FIDELITY FINANCIAL TRUST, N-30D, 1998-07-22

FIDELITY FINANCIAL TRUST
N-30D, 1998-07-22

Previous: KEMPER PORTFOLIOS, 497, 1998-07-22

Next: SUN MICROSYSTEMS INC, S-4, 1998-07-22

(2_FIDELITY_LOGOS)FIDELITY

CONVERTIBLE SECURITIES
FUND
SEMIANNUAL REPORT
MAY 31, 1998
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 24 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 28 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:
While low interest rates and subdued inflation provided support for
stock and bond markets in the U.S. during the first five months of
1998, concerns about continuing economic and political difficulties in
Asia colored their performance. The stock market reached record
heights due to stronger-than-expected corporate earnings, but
retreated at times when concerns surfaced about how the Asian
volatility would affect business prospects. The bond market benefited
from these retreats, as investors sought alternatives offering lower
volatility.
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, 1998 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS

FIDELITY CONVERTIBLE SECURITIES 14.31% 25.06% 89.21% 353.01%

ML CONVERTIBLE SECURITIES 7.74% 19.83% 80.75% 252.02%

CONVERTIBLE SECURITIES FUNDS AVERAGE 6.63% 17.06% 82.71% 221.57%

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
57 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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

FIDELITY CONVERTIBLE SECURITIES 25.06% 13.60% 16.31%

ML CONVERTIBLE SECURITIES 19.83% 12.57% 13.41%

CONVERTIBLE SECURITIES FUNDS AVERAGE 17.06% 12.71% 12.10%

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
Convertible Securities FB Conv. Sec. Index
00308 FB002
1988/05/31 10000.00 10000.00
1988/06/30 10415.31 10385.00
1988/07/31 10344.04 10277.00
1988/08/31 10191.33 10095.09
1988/09/30 10325.12 10275.80
1988/10/31 10490.32 10406.30
1988/11/30 10335.45 10236.68
1988/12/31 10462.53 10474.17
1989/01/31 10909.56 10944.46
1989/02/28 11026.64 10942.27
1989/03/31 11347.66 11084.52
1989/04/30 11768.34 11456.96
1989/05/31 12038.01 11689.53
1989/06/30 12134.69 11604.20
1989/07/31 12680.80 11937.24
1989/08/31 13095.85 12199.86
1989/09/30 13106.77 12093.72
1989/10/31 12841.54 11711.56
1989/11/30 13051.51 11902.46
1989/12/31 13212.33 11915.55
1990/01/31 12722.56 11441.31
1990/02/28 12870.63 11592.34
1990/03/31 13123.34 11769.70
1990/04/30 13019.55 11507.23
1990/05/31 13538.49 12065.34
1990/06/30 13689.65 12050.86
1990/07/31 13596.29 11943.60
1990/08/31 12697.65 11255.65
1990/09/30 12071.04 10763.78
1990/10/31 11834.59 10361.22
1990/11/30 12449.37 10867.88
1990/12/31 12829.94 11095.02
1991/01/31 13625.03 11593.18
1991/02/28 14504.46 12285.30
1991/03/31 14890.10 12586.29
1991/04/30 15060.69 12713.41
1991/05/31 15572.46 13089.73
1991/06/30 15276.78 12724.52
1991/07/31 15892.78 13208.05
1991/08/31 16496.46 13700.71
1991/09/30 16771.83 13676.05
1991/10/31 17494.00 13872.99
1991/11/30 16746.92 13538.65
1991/12/31 17799.93 14325.24
1992/01/31 18698.39 14722.05
1992/02/29 19310.38 15103.35
1992/03/31 18984.73 14978.00
1992/04/30 19142.50 15148.75
1992/05/31 19510.62 15424.45
1992/06/30 19394.21 15351.96
1992/07/31 19925.19 15774.14
1992/08/31 19540.23 15674.76
1992/09/30 20005.71 15988.26
1992/10/31 20474.70 16026.63
1992/11/30 21131.29 16489.80
1992/12/31 21719.39 16855.87
1993/01/31 22445.70 17381.77
1993/02/28 22054.61 17449.56
1993/03/31 23152.12 18088.22
1993/04/30 23363.75 18084.60
1993/05/31 23942.20 18401.08
1993/06/30 23914.79 18575.89
1993/07/31 24156.93 18767.22
1993/08/31 24726.67 19281.44
1993/09/30 25013.92 19499.32
1993/10/31 25588.95 19959.51
1993/11/30 25344.56 19658.12
1993/12/31 25582.81 19982.48
1994/01/31 26220.43 20555.97
1994/02/28 25800.53 20229.13
1994/03/31 24671.15 19403.79
1994/04/30 24262.32 19050.64
1994/05/31 24167.98 19092.55
1994/06/30 24149.79 18876.80
1994/07/31 24579.89 19409.13
1994/08/31 25886.15 19791.49
1994/09/30 25724.47 19441.18
1994/10/31 25885.75 19608.37
1994/11/30 25208.37 18896.59
1994/12/31 25133.60 19040.20
1995/01/31 25133.60 19015.45
1995/02/28 25657.21 19637.26
1995/03/31 26415.43 20155.68
1995/04/30 27010.53 20613.21
1995/05/31 27308.07 21221.30
1995/06/30 27991.12 21993.76
1995/07/31 28725.53 22774.54
1995/08/31 29059.36 23013.67
1995/09/30 29610.93 23356.57
1995/10/31 28886.66 22639.53
1995/11/30 29745.68 23427.38
1995/12/31 30004.62 23556.23
1996/01/31 30615.51 24076.83
1996/02/29 31352.58 24724.49
1996/03/31 31753.44 24932.18
1996/04/30 32497.38 25513.10
1996/05/31 33023.58 26082.04
1996/06/30 32658.32 25463.90
1996/07/31 31118.87 24470.80
1996/08/31 31980.23 25381.12
1996/09/30 32678.34 26043.56
1996/10/31 33067.14 26205.03
1996/11/30 34511.29 26286.79
1996/12/31 34519.11 25992.38
1997/01/31 35639.61 26818.94
1997/02/28 34971.24 26679.48
1997/03/31 33757.40 26127.22
1997/04/30 34234.54 26391.10
1997/05/31 36222.61 27613.01
1997/06/30 37304.70 28416.55
1997/07/31 39194.06 29973.77
1997/08/31 39013.16 29994.76
1997/09/30 41615.84 31260.54
1997/10/31 39469.24 30404.00
1997/11/30 39631.24 30221.57
1997/12/31 39509.64 30390.81
1998/01/31 40438.39 30381.70
1998/02/28 43542.06 31739.76
1998/03/31 45711.93 32885.56
1998/04/30 46533.92 33178.24
1998/05/29 45300.93 32222.71
IMATRL PRASUN SHR__CHT 19980531 19980611 102417 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Convertible Securities Fund on May 31, 1988. As
the chart shows, by May 31, 1998, the value of the investment would
have grown to $45,301 - a 353.01% 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. With dividends
and capital gains, if any, reinvested, the same $10,000 would have
grown to $32,223 - a 222.23% 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

