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 91.4%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 6.9%
AEROSPACE & DEFENSE - 5.9%
AlliedSignal, Inc. 2,206,100 $ 169,318
Boeing Co. 1,948,957 205,128
Gulfstream Aerospace Corp. (a) 1,182,000 34,721
Lockheed Martin Corp. 1,376,554 128,880
Rockwell International Corp. 183,700 11,849
Sundstrand Corp. 1,899,600 94,505
Textron, Inc. 453,200 53,704
United Technologies Corp. 2,690,600 216,257
914,362
DEFENSE ELECTRONICS - 1.0%
Litton Industries, Inc. (a) 1,057,200 47,838
Raytheon Co. 2,289,500 109,324
157,162
TOTAL AEROSPACE & DEFENSE 1,071,524
BASIC INDUSTRIES - 6.3%
CHEMICALS & PLASTICS - 4.4%
Air Products & Chemicals, Inc. 1,360,800 105,802
Cytec Industries, Inc. (a) 367,100 14,363
du Pont (E.I.) de Nemours & Co. 1,092,200 118,913
Goodrich (B.F.) Co. 1,001,400 43,060
W.R. Grace & Co. 1,412,000 73,777
Monsanto Co. 2,257,900 99,348
Nalco Chemical Co. 1,838,700 68,262
Olin Corp. 1,117,500 45,818
Praxair, Inc. 1,388,900 73,091
Union Carbide Corp. 1,085,400 50,742
693,176
METALS & MINING - 0.2%
Aluminum Co. of America 414,900 30,547
PACKAGING & CONTAINERS - 0.4%
Corning, Inc. 1,113,200 56,077
PAPER & FOREST PRODUCTS - 1.3%
Fort Howard Corp. (a) 652,300 29,965
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - CONTINUED
PAPER & FOREST PRODUCTS - CONTINUED
James River Corp. of Virginia 350,000 $ 12,294
Kimberly-Clark Corp. 3,232,600 162,034
204,293
TOTAL BASIC INDUSTRIES 984,093
CONSTRUCTION & REAL ESTATE - 2.1%
BUILDING MATERIALS - 1.1%
American Standard Companies, Inc. (a) 1,027,400 51,499
Masco Corp. 2,938,600 114,238
165,737
REAL ESTATE INVESTMENT TRUSTS - 1.0%
Beacon Properties Corp. 606,900 18,813
Cali Realty Corp. 577,300 17,103
Duke Realty Investors, Inc. 271,600 10,355
Equity Residential Properties Trust (SBI) 441,700 20,870
Felcor Suite Hotels, Inc. 300,000 11,175
Macerich Co. 606,000 16,362
Patriot American Hospitality, Inc. 600,000 12,975
Public Storage, Inc. 574,800 15,304
Reckson Associates Realty Corp. 462,400 10,404
Starwood Lodging Trust combined certificate (SBI) 618,000 23,021
156,382
TOTAL CONSTRUCTION & REAL ESTATE 322,119
DURABLES - 2.9%
AUTOS, TIRES, & ACCESSORIES - 0.4%
Johnson Controls, Inc. 1,405,500 59,558
CONSUMER DURABLES - 1.3%
Minnesota Mining & Manufacturing Co. 2,169,400 199,043
CONSUMER ELECTRONICS - 0.5%
Newell Co. 2,168,300 82,937
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - 0.7%
Fruit of the Loom, Inc. Class A (a) 1,495,200 $ 52,145
Unifi, Inc. 2,064,600 66,583
118,728
TOTAL DURABLES 460,266
ENERGY - 9.8%
ENERGY SERVICES - 2.1%
Dresser Industries, Inc. 2,624,200 89,879
Halliburton Co. 588,900 45,567
Schlumberger Ltd. 798,300 95,097
Western Atlas, Inc. (a) 1,567,769 106,216
336,759
OIL & GAS - 7.7%
British Petroleum PLC:
Ord. 336 4
ADR 2,391,178 346,422
Burlington Resources, Inc. 1,687,100 78,450
Coastal Corp. (The) 1,144,200 57,353
Exxon Corp. 1,230,000 72,876
Royal Dutch Petroleum Co. ADR 1,168,600 228,169
Texaco, Inc. 806,100 87,966
Tosco Corp. 300,000 9,788
Total SA:
Class B 1,857,442 170,133
sponsored ADR 559,413 25,523
USX-Marathon Group 2,085,000 62,029
Union Pacific Resources Group, Inc. 2,106,415 60,823
1,199,536
TOTAL ENERGY 1,536,295
FINANCE - 17.4%
BANKS - 6.5%
Bank of New York Co., Inc. 6,479,928 276,207
BankAmerica Corp. 1,875,500 219,199
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Citicorp 3,096,300 $ 354,139
NationsBank Corp. 2,770,000 163,084
1,012,629
CREDIT & OTHER FINANCE - 4.0%
American Express Co. 8,095,612 562,645
Beneficial Corp. 595,700 38,274
First Chicago NBD Corp. 482,300 28,576
629,495
FEDERAL SPONSORED CREDIT - 2.5%
Federal Home Loan Mortgage Corporation 2,013,200 66,436
Federal National Mortgage Association 4,715,700 205,722
Student Loan Marketing Association 987,600 120,117
392,275
INSURANCE - 3.9%
Allstate Corp. 3,462,500 254,927
Berkley (W.R.) Corp. 571,960 29,670
Hartford Financial Services Group, Inc. 1,066,500 83,187
MBIA, Inc. 950,500 102,060
St. Paul Companies, Inc. (The) 552,500 39,573
Travelers Group, Inc. (The) 1,417,415 77,781
Terra Nova (Bermuda) Holdings Ltd. 1,173,000 23,460
Unionamerica Holdings PLC sponsored ADR 177,100 2,922
613,580
SAVINGS & LOANS - 0.5%
Great Western Financial Corp. 1,497,300 72,619
TOTAL FINANCE 2,720,598
HEALTH - 10.5%
DRUGS & PHARMACEUTICALS - 8.3%
American Home Products Corp. 2,974,700 226,821
Bristol-Myers Squibb Co. 4,241,400 311,212
Genentech, Inc. special (a) 1,589,100 93,161
Merck & Co., Inc. 2,441,200 219,403
Novartis AG (Reg.) 26,227 35,600
Pfizer, Inc. 700,000 72,013
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Schering-Plough Corp. 2,686,300 $ 243,782
SmithKline Beecham PLC ADR 1,097,500 96,031
1,298,023
MEDICAL EQUIPMENT & SUPPLIES - 1.3%
Abbott Laboratories 389,200 24,520
Baxter International, Inc. 2,191,500 115,601
Johnson & Johnson 1,040,000 62,270
202,391
MEDICAL FACILITIES MANAGEMENT - 0.9%
Tenet Healthcare Corp. (a) 2,838,800 78,067
United HealthCare Corp. 981,900 55,477
133,544
TOTAL HEALTH 1,633,958
HOLDING COMPANIES - 0.3%
Norfolk Southern Corp. 419,300 40,725
INDUSTRIAL MACHINERY & EQUIPMENT - 8.0%
ELECTRICAL EQUIPMENT - 5.0%
Alcatel Alsthom Compagnie Generale d'Electricite SA 250,000 27,105
Emerson Electric Co. 2,175,400 117,472
General Electric Co. 9,391,200 566,994
Honeywell, Inc. 1,073,200 78,075
789,646
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
Cooper Industries, Inc. 2,136,138 108,943
Stanley Works 2,147,500 88,048
Tyco International Ltd. 650,200 41,288
238,279
POLLUTION CONTROL - 1.5%
Browning-Ferris Industries, Inc. 4,003,400 131,111
Waste Management, Inc. 3,145,200 99,860
230,971
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,258,896
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 1.3%
BROADCASTING - 0.4%
Time Warner, Inc. 1,325,600 $ 61,640
PUBLISHING - 0.9%
Cognizant Corp. 922,400 34,129
McGraw-Hill, Inc. 749,800 40,957
New York Times Co. (The) Class A 860,800 39,651
Times Mirror Co. Class A 535,600 30,061
144,798
TOTAL MEDIA & LEISURE 206,438
NONDURABLES - 11.8%
BEVERAGES - 1.1%
Anheuser-Busch Companies, Inc. 1,509,400 64,716
PepsiCo, Inc. 2,850,000 104,737
169,453
FOODS - 2.0%
Campbell Soup Co. 1,815,800 83,527
General Mills, Inc. 288,300 18,235
Heinz (H.J.) Co. 1,252,600 53,862
Hershey Foods Corp. 451,500 25,340
Nabisco Holdings Corp. Class A 396,200 15,699
Ralston Purina Co. 954,000 81,329
Sara Lee Corp. 850,000 34,744
312,736
HOUSEHOLD PRODUCTS - 5.2%
Avon Products, Inc. 1,528,100 97,416
Clorox Co. 226,700 28,621
Procter & Gamble Co. 2,165,100 298,513
Rubbermaid, Inc. 89,600 2,498
Unilever PLC Ord. 4,322,200 115,927
Unilever NV:
Ord. 50,000 9,624
ADR 1,378,800 267,143
819,742
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
TOBACCO - 3.5%
Philip Morris Companies, Inc. 11,550,400 $ 508,218
RJR Nabisco Holdings Corp. 1,353,700 43,826
552,044
TOTAL NONDURABLES 1,853,975
PRECIOUS METALS - 0.1%
Newmont Mining Corp. 326,600 12,778
RETAIL & WHOLESALE - 5.1%
APPAREL STORES - 0.3%
Payless ShoeSource, Inc. (a) 1,013,908 48,033
DRUG STORES - 0.9%
Rite Aid Corp. 2,875,800 133,725
GENERAL MERCHANDISE STORES - 3.5%
Dayton Hudson Corp. 1,727,000 83,112
Federated Department Stores, Inc. (a) 3,575,400 132,290
May Department Stores Co. (The) 592,200 27,907
Sears, Roebuck & Co. 1,817,300 89,275
Wal-Mart Stores, Inc. 7,345,600 218,532
551,116
GROCERY STORES - 0.3%
American Stores Co. 1,009,200 45,919
Asda Group PLC 2,000,000 3,937
49,856
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Toys "R" Us, Inc. (a) 700,000 21,787
TOTAL RETAIL & WHOLESALE 804,517
SERVICES - 1.2%
ADVERTISING - 0.2%
WPP Group PLC 3,890,100 15,284
WPP Group PLC (e) 6,000,000 23,573
38,857
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
LEASING & RENTAL - 0.2%
Hertz Corp. Class A 58,000 $ 1,986
Ryder Systems, Inc. 830,700 27,517
29,503
PRINTING - 0.3%
Donnelley (R.R.) & Sons Co. 1,132,100 42,029
SERVICES - 0.5%
ADT Ltd. (a) 443,500 12,917
Block (H&R), Inc. 2,004,400 66,145
National Service Industries, Inc. 118,600 5,204
84,266
TOTAL SERVICES 194,655
TECHNOLOGY - 3.1%
COMPUTER SERVICES & SOFTWARE - 0.6%
Automatic Data Processing, Inc. 1,836,700 90,227
COMPUTERS & OFFICE EQUIPMENT - 2.1%
International Business Machines Corp. 1,465,800 126,792
Pitney Bowes, Inc. 2,692,500 189,148
Xerox Corp. 114,300 7,744
323,684
ELECTRONICS - 0.3%
Thomas & Betts Corp. 968,900 49,293
PHOTOGRAPHIC EQUIPMENT - 0.1%
Eastman Kodak Co. 200,000 16,575
TOTAL TECHNOLOGY 479,779
TRANSPORTATION - 0.6%
AIR TRANSPORTATION - 0.2%
AMR Corp. (a) 270,000 26,831
RAILROADS - 0.4%
CSX Corp. 1,143,300 60,595
TOTAL TRANSPORTATION 87,426
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 4.0%
CELLULAR - 0.2%
AirTouch Communications, Inc. (a) 1,188,000 $ 33,116
ELECTRIC UTILITY - 0.4%
American Electric Power Co., Inc. 751,600 30,627
Entergy Corp. 1,426,300 37,619
68,246
GAS - 0.5%
Williams Companies, Inc. 1,737,800 76,680
TELEPHONE SERVICES - 2.9%
ALLTEL Corp. 2,092,600 68,794
Ameritech Corp. 1,665,500 109,090
Bell Atlantic Corp. 363,600 25,452
MCI Communications Corp. 2,332,900 89,525
NYNEX Corp. 1,288,700 69,268
SBC Communications, Inc. 1,125,000 65,813
WorldCom, Inc. (a) 850,000 25,181
453,123
TOTAL UTILITIES 631,165
TOTAL COMMON STOCKS
(Cost $10,761,767) 14,299,207
CONVERTIBLE PREFERRED STOCKS - 0.6%
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Republic Industries, Inc. $1.55 402,000 9,598
ENERGY - 0.1%
OIL & GAS - 0.1%
Occidental Petroleum Corp. $3.875 (e) 180,000 10,148
Tosco Financing Trust $2.875 (e) 75,000 4,406
14,554
FINANCE - 0.4%
INSURANCE - 0.4%
Allstate Corp. $2.30 1,225,100 57,120
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 0.1%
CELLULAR - 0.1%
AirTouch Communications, Inc. Class B $1.74 435,300 $ 12,841
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $83,031) 94,113
CORPORATE BONDS - 2.1%
MOODY'S PRINCIPAL
RATINGS (C) AMOUNT (000S)
CONVERTIBLE BONDS - 0.9%
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Centerpoint Properties 8.22%, 1/15/04 Baa3 $ 1,030 1,658
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
POLLUTION CONTROL - 0.1%
WMX Technologies, Inc. 2%, 1/24/05 A3 22,500 20,587
RETAIL & WHOLESALE - 0.3%
GENERAL MERCHANDISE STORES - 0.3%
Federated Department Stores, Inc. 5%, 10/1/03 Baa3 43,100 53,121
SERVICES - 0.5%
SERVICES - 0.5%
ADT Operations, Inc. liquid yield option
notes 0%, 7/6/10 Ba3 87,940 72,551
TOTAL CONVERTIBLE BONDS 147,917
NONCONVERTIBLE BONDS - 1.2%
BASIC INDUSTRIES - 0.1%
PAPER & FOREST PRODUCTS - 0.1%
Stone Container Corp. 9 7/8%, 2/1/01 B2 20,000 19,950
CORPORATE BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (D) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
American Standard, Inc.:
10 1/2%, 6/1/05 (d) B1 $ 15,000 $ 14,663
10 7/8%, 5/15/99 Ba3 1,000 1,070
15,733
DURABLES - 0.4%
TEXTILES & APPAREL - 0.4%
Westpoint Stevens, Inc.:
8 3/4%, 12/15/01 Ba3 32,690 33,671
9 3/8%, 12/15/05 B2 29,750 30,940
64,611
ENERGY - 0.2%
ENERGY SERVICES - 0.2%
Global Marine, Inc. 12 3/4%, 12/15/99 Ba1 24,200 25,410
FINANCE - 0.1%
ASSET-BACKED SECURITIES - 0.1%
Airplanes Pass Through Trust 10 7/8%, 3/15/19 Ba2 12,610 14,155
SAVINGS & LOANS - 0.0%
Coast Savings Financial, Inc. 10%, 3/1/00 Ba2 2,800 2,870
TOTAL finance 17,025
HEALTH - 0.1%
MEDICAL FACILITIES MANAGEMENT - 0.1%
Tenet Healthcare Corp.:
8 5/8%, 12/1/03 Ba1 7,480 7,704
8%, 1/15/05 Ba1 5,560 5,560
8 5/8%, 1/15/07 Ba3 490 495
13,759
TRANSPORTATION - 0.2%
AIR TRANSPORTATION - 0.2%
AMR Corp. 7 3/4%, 12/1/97 Baa3 26,000 26,190
TOTAL NONCONVERTIBLE BONDS 182,678
TOTAL CORPORATE BONDS
(Cost $296,841) 330,595
CASH EQUIVALENTS - 5.9%
SHARES VALUE (NOTE 1)
(000S)
Taxable Central Cash Fund (b)
(Cost $929,776) 929,776,366 $ 929,776
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $12,071,415) $ 15,653,691
LEGEND
1. Non-income producing
2. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.54%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
3. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
4. Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
5. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $38,127,000 or 0.2% of net
assets.
INCOME TAX INFORMATION
At May 31,1997, the aggregate cost of investment securities for income tax
purposes was $12,071,515,000. Net unrealized appreciation aggregated
$3,582,176,000, of which $3,634,994,000 related to appreciated investment
securities and $52,818,000 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, 1997 (UNAUDITED)