MARKET RECAP
Although renewed concerns about
economic difficulties in Asia late
in the period tempered the rapid
growth of U.S. equity markets, the
Standard & Poor's 500 Index - a
measure of the U.S. stock market
- - still managed to return 15.06%
during the six months that ended
May 31, 1998. As feared, some
U.S. corporations with business
exposure to Asia did report
disappointing earnings and their
stocks were harshly punished.
However, investors seemed to
adopt a new attitude - one that
overlooked short-term troubles
and focused on longer-term
growth - helping many of these
stocks to rebound quickly. In
addition, the continued strength of
the U.S. economy, combined with
low interest rates and low inflation,
seemed to buoy the stock market
for much of the period. The
upward climb of the stock market
stagnated in mid- and late May
when investors were inundated
with worrisome news about the
stability of Asian markets.
Specifically, the president of
Indonesia resigned amidst civil
strife and a battle over nuclear
testing erupted between Pakistan
and India. Concerns about falling
demand for U.S. exports
particularly hurt technology
companies, especially during the
intensified investigation of
Microsoft by the Justice
Department in May. As a result of
concerns about these tumultuous
events and their potential impact
on the U.S. economy, the Dow
Jones Industrial Average produced
a negative return in May for the first
time in 1998 - although the Dow
was still up 13.29% for the first five
months of 1998.
An interview with David Felman, Portfolio Manager of Fidelity
Convertible Securities Fund
Q. HOW DID THE FUND PERFORM, DAVID?
A. For the six months that ended May 31, 1998, the fund returned
14.31%, compared to 7.74% for the Merrill Lynch Convertible Securities
Index and 6.63% for the convertible securities funds average tracked
by Lipper Analytical Services. For the 12 months that ended May 31,
1998, the fund returned 25.06%, while the index and the Lipper average
had returns of 19.83% and 17.06%, respectively.
Q. WHY DID THE FUND POST SUCH STRONG RETURNS RELATIVE TO THE INDEX AND
THE AVERAGE?
A. Two factors were instrumental. First, the fund had a somewhat
higher equity exposure than the index and the average. Some
convertible securities are more equity-sensitive - that is, they act
more like equities - while others act more like bonds. I selected
convertibles that, on balance, behaved more like equities than those
chosen by my peers. In addition, relative to the index I overweighted
the fund with technology securities early in the period because I felt
they had been beaten down excessively due to volatility in the Asian
markets. This strategy paid off in the first two months of 1998, when
technology shares led a vigorous rally in the broader market. Toward
the end of the period, I took some profits and scaled back my exposure
to the technology sector.
Q. HOW DID YOU DECIDE HOW EQUITY-SENSITIVE THE FUND SHOULD BE?
A. That's an issue I grapple with all the time. In general, as the
market declines, I try to increase the fund's equity sensitivity, and
as the market surges upward, I decrease it. So during the December
weakness, the fund's equity exposure rose, and as the rally
materialized earlier this year, I scaled back the equity sensitivity
to a more conservative level. Late in the period - as the equity
markets entered a choppy phase - I began to nudge the equity
sensitivity up again. I did not make huge bets either way - these were
more in the nature of incremental adjustments.
Q. WHICH HOLDINGS DID WELL FOR THE FUND?
A. In the technology sector, Unisys did well. The fund owned both
Unisys common stock and one of the company's convertible securities
that together comprised about 3% of holdings at the end of the period.
Both did well due to the general strength in technology shares, as
well as investor optimism over Larry Weinbach, the company's new CEO.