ASSETS

Investment in securities, at value (cost $12,071,415) - $ 15,653,691
See accompanying schedule

Receivable for investments sold 223,893

Receivable for fund shares sold 16,210

Dividends receivable 33,735

Interest receivable 10,572

Other receivables 523

TOTAL ASSETS 15,938,624

LIABILITIES

Payable to custodian bank $ 165

Payable for investments purchased 139,777

Payable for fund shares redeemed 24,532

Accrued management fee 6,455

Other payables and accrued expenses 2,618

TOTAL LIABILITIES 173,547

NET ASSETS $ 15,765,077

Net Assets consist of:

Paid in capital $ 11,255,512

Undistributed net investment income 42,909

Accumulated undistributed net realized gain (loss) on 884,524
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 3,582,132
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 604,406 shares outstanding $ 15,765,077

NET ASSET VALUE, offering price and redemption price per $26.08
share ($15,765,077 (divided by) 604,406 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)

INVESTMENT INCOME $ 146,488
Dividends (including $447 received from
affiliated issuers)

Interest 44,167

TOTAL INCOME 190,655

EXPENSES

Management fee $ 38,144

Transfer agent fees 14,825

Accounting fees and expenses 413

Non-interested trustees' compensation 60

Custodian fees and expenses 171

Registration fees 94

Audit 55

Legal 45

Miscellaneous 46

Total expenses before reductions 53,853

Expense reductions (1,421) 52,432

NET INVESTMENT INCOME 138,223

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

Investment securities (including realized gain (loss) of 893,075
$6,899 on sales of investments in affiliated issuers)

Foreign currency transactions (157) 892,918

Change in net unrealized appreciation (depreciation) on:

Investment securities 403,047

Assets and liabilities in foreign currencies (141) 402,906

NET GAIN (LOSS) 1,295,824

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 1,434,047
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, 1997 1996
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 138,223 $ 291,770
Net investment income

Net realized gain (loss) 892,918 828,609

Change in net unrealized appreciation (depreciation) 402,906 1,678,837

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,434,047 2,799,216
FROM OPERATIONS

Distributions to shareholders (166,306) (257,012)
From net investment income

From net realized gain (715,007) (347,350)

TOTAL DISTRIBUTIONS (881,313) (604,362)

Share transactions 1,575,460 4,678,475
Net proceeds from sales of shares

Reinvestment of distributions 853,722 583,372

Cost of shares redeemed (2,812,865) (3,413,375)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (383,683) 1,848,472
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 169,051 4,043,326

NET ASSETS

Beginning of period 15,596,026 11,552,700

End of period (including undistributed net investment $ 15,765,077 $ 15,596,026
income of $42,909 and $70,992, respectively)

OTHER INFORMATION
Shares

Sold 64,285 206,780

Issued in reinvestment of distributions 35,417 26,774

Redeemed (115,023) (150,529)

Net increase (decrease) (15,321) 83,025

</TABLE>

FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED MAY 31,
1997

(UNAUDITED) 1996 1995 1994 E 1993 1992

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

Net asset value, $ 25.17 $ 21.53 $ 18.57 $ 18.85 $ 16.57 $ 13.87
beginning of period

Income from Investment
Operations

Net investment income .22 D .48 .42 .37 .44 .40

Net realized and 2.12 4.23 3.80 .53 2.62 2.75
unrealized gain (loss)

Total from investment 2.34 4.71 4.22 .90 3.06 3.15
operations

Less Distributions (.27) (.43) (.40) (.47) (.41) (.32)
From net investment
income

From net realized gain (1.16) (.64) (.86) (.71) (.37) (.13)

Total distributions (1.43) (1.07) (1.26) (1.18) (.78) (.45)

Net asset value, end $ 26.08 $ 25.17 $ 21.53 $ 18.57 $ 18.85 $ 16.57
of period

TOTAL RETURN B, C 9.82% 22.75% 24.13% 4.91% 19.08% 23.18%

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 15,765 $ 15,596 $ 11,553 $ 7,605 $ 4,815 $ 1,942
(in millions)

Ratio of expenses to .71% A .73% .76% .83% .89% 1.01%
average net assets

Ratio of expenses to .69% A, .72% .75% .81% .88% 1.01%
average net assets F F F F F
after expense reductions

Ratio of net investment 1.83% A 2.13% 2.37% 2.36% 2.69% 3.09%
income to average
net assets

Portfolio turnover rate 93% A 46% 45% 75% 55% 89%

Average commission rate G $ .0409 $ .0397

</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 5 OF NOTES TO FINANCIAL
STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E 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.
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1997 (Unaudited)

7. 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 financial statements have
been prepared in conformity with generally accepted accounting principles
which permit management to make certain estimates and assumptions at the
date of the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. 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 with remaining maturities of sixty days or less for which
quotations are not readily available 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. Income receipts and expense
payments are translated into U.S. dollars at the prevailing exchange rate
on the respective dates of the transactions. Purchases and sales of
securities are translated into U.S. dollars at the contractual currency
exchange rates established at the time of each trade.
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, 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.
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. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. Interest
income, which includes accretion
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
of original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
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
proceeds, 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.
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.
8. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
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 foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
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 for U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS -
CONTINUED
Account, at a bank custodian. The securities are marked-to-market daily and
maintained at a value at least equal to the principal amount of the
repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
SEC, the fund may invest in the Taxable Central Cash Fund (the Cash Fund)
managed by FMR Texas, an affiliate of FMR. The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in U.S. Treasury
securities and repurchase agreements for these securities. Income
distributions from the Cash Fund are declared daily and paid monthly from
net interest income. Income distributions received by the fund are recorded
as interest income in the accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally 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, the
fund had no investments in restricted securities (excluding 144A issues).
9. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $6,508,633,000 and $7,456,508,000, respectively.
10. 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 .2500% to .5200% for the period. The annual individual
fund fee rate is .20%. 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.
For the period, the management fee was equivalent to an annualized rate of
.51% of average net assets.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, is the fund's transfer, dividend disbursing and shareholder servicing
agent.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES -
CONTINUED
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. For the
period, the transfer agent fees were equivalent to an annualized rate of
.20% of average net assets.
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 $2,367,000 for the period.
11. 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
$1,421,000 under this arrangement.
12. 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 during the period with
companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Angerstein Underwriting Trust PLC $ - $ 5,243 $ 134 $ -
Berkley (W.R.) Corp. - 2,486 286 -
Ferro Corp. - 7,649 - -
Gryphon Holdings, Inc. - 7,125 - -
McDermott (J. Ray) SA - 14,345 - -
Russell Corp. - 3,082 - -
Ryerson Tull, Inc. Class A - 1,755 - -
Stewart & Stevenson Services, Inc. - 1,295 - -
Syndicate Capital Trust PLC - 2,197 - -
Terra Nova (Bermuda) Holdings Ltd. - 1,705 27 -
Western Atlas, Inc. - 27,052 - -
TOTALS $ - $ 73,934 $ 447 $ -
MANAGING YOUR INVESTMENTS

If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research (U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Bettina E. Doulton, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, 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 *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
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
Spartan(registered trademark) Market Index Fund
Puritan(registered trademark) Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE

FIDELITY

(REGISTERED TRADEMARK)
RETIREMENT GROWTH
FUND
SEMIANNUAL REPORT
MAY 31, 1997
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.