Another strong area for the fund was telecommunications. Intermedia
Communications, a competitive local exchange company (CLEC), performed
well as the company continued to take market share away from the
incumbent local telephone service providers - the regional Bell
operating companies. The same considerations applied to WorldCom. Two
satellite companies - Orbital Sciences and Loral Space - performed
well in connection with healthy sales of satellite services and the
launch of their respective networks. USA Waste - another top 10
holding - benefited from investors' favorable perceptions about the
synergies made possible by the company's acquisition of rival Waste
Management. Finally, Apple Computer performed well on optimism about
CEO Steve Jobs' restructuring plans.
Q. WHAT HOLDINGS FAILED TO MEET YOUR EXPECTATIONS?
A. Although the technology sector provided the fund with many success
stories, it was also the source of some disappointments. Quantum - a
manufacturer of computer hard drives and tape drives - was hurt by
sluggish sales and revenues caused by overcapacity in the drive
industry. CompUSA is a personal computer retailer that suffered
because of lower earnings due to slackening end-user demand. Finally,
declining profit margins hurt Tosco, an oil refiner.
Q. WHAT'S YOUR OUTLOOK, DAVID?
A. I'm cautiously optimistic. The fund did extremely well even though
the mid-capitalization stocks and related convertibles in which the
fund tends to invest underperformed the large-cap stocks that make up
the S&P 500. If we get a market where small- and mid-cap stocks take a
leadership role, the fund could do even better. On the other hand, a
major correction in the equity markets could hurt the fund because of
its higher-than-average equity exposure. My policy is not to try to
predict what the overall market will do but rather to identify
individual securities with the potential for superior performance over
the next six to 12 months.
DAVID FELMAN ON THE PROS AND
CONS OF INVESTING IN THE
TECHNOLOGY SECTOR:
"INVESTING IN TECHNOLOGY COMPANIES
IS ALWAYS A BIT OF A DOUBLE-EDGED
SWORD. ON THE ONE HAND, TECHNOLOGY
ISSUES TEND TO DISPLAY MORE
VOLATILITY THAN THOSE IN OTHER
SECTORS. ALTHOUGH CONVERTIBLE
SECURITIES ARE, IN GENERAL, LESS
VOLATILE THAN COMMON STOCK,
TECHNOLOGY CONVERTIBLES FOLLOW
THE SAME PATTERN OF OVERALL
GREATER VOLATILITY RELATIVE TO
NON-TECHNOLOGY CONVERTIBLES.
"ON THE OTHER HAND, TECHNOLOGY IS
WHERE A LOT OF EXCITING GROWTH IS
LIKELY TO BE OVER THE NEXT DECADE.
ALTHOUGH CONSUMER PRODUCT
COMPANIES CAN DEVELOP NEW
MARKETS FOR ITEMS LIKE SOAP AND
TOOTHPASTE, THE APPLICATIONS FOR
THOSE PRODUCTS SEEM LIMITED
ESSENTIALLY TO WHAT THEY ARE NOW.
THE APPLICATIONS FOR TECHNOLOGY,
HOWEVER, ARE CONSTANTLY EVOLVING,
WITH WHOLE NEW AREAS OPENING UP.
THE INCREASING USE OF COMPUTER
NETWORKS IN TELECOMMUNICATIONS
IS JUST ONE AREA THAT I AM WATCHING
CLOSELY.
"PRODUCT CYCLES ARE A KEY CONCEPT
TO KEEP IN MIND WHEN YOU INVEST
IN TECHNOLOGY. APPLE COMPUTER
OFFERED A GOOD EXAMPLE OF THIS
RECENTLY, WHEN ITS STOCK
STRENGTHENED AS INVESTORS
ANTICIPATED THE MARKET'S FAVORABLE
RECEPTION OF THE COMPANY'S NEW LINE
OF LOW-COST COMPUTERS. IN ADDITION,
KEEPING THE LONG TERM IN MIND -
WHILE ALWAYS A SOUND INVESTMENT
STRATEGY - IS EVEN MORE IMPORTANT
WITH VOLATILE TECHNOLOGY
INVESTMENTS. IF YOU BELIEVE IN A
COMPANY, YOU DON'T WANT TO GET
SHAKEN OUT BY SHORT-TERM MARKET
FLUCTUATIONS."
FUND FACTS
GOAL: TO PROVIDE 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, 1998,
MORE THAN $1.1 BILLION
MANAGER: DAVID FELMAN,
SINCE 1997; MANAGER, FIDELITY
SELECT TELECOMMUNICATIONS
PORTFOLIO, 1994-1996; FIDELITY
SELECT CHEMICALS PORTFOLIO,
JANUARY 1995-JULY 1995;
JOINED FIDELITY IN 1993
(CHECKMARK)
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 INVESTMENTS AS OF MAY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO

FEDERAL-MOGUL FINANCING TRUST $3.50 2.8 0.0

FEDERATED DEPARTMENT STORES, INC. 2.5 2.5
5%, 10/1/03

APPLE COMPUTER, INC. 6%, 6/1/01 2.4 0.9

USA WASTE SERVICES, INC. 4%, 2/1/02 2.2 2.0

TOSCO FINANCING TRUST $2.875 TOPRS 2.1 2.5

HOUSTON INDUSTRIES, INC. $3.215 ACES 2.0 1.4

ORBITAL SCIENCES CORP. 5%, 10/1/02 1.8 0.7

UNISYS CORP. 1.6 0.0

ALCATEL ALSTHOM COMPAGNIE GENERALE 1.6 0.3
D'ELECTRICITE SA SPONSORED ADR

UNISYS CORP. 8 1/4%, 3/15/06 1.5 3.2

TOP FIVE MARKET SECTORS AS OF MAY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO

TECHNOLOGY 22.3 30.4

FINANCE 14.6 10.3

UTILITIES 11.2 7.9

HEALTH 9.4 5.1

INDUSTRIAL MACHINERY & EQUIPMENT 9.1 9.4

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF MAY 31, 1998 * AS OF NOVEMBER 30, 1997 **
ROW: 1, COL: 1, VALUE: 74.59999999999999
ROW: 1, COL: 2, VALUE: 22.4
ROW: 1, COL: 3, VALUE: 3.0
ROW: 1, COL: 4, VALUE: 0.0
CONVERTIBLE
SECURITIES 82.9%
STOCKS 14.1%
SHORT-TERM
INVESTMENTS 2.8%
NONCONVERTIBLE
BONDS 0.2%
FOREIGN
INVESTMENTS 4.0%
CONVERTIBLE
SECURITIES 74.6%
STOCKS 22.4%
SHORT-TERM
INVESTMENTS 3.0%
NONCONVERTIBLE
BONDS 0.0%
FOREIGN
INVESTMENTS 5.8%
ROW: 1, COL: 1, VALUE: 81.90000000000001
ROW: 1, COL: 2, VALUE: 14.1
ROW: 1, COL: 3, VALUE: 2.8
ROW: 1, COL: 4, VALUE: 1.2
*
**
INVESTMENTS MAY 31, 1998 (UNAUDITED)