Fidelity Retirement Growth 5.09% 8.73% 92.69% 227.58%

S&P 500(registered trademark) 13.15% 29.42% 132.50% 294.84%

Capital Appreciation Funds 5.11% 7.23% 98.79% 200.42%
Average

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 10
years. For example, if you had 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 500 Index - a widely recognized, unmanaged index of common stocks.
To measure how the fund's performance stacked up against its peers, you can
compare it to the capital appreciation funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Analytical Services, Inc. The past six months average represents a peer
group of 227 mutual funds. These benchmarks include reinvested dividends
and capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

Fidelity Retirement Growth 8.73% 14.02% 12.60%

S&P 500 29.42% 18.38% 14.70%

Capital Appreciation Funds Average 7.23% 14.29% 10.94%

AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year. (Note: Lipper calculates average annual total returns by annualizing
each fund's total return, then taking an arithmetic average. This may
produce a slightly different figure than that obtained by averaging the
cumulative total returns and annualizing the result.)
$10,000 OVER 10 YEARS
1987/05/31 10000.00 10000.00
1987/06/30 10335.53 10505.00
1987/07/31 11132.41 11037.60
1987/08/31 11467.94 11449.31
1987/09/30 11378.07 11198.57
1987/10/31 8310.37 8786.40
1987/11/30 7753.15 8062.40
1987/12/31 8501.03 8675.94
1988/01/31 8650.04 9041.20
1988/02/29 9387.21 9462.52
1988/03/31 9379.37 9170.13
1988/04/30 9551.90 9271.92
1988/05/31 9504.85 9352.58
1988/06/30 9998.91 9781.87
1988/07/31 9881.27 9744.70
1988/08/31 9606.80 9413.38
1988/09/30 9896.96 9814.39
1988/10/31 9967.54 10087.23
1988/11/30 9842.06 9942.98
1988/12/31 9820.84 10116.98
1989/01/31 10578.75 10857.54
1989/02/28 10363.34 10587.19
1989/03/31 10634.59 10833.87
1989/04/30 11137.20 11396.15
1989/05/31 11352.61 11857.70
1989/06/30 11193.05 11790.11
1989/07/31 12246.14 12854.75
1989/08/31 12389.74 13106.71
1989/09/30 12573.23 13052.97
1989/10/31 12134.45 12750.14
1989/11/30 12461.54 13010.24
1989/12/31 12807.44 13322.49
1990/01/31 12176.46 12428.55
1990/02/28 12303.74 12588.88
1990/03/31 12405.56 12922.48
1990/04/30 12049.18 12599.42
1990/05/31 13177.73 13827.86
1990/06/30 13474.71 13733.84
1990/07/31 13423.80 13689.89
1990/08/31 12049.18 12452.32
1990/09/30 10767.89 11845.89
1990/10/31 10419.99 11794.96
1990/11/30 11141.25 12556.91
1990/12/31 11506.82 12907.25
1991/01/31 12037.24 13470.00
1991/02/28 13029.65 14433.11
1991/03/31 13371.86 14782.39
1991/04/30 13457.41 14817.87
1991/05/31 13902.29 15458.00
1991/06/30 13012.54 14750.02
1991/07/31 13859.51 15437.37
1991/08/31 14449.82 15803.24
1991/09/30 14629.48 15539.33
1991/10/31 15151.35 15747.55
1991/11/30 14723.59 15112.93
1991/12/31 16752.19 16841.85
1992/01/31 16788.95 16528.59
1992/02/29 17027.87 16743.46
1992/03/31 16504.08 16416.96
1992/04/30 16687.87 16899.62
1992/05/31 17000.30 16982.43
1992/06/30 16375.43 16729.39
1992/07/31 16935.98 17413.62
1992/08/31 16476.51 17056.64
1992/09/30 16669.49 17257.91
1992/10/31 17193.28 17318.31
1992/11/30 18167.35 17908.87
1992/12/31 18527.29 18129.15
1993/01/31 18989.35 18281.43
1993/02/28 18392.06 18530.06
1993/03/31 18910.46 18921.04
1993/04/30 18763.96 18463.15
1993/05/31 19755.68 18957.97
1993/06/30 20014.89 19012.95
1993/07/31 20150.12 18936.89
1993/08/31 21277.09 19654.60
1993/09/30 21355.97 19503.26
1993/10/31 21987.07 19906.98
1993/11/30 21705.33 19717.86
1993/12/31 22627.28 19956.45
1994/01/31 23266.65 20634.97
1994/02/28 23027.95 20075.76
1994/03/31 21972.66 19200.46
1994/04/30 22173.67 19446.22
1994/05/31 22324.43 19765.14
1994/06/30 21834.47 19280.90
1994/07/31 22387.24 19913.31
1994/08/31 23467.66 20729.75
1994/09/30 23203.84 20221.88
1994/10/31 23304.34 20676.87
1994/11/30 22625.94 19923.82
1994/12/31 22641.10 20219.29
1995/01/31 22740.02 20743.57
1995/02/28 23261.32 21551.95
1995/03/31 23754.45 22187.95
1995/04/30 24374.37 22841.38
1995/05/31 24684.34 23754.35
1995/06/30 25191.55 24306.17
1995/07/31 26417.31 25112.16
1995/08/31 26614.56 25175.19
1995/09/30 27192.22 26237.58
1995/10/31 26600.47 26143.91
1995/11/30 27474.01 27291.63
1995/12/31 28138.38 27817.27
1996/01/31 28557.06 28764.17
1996/02/29 28852.59 29030.81
1996/03/31 28945.91 29310.38
1996/04/30 29863.60 29742.41
1996/05/31 30128.01 30509.47
1996/06/30 29474.75 30625.71
1996/07/31 27810.47 29272.67
1996/08/31 28292.65 29890.03
1996/09/30 29583.62 31572.24
1996/10/31 29350.32 32443.00
1996/11/30 31170.13 34895.37
1996/12/31 30483.68 34204.09
1997/01/31 31947.03 36341.16
1997/02/28 31823.62 36626.08
1997/03/31 29901.86 35121.11
1997/04/30 30889.19 37217.84
1997/05/30 32758.05 39483.67
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Retirement Growth Fund on May 31, 1987. As the chart shows, by
May 31, 1997, the value of the investment would have grown to $32,758 - a
227.58% increase on the 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 $39,484 - a 294.84% 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
long-term growth and
short-term volatility. 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 J. Fergus Shiel, Portfolio Manager of Fidelity Retirement
Growth Fund
Q. HOW DID THE FUND PERFORM, FERGUS?
A. For the six months that ended May 31, 1997, the fund had a total return
of 5.09%, while the capital appreciation funds average, according to Lipper
Analytical Services, returned 5.11% and the Standard & Poor's 500 Index
returned 13.15%. For the 12 months that ended May 31, 1997, the fund had a
total return of 8.73%, while the capital appreciation funds average
returned 7.23% and the S&P 500 returned 29.42%.
Q. THE FUND CLOSELY MIRRORED THE LIPPER CAPITAL APPRECIATION AVERAGE, BUT
UNDERPERFORMED THE S&P 500 INDEX. WHY?
A. I think competition in the capital appreciation arena is very broad.
Managers are making all sorts of investments under the guise of capital
appreciation. They invest in America, overseas and in all types of
capitalization ranges. It's not like style-specific funds, which all own
similar stocks. I don't try to mirror the peer group; I try to invest in
companies that I believe will show earnings growth. If the fund's
performance was like the group, I'd say it's more coincidence than anything
else. As for the S&P 500 over the past six months, it was a pretty tough
benchmark to beat, with much of the performance coming from the top 50
stocks. It was a big-cap market during the period, and only about 40% of
the fund was invested in big caps.
Q. FIVE OF YOUR TOP 10 HOLDINGS REMAINED IN THE TOP 10 OVER THE SIX-MONTH
PERIOD. HOW HAVE THESE STOCKS HELPED THE FUND'S PERFORMANCE?
A. I try to look at each investment on a stock-by-stock basis, rather than
deciding I need a certain market weighting in a stock or industry. I look
for companies that are good at generating returns on capital, such as
General Electric. GE is becoming less of a "metal bender" and more of a
service provider. This should help drive operating margins up and allow the
company to use less capital to drive incremental sales and profits.
Coca-Cola's another example. Margins have been increasing and return on
capital is rising due to operational improvements and better positioning of
the company's asset portfolio. Both stocks were up during the period,
helping the fund's performance.
Q. OVER THE PAST SIX MONTHS, YOU CUT MEDIA AND LEISURE INVESTMENTS ALMOST
IN HALF AND REALLOCATED SOME OF THOSE ASSETS INTO FINANCE, HEALTH AND
RETAIL. WHY?
A. I sold some media and leisure stocks because they reached price
objectives I had set or they just looked expensive compared with my
earnings expectations. I remained overweighted in financial stocks because
banks are increasingly focusing on the parts of their business where they
can make money. Banks are also huge beneficiaries of technology. The price
of processing transactions and overall costs are coming down every year. In
health care, the pharmaceutical business is doing very well. Pharmaceutical
companies can bring out new products all the time, which provides them with
pricing flexibility. These stocks are still expensive, but I don't think
stocks go down because they're expensive; they go down because of changing
company fundamentals, such as slowing earnings growth. I believe drug
companies are still very strong. I boosted the fund's investment in retail,
although I don't have any real love for the sector. I just found some
retailers with good stories. For example, I purchased a stake in Wal-Mart
toward the end of the period because the company has done a good job
recently of driving return on investments.
Q. WHAT WERE THE BIGGEST DISAPPOINTMENTS FOR THE FUND OVER THE SIX-MONTH
PERIOD?
A. I often buy stocks that I think are turnaround situations and a couple
didn't work out. For example, Viacom's operations, especially Blockbuster,
were very disappointing. The company hasn't hit earnings expectations in
the past few years, and I expected management to get the message sooner and
start addressing fundamental issues. That didn't happen in the past six
months. Another factor that affected the fund's performance is that the
market hasn't priced in risk very well. If a company misses a quarterly
earnings figure or two, the stock will get annihilated very quickly and you
can't get out in time. That happened in a couple instances, such as
Scholastic Corp. The stock plunged after the company reported surprisingly
heavy losses for the fiscal third quarter that ended in February. Also, a
lot of big-caps did very well in the period, and I didn't own as many of
them as I could have. I held back because I felt valuations were too high.
Q. WHAT'S YOUR OUTLOOK FOR THE FUND IN THE NEXT SIX MONTHS?
A. I think the fund is well-positioned going into the second half of the
year for a couple of reasons. First, I was underweighted in energy stocks
at the end of the period, compared with the index. I think energy is a
commodity, and when demand rises there's plenty of supply to fill it.
Second, I was overweighted in advertising stocks, which I think is one of
the best, undiscovered businesses in America. It's a huge cash generator
and the stocks trade at modest prices. Third, I had invested about 15% of
the fund in Europe as of May 31. A lot of European companies are undergoing
the type of corporate restructurings that American companies did over the
past 10 years. Their products are good, but operating costs are too high.
These companies have been operating in national markets protected by local
governments. Now, worldwide competition is forcing them to become more
efficient by selling assets and cutting staff. Due to this consolidation, I
think certain European stocks are better values with much better growth
prospects than many U.S. stocks.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.