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

CONVERTIBLE BONDS - 38.9%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
AEROSPACE & DEFENSE - 2.6%
Kellstrom Industries, Inc.:
5 3/4%, 10/15/02 (d) B3 $ 3,500 $ 4,148
5 3/4%, 10/15/02 B3 1,580 1,579
Orbital Sciences, Corp.:
5%, 10/1/02 (d) B 12,200 19,795
5%, 10/1/02 B 2,000 3,245
28,767
BASIC INDUSTRIES - 0.2%
PAPER & FOREST PRODUCTS - 0.2%
Metsa Serla OY 4 3/8%, 10/15/02 (d) - 2,000 2,173
CONSTRUCTION & REAL ESTATE - 0.1%
CONSTRUCTION - 0.1%
Emcor Group, Inc. 5 3/4%, 4/1/05 B3 1,000 973
DURABLES - 0.4%
CONSUMER ELECTRONICS - 0.4%
Sunbeam Corp. 0%, 3/25/18 (d) - 15,000 4,538
ENERGY - 0.9%
ENERGY SERVICES - 0.7%
Pride International, Inc. 0%, 4/15/18 B2 17,500 7,350
OIL & GAS - 0.2%
Pennzoil Co. 4 3/4%,10/1/03 Baa3 2,000 2,716
TOTAL ENERGY 10,066
FINANCE - 0.6%
CREDIT & OTHER FINANCE - 0.2%
STB CayMan Capital Ltd. 1/2%, 10/1/07 (d) Baa2 JPY 285,000 1,857
INSURANCE - 0.4%
Berkshire Hathaway, Inc. 1%, 12/2/01 Aa1 2,600 4,781
TOTAL FINANCE 6,638
CONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
HEALTH - 5.3%
DRUGS & PHARMACEUTICALS - 3.5%
Athena Neurosciences, Inc.
4 3/4%, 11/15/04 (d) Baa3 $ 9,000 $ 10,305
Atrix Laboratories, Inc. 7%, 12/1/04 (d) - 3,000 3,225
Aviron 5 3/4%, 4/1/05 (d) - 11,800 12,833
Integrated Process Equipment Corp.
6 1/4%, 9/15/04 (d) B- 4,000 3,210
Sepracor, Inc. 6 1/4%, 2/15/05 (d) - 8,400 9,744
39,317
MEDICAL EQUIPMENT & SUPPLIES - 1.5%
ESC Medical Systems Ltd.:
6%, 9/1/02 (d) Caa1 16,500 15,263
6%, 9/1/02 Caa2 1,000 915
16,178
MEDICAL FACILITIES MANAGEMENT - 0.3%
Res-Care, Inc. 6%, 12/1/04 (d) B3 3,000 3,772
TOTAL HEALTH 59,267
HOLDING COMPANIES - 0.5%
Triarc Cos, Inc. 0%, 2/9/18 (d) - 20,000 5,650
INDUSTRIAL MACHINERY & EQUIPMENT - 5.9%
ELECTRICAL EQUIPMENT - 1.1%
ANTEC Corp. 4 1/2%, 5/15/03 (d) B2 1,000 1,050
Gilat Sattelite Networks Ltd.
6 1/2%, 6/3/04 (d) - 3,000 3,101
Oak Industries, Inc. 4 7/8%, 3/1/08 (d) B2 7,000 7,575
11,726
POLLUTION CONTROL - 4.8%
Sanifill, Inc. 5%, 3/1/06 Ba2 8,730 14,928
USA Waste Services, Inc. 4%, 2/1/02 Ba2 20,000 24,450
United Waste Systems, Inc. 4 1/2%, 6/1/01 Ba3 9,200 14,628
54,006
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 65,732
CONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MEDIA & LEISURE - 0.7%
PUBLISHING - 0.4%
World Color Press, Inc. 6%, 10/1/07 B1 $ 4,000 $ 4,085
RESTAURANTS - 0.3%
CKE Restaurants, Inc. 4 1/4%, 3/15/04 (d) B1 4,000 3,680
TOTAL MEDIA & LEISURE 7,765
NONDURABLES - 0.6%
HOUSEHOLD PRODUCTS - 0.6%
Alberto Culver Co. 5 1/2%, 6/30/05 (d) - 4,100 6,837
RETAIL & WHOLESALE - 3.6%
GENERAL MERCHANDISE STORES - 2.8%
Costco Companies, Inc.:
0%, 8/19/17 (d) A3 3,000 2,115
0%, 8/19/17 - 2,000 1,420
Federated Department Stores, Inc. 5%, 10/1/03 Baa3 18,000 27,641
31,176
RETAIL & WHOLESALE, MISCELLANEOUS - 0.8%
Action Performance Companies, Inc.
4 3/4%, 4/1/05 (d) - 5,000 4,450
Home Depot, Inc. 3 1/4%, 10/1/01 A1 1,300 2,243
Office Depot, Inc. 0%, 11/1/08 Baa3 3,500 2,568
9,261
TOTAL RETAIL & WHOLESALE 40,437
SERVICES - 2.6%
ADT Operations, Inc. liquid yield option notes
0%, 7/6/10 Baa1 4,500 6,772
Assisted Living Concepts, Inc.
5 5/8%, 5/1/03 (d) - 4,000 3,540
Career Horizons, Inc. 7%, 11/1/02 Ba1 3,150 9,123
Interim Services, Inc. 4 1/2%, 6/1/05 Ba3 7,000 7,184
Personnel Group of America, Inc.
5 3/4%, 7/1/04 (d) B2 2,000 2,630
29,249
CONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TECHNOLOGY - 13.7%
COMPUTER SERVICES & SOFTWARE - 1.3%
HNC Software, Inc. 4 3/4%, 3/1/03 - $ 6,000 $ 6,293
Systems Software Associates, Inc. 7%, 9/15/02 - 4,100 3,423
Tecnomatix Technologies Ltd.
5 1/4%, 8/15/04 (d) - 5,732 4,808
14,524
COMPUTERS & OFFICE EQUIPMENT - 6.0%
Apple Computer, Inc. 6%, 6/1/01 CCC 24,500 27,103
EMC Corp.:
3 1/4%, 3/15/02 (d) Ba3 4,800 9,108
3 1/4%, 3/15/02 Ba3 3,250 6,167
Hutchinson Technology, Inc.
6%, 3/15/05 (d) - 8,100 9,112
Unisys Corp. 8 1/4%, 3/15/06 B- 4,470 16,450
67,940
ELECTRONIC INSTRUMENTS - 1.1%
Credence Systems Corp.
5 1/4%, 9/15/02 (d) - 16,000 12,760
ELECTRONICS - 5.3%
Brightpoint, Inc. 0%, 3/11/18 (d) B2 18,000 7,560
Advanced Micro Devices, Inc. 6%, 5/15/05 B3 2,610 2,362
Altera Corp. 5 3/4%, 6/15/02 B2 1,500 1,989
Candescent Technologies Corp.
7%, 5/1/03 (d) - 5,500 5,500
Micron Technology, Inc. 7%, 7/1/04 B1 9,250 8,556
Photronics, Inc. 6%, 6/1/04 B2 4,000 4,745
World Access, Inc.:
4 1/2%, 10/1/02 (d) CCC 13,250 13,979
4 1/2%, 10/1/02 CCC 13,550 14,295
58,986
TOTAL TECHNOLOGY 154,210
TRANSPORTATION - 0.7%
AIR TRANSPORTATION - 0.4%
Alaska Air Group, Inc. 6 1/2%, 6/15/05 Ba2 1,898 4,078
TRUCKING & FREIGHT - 0.3%
SPACEHAB, Inc. 8%, 10/15/07 (d) - 3,500 3,867
TOTAL TRANSPORTATION 7,945
CONVERTIBLE BONDS - CONTINUED
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
UTILITIES - 0.5%
CELLULAR - 0.5%
Cellular Communications International, Inc.
6%, 4/1/05 (d) CCC $ 4,500 $ 6,075
TELEPHONE SERVICES - 0.0%
Cam-Net Communications Network, Inc.
11 1/2%, 4/4/98 (e)(f) - 2,275 -
TOTAL UTILITIES 6,075
TOTAL CONVERTIBLE BONDS
(Cost $386,436) 436,322
COMMON STOCKS - 22.4%
SHARES
AEROSPACE & DEFENSE - 0.6%
Alliant Techsystems, Inc. (a) 100,000 6,450
Orbital Sciences Corp. (a) 3,100 127
6,577
BASIC INDUSTRIES - 0.8%
CHEMICALS & PLASTICS - 0.6%
Hanna Co. 82,800 1,661
Ivex Packaging Corp. 166,000 3,849
Sealed Air Corp. (a) 26,800 1,434