FUND FACTS
GOAL: capital appreciation
by investing mainly in
common stocks with the
potential for growth
FUND NUMBER: 073
TRADING SYMBOL: FDFFX
START DATE: March 25, 1983
SIZE: as of May 31, 1997,
more than $3.8 billion
MANAGER: J. Fergus Shiel,
since June 1996; manager,
Fidelity Trend Fund, 1995-
1996; Fidelity Dividend
Growth Fund 1994-1995;
Fidelity Select Broadcast &
Media Portfolio, 1993; Fidelity
Select Telecommunications
Portfolio, 1992-1994; Fidelity
Select Consumer Products
Portfolio, 1991-1992; joined
Fidelity in 1989
(checkmark)
FERGUS SHIEL ON COMPARING THE
RETURNS OF THE FUND WITH THE
S&P 500:
"The S&P 500 is a very tough
benchmark, but also a very
fair one for managers
running a fund of this size.
You can really buy the stocks
in the benchmark. But, do I
run the fund on a day-to-day
basis trying to mirror the
S&P? Absolutely not. I'm
out there trying to find the
best investments on a
stock-by-stock basis every
day. And because of that,
there will be periods, such as
the last six months, when the
fund underperforms the
S&P. Hopefully, there will also
be periods of
outperformance because of
that, too. But, I don't start
every morning by thinking that
the S&P weighting in a stock
is `x', and the fund has only
half of that. Instead, I try to
ask myself, `Is this stock a
good investment and can it
make money for shareholders
over the length of the holding
period?' "
INVESTMENT CHANGES

TOP TEN STOCKS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO

Wal-Mart Stores, Inc. 3.7 0.0

General Electric Co. 2.7 3.0

Merck & Co., Inc. 2.5 1.0

Philip Morris Companies, Inc. 2.1 0.0

Schering-Plough Corp. 2.1 0.9

Intel Corp. 1.9 2.7

NationsBank Corp. 1.8 1.0

SunGard Data Systems, Inc. 1.8 1.8

Mirage Resorts, Inc. 1.7 1.9

Coca-Cola Co. (The) 1.4 1.9

TOP FIVE MARKET SECTORS AS OF MAY 31, 1997
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE MARKET
SECTORS
6 MONTHS AGO

Technology 17.5 18.6

Finance 16.1 13.5

Health 14.5 10.4

Retail & Wholesale 9.4 6.5

Nondurables 8.2 5.6

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF MAY 31, 1997 * AS OF NOVEMBER 30, 1996 **

Row: 1, Col: 1, Value: 3.6
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 44.2
Row: 1, Col: 4, Value: 48.0
Stocks 98.2%
Bonds 0.2%
Short-term
investments 1.6%
FOREIGN
INVESTMENTS 10.4%
Stocks 97.2%
Bonds 0.2%
Short-term
investments 2.6%
FOREIGN
INVESTMENTS 15.1%
Row: 1, Col: 1, Value: 2.6
Row: 1, Col: 2, Value: 1.2
Row: 1, Col: 3, Value: 45.2
Row: 1, Col: 4, Value: 48.0
*
**
INVESTMENTS MAY 31, 1997 (UNAUDITED)

Showing Percentage of Total Value of Investment in Securities

COMMON STOCKS - 97.2%
SHARES
AEROSPACE & DEFENSE - 2.8%
AlliedSignal, Inc. 277,400 $ 21,290
Boeing Co. 69,900 7,357
McDonnell Douglas Corp. 595,000 38,303
Rockwell International Corp. 88,700 5,721
Textron, Inc. 191,200 11,329
United Technologies Corp. 288,600 23,196
107,196
BASIC INDUSTRIES - 5.0%
CHEMICALS & PLASTICS - 4.0%
Air Products & Chemicals, Inc. 15,000 1,166
Cabot Corp. 159,400 4,085
Cytec Industries, Inc. (a) 661,500 25,881
du Pont (E.I.) de Nemours & Co. 190,000 20,686
Goodrich (B.F.) Co. 33,500 1,441
Hercules, Inc. 70,000 3,281
Lubrizol Corp. 150,000 5,344
Monsanto Co. 427,300 18,801
Morton International, Inc. 730,400 23,555
Raychem Corp. 117,500 8,710
Sealed Air Corp. (a) 405,300 18,593
W.R. Grace & Co. 405,500 21,187
152,730
PAPER & FOREST PRODUCTS - 1.0%
Abitibi-Consolidated, Inc. 50,310 870
Alliance Forest Products, Inc. (a) 30,000 724
Clondalkin Group PLC unit 844,000 7,917
Domtar, Inc. 50,000 394
Pentair, Inc. 401,500 13,199
St. Laurent Paperboard, Inc. (a)(b) 156,000 2,513
Tembec, Inc. Class A (a) 80,000 665
Unisource Worldwide, Inc. 535,800 9,310
35,592
TOTAL BASIC INDUSTRIES 188,322
COMMON STOCKS - CONTINUED
SHARES
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
Sherwin-Williams Co. 115,100 $ 3,453
CONSTRUCTION - 0.0%
Sundance Homes, Inc. (a) 82,500 175
REAL ESTATE - 0.0%
Unibail 5,000 487
TOTAL CONSTRUCTION & REAL ESTATE 4,115
DURABLES - 2.3%
AUTOS, TIRES, & ACCESSORIES - 0.2%
Tower Automotive, Inc. (a) 206,100 8,167
CONSUMER DURABLES - 0.9%
Minnesota Mining & Manufacturing Co. 320,500 29,406
Waterford Wedgwood PLC Unit 4,300,000 5,573
34,979
CONSUMER ELECTRONICS - 0.3%
Electrolux AB 50,000 2,983
Phillips Electronics NV (Bearer) 175,000 9,581
12,564
TEXTILES & APPAREL - 0.9%
Liz Claiborne, Inc. 305,700 13,948
Phillips-Van Heusen Corp. 403,500 5,649
Reebok International Ltd. 317,800 13,030
32,627
TOTAL DURABLES 88,337
ENERGY - 3.1%
ENERGY SERVICES - 0.3%
Halliburton Co. 50,000 3,869
Precision Drilling Class A (a) 100,000 4,451
Western Atlas, Inc. (a) 70,000 4,743
13,063
COMMON STOCKS - CONTINUED
SHARES
ENERGY - CONTINUED
OIL & GAS - 2.8%
British Petroleum PLC:
ADR 71,089 $ 10,299
Ord. 1,121,072 13,315
Exxon Corp. 500,000 29,625
Nationale Elf Aquitaine 170,000 17,016
Total SA Class B 362,000 33,157
USX-Marathon Group 35,800 1,065
104,477
TOTAL ENERGY 117,540
FINANCE - 16.1%
BANKS - 10.2%
Allied Irish Banks PLC 886,888 6,780
Bank of Ireland, Inc. 2,410,323 26,215
Bank of New York Co., Inc. 1,100,900 46,926
Barnett Banks, Inc. 474,200 24,955
Citicorp 438,700 50,176
Comerica, Inc. 310,900 19,431
Credito Italiano Ord. 3,836,400 5,718
First Bank System, Inc. 331,800 27,208
Julius Baer Holding AG 4,500 6,188
Lloyds TSB Group PLC 2,472,045 24,930
Merita Ltd. Class A 3,000,000 10,257
NationsBank Corp. 1,188,500 69,973
Nordbanken AB 185,000 5,733
SunTrust Banks, Inc. 266,700 14,235
U.S. Bancorp 364,100 22,347
Wells Fargo & Co. 86,400 22,766
383,838
CREDIT & OTHER FINANCE - 2.2%
Associates First Capital Corp. 290,600 13,731
Axime SA Ex Segin (a) 92,605 10,571
Axime SA Ex Segin (a)(b) 31,119 3,552
First Chicago NBD Corp. 389,000 23,048
Household International, Inc. 281,500 27,657
Woodchester Investments PLC Unit 1,006,591 4,458
83,017
COMMON STOCKS - CONTINUED
SHARES
FINANCE - CONTINUED
FEDERAL SPONSORED CREDIT - 1.1%
Federal National Mortgage Association 986,300 $ 43,027
INSURANCE - 2.6%
Allstate Corp. 393,100 28,942
American International Group, Inc. 91,100 12,333
CIGNA Corp. 96,300 16,732
Nationwide Financial Services, Inc. Class A 197,300 5,549
Provident Companies, Inc. 280,185 15,060
Skandia Foersaekrings AB 150,000 5,297
UNUM Corp. 200,700 15,880
99,793
TOTAL FINANCE 609,675
HEALTH - 14.5%
DRUGS & PHARMACEUTICALS - 8.9%
American Home Products Corp. 543,600 41,450
Astra AB Class A Free shares 466,666 7,532
Biogen, Inc. (a) 23,600 783
Elan Corp. PLC ADR (a) 806,700 32,873
Merck & Co., Inc. 1,055,700 94,881
Pfizer, Inc. 381,800 39,278
Rhone Poulenc Rorer, Inc. 311,500 23,440
Rhone Poulenc SA Class A 320,000 10,381
Schering-Plough Corp. 871,100 79,052
Twinlab Corp. 500,000 7,188
336,858
MEDICAL EQUIPMENT & SUPPLIES - 4.2%
AmeriSource Health Corp. Class A (a) 595,600 25,387
Becton, Dickinson & Co. 1,044,400 51,437
Johnson & Johnson 804,500 48,169
Medtronic, Inc. 178,000 13,172
St. Jude Medical, Inc. (a) 656,250 22,230
160,395
COMMON STOCKS - CONTINUED
SHARES
HEALTH - CONTINUED
MEDICAL FACILITIES MANAGEMENT - 1.4%
HEALTHSOUTH Rehabilitation Corp. (a) 804,200 $ 18,396
Health Management Associates, Inc. Class A (a) 529,900 15,500
Tenet Healthcare Corp. (a) 631,400 17,364
51,260
TOTAL HEALTH 548,513
HOLDING COMPANIES - 0.1%
Cookson Group PLC 843,900 3,253
Norfolk Southern Corp. 10,000 971
4,224
INDUSTRIAL MACHINERY & EQUIPMENT - 5.3%
ELECTRICAL EQUIPMENT - 5.0%
Alcatel Alsthom Compagnie Generale d'Electricite SA 444,166 48,157
Emerson Electric Co. 457,100 24,683
General Electric Co. 1,700,600 102,674
Harris Corp. 73,900 6,549
Honeywell, Inc. 82,500 6,002
188,065
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Rauma OY 130,000 3,030
POLLUTION CONTROL - 0.2%
Browning-Ferris Industries, Inc. 100,000 3,275
Waste Management, Inc. 200,000 6,350
9,625
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 200,720
MEDIA & LEISURE - 7.3%
BROADCASTING - 0.1%
TCI Group Class A (a) 200,000 3,025
ENTERTAINMENT - 1.5%
MGM Grand, Inc. (a) 793,900 30,069
Viacom, Inc. Class B (non-vtg.) (a) 863,900 25,647
55,716
COMMON STOCKS - CONTINUED
SHARES
MEDIA & LEISURE - CONTINUED
LEISURE DURABLES & TOYS - 0.1%
Callaway Golf Co. 161,900 $ 5,221
LODGING & GAMING - 3.2%
Circus Circus Enterprises, Inc. (a) 1,392,300 36,200
Jurys Hotel Group PLC 707,628 3,831
Ladbroke Group PLC Ord. 2,125,000 8,018
Mirage Resorts, Inc. (a) 2,751,200 65,685
Sun International Hotels Ltd. Ord. (a) 202,996 7,688
121,422
PUBLISHING - 2.0%
EMAP PLC 850,000 10,960
Independent Newspapers PLC 3,734,999 19,913
Journal Register Co. 300,000 4,538
Schibsted AS, Series B 505,000 9,431