6,944
IRON & STEEL - 0.0%
Carpenter Technology Corp. 3,400 180
PACKAGING & CONTAINERS - 0.2%
Tupperware Corp. 80,000 2,160
TOTAL BASIC INDUSTRIES 9,284
CONSTRUCTION & REAL ESTATE - 0.5%
BUILDING MATERIALS - 0.5%
Owens-Corning 105,300 3,949
Southdown, Inc. 20,000 1,313
5,262
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 2.8%
AUTOS, TIRES, & ACCESSORIES - 1.0%
Breed Technologies, Inc. 15,400 $ 294
Federal-Mogul Corp. 177,200 10,488
10,782
CONSUMER ELECTRONICS - 0.2%
Sunbeam-Oster, Inc. 100,000 2,294
HOME FURNISHINGS - 0.3%
Furniture Brands International, Inc. (a) 112,600 3,322
TEXTILES & APPAREL - 1.3%
Fruit of the Loom, Inc. Class A (a) 402,600 14,468
TOTAL DURABLES 30,866
ENERGY - 0.9%
OIL & GAS - 0.9%
Amerada Hess Corp. 23,200 1,254
Cooper Cameron Corp. (a) 45,000 2,678
EVI Weatherford, Inc. (a) 75,000 3,792
Tosco Corp. 75,500 2,397
10,121
FINANCE - 1.8%
BANKS - 1.6%
Banc One Corp. 129,141 7,119
Comerica, Inc. 103,500 6,805
Credit Suisse Group (Reg.) 19,000 4,173
18,097
CREDIT & OTHER FINANCE - 0.2%
Associates First Capital Corp. 21,800 1,631
Heller Financial, Inc. Class A 4,000 112
1,743
TOTAL FINANCE 19,840
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 1.1%
MEDICAL EQUIPMENT & SUPPLIES - 0.4%
Arterial Vascular Engineering, Inc. (a) 13,500 $ 417
ESC Medical Systems Ltd. 50,000 1,394
Steris Corp. 30,000 1,875
Sybron International Corp. (a) 50,000 1,197
4,883
MEDICAL FACILITIES MANAGEMENT - 0.7%
Foundation Health Systems, Inc. Class A (a) 160,900 4,898
PacifiCare Health Systems, Inc. Class A 39,100 3,152
8,050
TOTAL HEALTH 12,933
HOLDING COMPANIES - 0.0%
Triarc Companies, Inc. Class A 33,400 814
INDUSTRIAL MACHINERY & EQUIPMENT - 2.2%
ELECTRICAL EQUIPMENT - 1.9%
Alcatel Alsthom Compagnie Generale d'Electricite
SA sponsored ADR 404,200 17,482
Alcatel Alsthom Compagnie Generale d'Electricite SA (RFD) 17,000
3,553
L-3 Communications Holdings, Inc. 500 14
21,049
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
Kaydon Corp. 36,600 1,443
Mettler-Toledo International, Inc. 119,400 2,269
3,712
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 24,761
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.2%
TCA Cable TV, Inc. 32,400 1,974
PRECIOUS METALS - 0.2%
Centaur Mining & Exploration Ltd. (a) 4,814,500 2,280
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - 1.0%
APPAREL STORES - 0.7%
AnnTaylor Stores Corp. (a) 270,500 $ 5,900
Baker (J.), Inc. 181,600 2,202
8,102
DRUG STORES - 0.0%
CVS Corp. 2,200 154
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
Best Buy Co., Inc. (a) 101,400 3,308
TOTAL RETAIL & WHOLESALE 11,564
SERVICES - 0.0%
Bright Horizons, Inc. 1,400 35