Scholastic Corp. (a) 383,500 11,409
Telegraaf 235,000 4,774
VNU Ord. 760,000 17,183
78,208
RESTAURANTS - 0.4%
Apple South, Inc. 640,400 9,686
J.D. Wetherspoon PLC 201,732 4,335
14,021
TOTAL MEDIA & LEISURE 277,613
NONDURABLES - 8.2%
AGRICULTURE - 0.0%
IAWS Group PLC 269,900 1,005
IAWS Group PLC Class A (Reg.) 17,600 62
1,067
BEVERAGES - 2.6%
Anheuser-Busch Companies, Inc. 385,500 16,528
Coca-Cola Co. (The) 800,700 54,648
PepsiCo, Inc. 694,700 25,530
96,706
COMMON STOCKS - CONTINUED
SHARES
NONDURABLES - CONTINUED
FOODS - 0.8%
Campbell Soup Co. 221,720 $ 10,199
Greencore Group PLC 935,000 4,668
Hershey Foods Corp. 162,400 9,115
Wrigley (Wm.) Jr. Co. 110,000 6,518
30,500
HOUSEHOLD PRODUCTS - 2.6%
Clorox Co. 339,400 42,849
IWP International 715,000 3,245
Procter & Gamble Co. 375,700 51,800
97,894
TOBACCO - 2.2%
Philip Morris Companies, Inc. 1,802,700 79,319
Standard Commercial Corp. 303,000 5,113
84,432
TOTAL NONDURABLES 310,599
PRECIOUS METALS - 0.1%
Newmont Mining Corp. 128,900 5,043
RETAIL & WHOLESALE - 9.4%
APPAREL STORES - 1.0%
Ann Taylor Stores Corp. (a) 1,026,400 23,864
Gap, Inc. 300,000 10,275
Gymboree Corp. (a) 186,700 4,668
38,807
DRUG STORES - 0.4%
Walgreen Co. 276,800 12,940
GENERAL MERCHANDISE STORES - 4.9%
Arnotts PLC 760,000 4,485
Dollar General Corp. 75,000 2,522
Federated Department Stores, Inc. (a) 1,056,100 39,076
Wal-Mart Stores, Inc. 4,728,400 140,670
186,753
COMMON STOCKS - CONTINUED
SHARES
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 2.4%
American Stores Co. 507,600 $ 23,096
Kroger Co. (The) (a) 614,000 15,734
Safeway, Inc. (a) 1,131,400 50,913
89,743
RETAIL & WHOLESALE, MISCELLANEOUS - 0.7%
Home Depot, Inc. (The) 100,000 6,300
Viking Office Products, Inc. (a) 1,051,300 19,843
26,143
TOTAL RETAIL & WHOLESALE 354,386
SERVICES - 3.8%
ADVERTISING - 2.3%
ADVO, Inc. (a)(d) 1,389,500 19,279
Interpublic Group of Companies, Inc. 262,500 15,717
More O'Ferrall PLC 1,220,900 12,367
Omnicom Group, Inc. 680,600 39,475
86,838
PRINTING - 0.6%
Harland (John H.) Co. 859,300 19,656
Reynolds & Reynolds Co. Class A 50,000 1,169
20,825
SERVICES - 0.9%
AccuStaff, Inc. (a) 598,000 14,352
CGI Group, Inc. Class A (sub. vtg.) (a) 30,000 520
Ecolab, Inc. 369,500 15,380
Groupe Photo Services GPS 35,000 5,240
35,492
TOTAL SERVICES 143,155
TECHNOLOGY - 17.5%
COMMUNICATIONS EQUIPMENT - 2.2%
Aspect Telecommunications Corp. (a) 382,000 8,595
Ericsson (L.M.) Telephone Co. Class B ADR 1,288,500 45,903
Nokia Corp. AB sponsored ADR 454,000 29,964
84,462
COMMON STOCKS - CONTINUED
SHARES
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - 6.9%
Affiliated Computer Services, Inc. Class A (a)(d) 1,690,000 $ 44,785
Award Software International, Inc. 57,100 771
CBT Group PLC sponsored ADR (a) 290,100 15,810
Cap Gemini Sogeti SA 73,763 3,903
Ceridian Corp. (a) 956,800 35,162
Electronics for Imaging, Inc. (a) 201,500 8,035
Equifax, Inc. 809,900 25,309
Microsoft Corp. (a) 281,800 34,943
PeopleSoft, Inc. (a) 395,900 20,488
SunGard Data Systems, Inc. (a) 1,584,600 67,346
Symantec Corp. (a) 264,500 5,042
261,594
COMPUTERS & OFFICE EQUIPMENT - 1.1%
Compaq Computer Corp. (a) 300,000 32,475
Symbol Technologies, Inc. 261,650 8,209
40,684
ELECTRONIC INSTRUMENTS - 0.6%
KLA Instruments Corp. (a) 209,100 9,945
Novellus Systems, Inc. (a) 168,400 13,788
23,733
ELECTRONICS - 6.0%
Altera Corp. 30,000 1,590
Atmel Corp. 300,000 8,625
Electroglas, Inc. (a) 688,800 17,328
Integrated Device Technology, Inc. (a) 43,800 616
Intel Corp. 471,100 71,372
Linear Technology Corp. 371,000 18,596
Maxim Integrated Products, Inc. (a) 376,500 20,237
Micron Technology, Inc. 346,600 14,731
Schneider SA 90,000 4,329
Speedfam International, Inc. (a) 207,900 7,575
Texas Instruments, Inc. 455,000 40,893
VLSI Technology, Inc. (a) 589,100 14,322
Xilinx, Inc. (a) 150,000 8,044
228,258
COMMON STOCKS - CONTINUED
SHARES
TECHNOLOGY - CONTINUED
PHOTOGRAPHIC EQUIPMENT - 0.7%
Imation Corp. (a) 414,590 $ 9,950
Polaroid Corp. 295,200 15,055
25,005
TOTAL TECHNOLOGY 663,736
TRANSPORTATION - 0.3%
AIR TRANSPORTATION - 0.3%
Comair Holdings, Inc. 104,400 2,714
Ryanair Holdings PLC sponsored ADR 253,800 6,282
8,996
SHIPPING - 0.0%
Irish Continental Group PLC 70,000 773
TOTAL TRANSPORTATION 9,769
UTILITIES - 1.3%
CELLULAR - 0.5%
360 Degrees Communications Co. (a) 914,100 17,254
TELEPHONE SERVICES - 0.8%
Ameritech Corp. 110,500 7,238
Frontier Corp. 591,200 10,863
SBC Communications, Inc. 171,712 10,045
WorldCom, Inc. 50,000 1,481
29,627
TOTAL UTILITIES 46,881
TOTAL COMMON STOCKS
(Cost $3,260,560) 3,679,824
CONVERTIBLE BONDS - 0.2%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS AMOUNT (000S) (000S)
UTILITIES - 0.2%
TELEPHONE SERVICES - 0.2%
MIDCOM Communications, Inc. 8 1/4%,
8/15/03 (b) (Cost $7,319) - $ 7,319 $ 6,038
CASH EQUIVALENTS - 2.6%
SHARES
Taxable Central Cash Fund
(Cost $100,534) (c) 100,534,198 100,534
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,368,413) $ 3,786,396
LEGEND
1. Non-income producing
2. 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 $12,103,000 or 0.3% of net
assets.
3. At period end, the seven-day yield on the Taxable Central Cash Fund was
5.54%. The yield refers to the income earned by investing in the fund over
the seven-day period, expressed as an annual percentage.
4. Affiliated company (see Note 7 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 84.9%
France 4.2
Ireland 3.8
United Kingdom 2.3
Sweden 1.8
Finland 1.1
Others (individually less than 1%) 1.9
TOTAL 100.0%
INCOME TAX INFORMATION
At May 31, 1997, the aggregate cost of investment securities for income tax
purposes was $3,369,362,000. Net unrealized appreciation aggregated
$417,034,000, of which $505,533,000 related to appreciated investment
securities and $88,499,000 related to depreciated investment securities.
The fund intends to elect to defer to its fiscal year ending November 30,
1997 approximately $14,860,000 of losses recognized during the period
November 1, 1996 to November 30, 1996.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) MAY 31, 1997 (UNAUDITED)

ASSETS

Investment in securities, at value (cost $3,368,413) - $ 3,786,396
See accompanying schedule

Receivable for investments sold 209,571

Receivable for fund shares sold 2,199

Dividends receivable 3,644

Interest receivable 1,050

Other receivables 297

TOTAL ASSETS 4,003,157

LIABILITIES

Payable for investments purchased $ 99,019

Payable for fund shares redeemed 32,404

Accrued management fee 1,307

Other payables and accrued expenses 736

TOTAL LIABILITIES 133,466

NET ASSETS $ 3,869,691

Net Assets consist of:

Paid in capital $ 3,179,500

Undistributed net investment income 14,977

Accumulated undistributed net realized gain (loss) on 257,239
investments and foreign currency transactions

Net unrealized appreciation (depreciation) on 417,975
investments and assets and liabilities in foreign
currencies

NET ASSETS, for 208,317 shares outstanding $ 3,869,691

NET ASSET VALUE, offering price and redemption price per $18.58
share ($3,869,691 (divided by) 208,317 shares)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)

INVESTMENT INCOME $ 23,259
Dividends

Interest 5,059

TOTAL INCOME 28,318

EXPENSES

Management fee $ 11,839
Basic fee

Performance adjustment (3,679)

Transfer agent fees 3,892

Accounting fees and expenses 404

Non-interested trustees' compensation 13

Custodian fees and expenses 153

Registration fees 42

Audit 46

Legal 15

Interest 2

Miscellaneous 10

Total expenses before reductions 12,737

Expense reductions (629) 12,108

NET INVESTMENT INCOME 16,210

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

Investment securities (including realized gain of 277,958
$834 on sales of investments in affiliated issuers)

Foreign currency transactions (2) 277,956

Change in net unrealized appreciation (depreciation) on:

Investment securities (104,942)

Assets and liabilities in foreign currencies (7) (104,949)

NET GAIN (LOSS) 173,007

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 189,217
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,
1997 1996
(UNAUDITED)

INCREASE (DECREASE) IN NET ASSETS

Operations $ 16,210 $ 52,190
Net investment income

Net realized gain (loss) 277,956 404,544

Change in net unrealized appreciation (depreciation) (104,949) 59,393

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 189,217 516,127
FROM OPERATIONS

Distributions to shareholders (53,940) (68,464)
From net investment income

From net realized gain (425,250) (312,726)

TOTAL DISTRIBUTIONS (479,190) (381,190)

Share transactions 242,001 659,602
Net proceeds from sales of shares

Reinvestment of distributions 478,299 380,575

Cost of shares redeemed (765,986) (939,573)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING (45,686) 100,604
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS (335,659) 235,541

NET ASSETS

Beginning of period 4,205,350 3,969,809

End of period (including undistributed net investment $ 3,869,691 $ 4,205,350
income of $14,977 and $52,707, respectively)

OTHER INFORMATION
Shares

Sold 13,514 35,293

Issued in reinvestment of distributions 27,647 21,160

Redeemed (42,696) (50,139)

Net increase (decrease) (1,535) 6,314

</TABLE>

FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED MAY 31,
1997

(UNAUDITED) 1996 1995 1994 D 1993 1992

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

Net asset value, $ 20.04 $ 19.50 $ 18.01 $ 19.26 $ 19.77 $ 17.21
beginning of period

Income from Investment
Operations

Net investment income .07 H .26 .34 .19 .09 .14

Net realized and .78 2.14 3.09 .58 3.09 3.66
unrealized gain (loss)

Total from investment .85 2.40 3.43 .77 3.18 3.80
operations

Less Distributions (.26) (.34) E (.20) (.14) (.16) (.20)
From net investment
income

From net realized gain (2.05) (1.52) E (1.74) (1.88) (3.53) (1.04)

Total distributions (2.31) (1.86) (1.94) (2.02) (3.69) (1.24)

Net asset value, $ 18.58 $ 20.04 $ 19.50 $ 18.01 $ 19.26 $ 19.77
end of period

TOTAL RETURN B, C 5.09% 13.45% 21.43 4.24 19.47 23.39
% % % %

RATIOS AND SUPPLEMENTAL DATA

Net assets, end of period $ 3,870 $ 4,205 $ 3,970 $ 3,163 $ 2,688 $ 2,166
(in millions)

Ratio of expenses to .65% A .74% .99 1.07 1.05 1.02
average net assets % % % %

Ratio of expenses to .62% A .70% .99 1.07 1.05 1.02
average net assets , F F % % % %
after expense
reductions

Ratio of net investment .83% A 1.26% 1.92 1.13 .80 1.01
income to average % % % %
net assets

Portfolio turnover rate 172% A 230% 108 72 101 138
% % % %

Average commission $ .0374 $ .0307
rate G

</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.
E THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
F FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 6 OF
NOTES TO FINANCIAL STATEMENTS).
G FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR SECURITY
TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY FROM PERIOD
TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES EXECUTED IN
VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION RATE STRUCTURES MAY
DIFFER.
H NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1997 (Unaudited)

13. 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 financial statements have
been prepared in conformity with generally accepted accounting principles
which permit management to make certain estimates and assumptions at the
date of the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. 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 with remaining maturities
of sixty days or less for which quotations are not readily available 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. Income receipts
and expense payments are translated into U.S. dollars at the prevailing
exchange rate on the respective dates of the transactions. Purchases and
sales of securities are translated into U.S. dollars at the contractual
currency exchange rates established at the time of each trade.
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, 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."
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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. Non-cash dividends included in dividend income, if any,
are recorded at the fair market value of the securities received. Interest
income is accrued as earned. Investment income is recorded net of foreign
taxes withheld where recovery of such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
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
proceeds, foreign currency transactions, passive foreign investment
companies (PFIC), market discount, non-taxable dividends and losses
deferred due to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
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.
14. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated securities.
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 foreign currency contracts is determined using contractual
currency exchange rates established at the time of each trade. The cost of
the foreign currency contracts is included in the cost basis of the
associated investment.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund may invest in the Taxable
Central Cash Fund (the Cash Fund) managed by FMR Texas, an affiliate of
Fidelity Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other accounts
managed by FMR and its affiliates. The Cash Fund seeks preservation of
capital, liquidity, and current income by investing in
2. OPERATING POLICIES -
CONTINUED
TAXABLE CENTRAL CASH FUND -
CONTINUED
U.S. Treasury securities and repurchase agreements for these securities.
Income distributions from the Cash Fund are declared daily and paid monthly
from net interest income. Income distributions received by the fund are
recorded as interest income in the accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally 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, the
fund had no investments in restricted securities (excluding 144A issues).
15. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $3,196,792,000 and $3,794,017,000, respectively.
16. 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 .2500% to .5200% for the period. The annual individual
fund fee rate is .30%. 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 basic fee is subject to a performance adjustment (up to a maximum of
".20% of the fund's average net assets over the performance period) 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 .42% of average net assets after the
performance adjustment.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, is the fund's transfer, dividend disbursing and shareholder servicing
agent. FSC receives account fees and asset-based fees that vary according
to account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annualized rate of
.20% of average net assets.
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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $1,378,000 for the period.
17. 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 balance during the period for which
the loan was outstanding amounted to $15,063,000. The weighted average
interest rate was 5.6%.
18. 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
$545,000 under this arrangement.
In addition, the fund has entered into arrangements with its custodian and
transfer agent whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of the fund's expenses. During the
period, the fund's custodian and transfer agent fees were reduced by
$10,000 and $74,000, respectively, under these arrangements.
19. 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 during the period with
companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
ADVO, Inc. $ - $ - $ - $ 19,279
Affiliated Computer Services, Inc.
Class A - 6,893 - 44,785
TOTALS $ - $ 6,893 $ - $ 64,064
MANAGING YOUR INVESTMENTS

INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
J. Fergus Shiel, Vice President
Arthur S. Loring, Secretary
Richard A. Silver, 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 *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
* INDEPENDENT TRUSTEES
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Export and Multinational Fund
Fidelity Fifty
Growth Company Fund
Large Cap Stock 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
TechnoQuant(trademark) Growth Fund
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
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