TECHNOLOGY - 7.5%
COMPUTER SERVICES & SOFTWARE - 1.9%
BEA Systems, Inc. 103,200 2,070
CompUSA, Inc. (a) 369,100 5,813
Learning Co., Inc. (The) (a) 210,000 5,985
Microsoft Corp. 35,000 2,968
New Dimension Software Ltd. (a) 33,800 946
Synopsys, Inc. 80,000 3,435
21,217
COMPUTERS & OFFICE EQUIPMENT - 4.4%
Apple Computer, Inc. (a) 274,900 7,319
CHS Electronics, Inc. (a) 425,500 8,457
Quantum Corp. (a) 657,245 14,377
Sequent Computer Systems, Inc. 23,100 383
Unisys Corp. (a) 734,545 17,996
Wang Laboratories, Inc. warrants 7/2/01 (a) 65,000 512
49,044
ELECTRONIC INSTRUMENTS - 0.2%
Credence Systems Corp. (a) 110,000 2,310
ELECTRONICS - 1.0%
Micron Technology, Inc. (a) 153,600 3,619
World Access, Inc. (a) 239,300 7,508
11,127
TOTAL TECHNOLOGY 83,698
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0
Florida West Airlines, Inc. (a) 18,236 $ -
UTILITIES - 2.8%
CELLULAR - 0.3%
SkyTel Communications, Inc. 134,300 3,039
ELECTRIC UTILITY - 0.0%
KTI, Inc. (a) 10,000 225
PG&E Corp. 3,900 123
348
TELEPHONE SERVICES - 2.5%
Cam-Net Communications Network, Inc. (a)(e) 875,935 -
Comsat Corp., Series 1 52,200 1,820
E Spire Communications, Inc. (a) 100,000 1,613
Global Telesystems Group, Inc. (a) 99,700 3,820
IXC Communications, Inc. 66,500 2,899
LCI International, Inc. (a) 52,200 1,954
U.S. LEC Corp. Class A 6,700 153
WorldCom, Inc. 343,929 15,649
27,908
TOTAL UTILITIES 31,295
TOTAL COMMON STOCKS
(Cost $228,528) 251,304
CONVERTIBLE PREFERRED STOCKS - 35.7%
AEROSPACE & DEFENSE - 0.2%
British Aerospace PLC 7 3/4% 599,500 2,644
BASIC INDUSTRIES - 1.1%
PACKAGING & CONTAINERS - 1.1%
Owens Illinois, Inc. $2.38 233,000 12,233
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - 1.2%
REAL ESTATE INVESTMENT TRUSTS - 1.2%
Crescent Real Estate Equities Co. $1.6875 180,000 $ 4,455
Glenborough Realty Trust, Inc. $1.93 Class A 200,000 5,025
Vornado Realty Trust, Series A, $3.25 75,200 4,211
13,691
ENERGY - 2.4%
OIL & GAS - 2.4%
Chesapeake Energy Corp. $3.50 (a)(d) 46,000 2,151
EVI, Inc. $2.50 (d) 30,000 1,403
Tosco Financing Trust $2.875 TOPRS (d) 409,000 23,312
26,866
FINANCE - 12.2%
CLOSED END INVESTMENT COMPANY - 0.8%
Readers Digest Association $1.93 TRACES 340,000 9,265
CREDIT & OTHER FINANCE - 8.4%
BTI Capital Trust $3.25 (d) 130,000 6,305
CellNet Funding LLC $1.75 555,000 13,528
Dollar General Corp. $3.35 STRYPES 330,000 12,767
Federal-Mogul Financing Trust $3.50 (d) 465,000 31,155
Life Re Corp./Life Re Capital Trust II $3.96 70,000 5,128
Nextel Strypes Trust $1.05 STRYPES 554,900 12,069
Suiza Capital Trust II $2.75 TIPES (d) 185,000 8,926
Union Pacific Capital Trust $3.13 TIDES (d) 100,000 4,963
94,841
INSURANCE - 0.3%
Philadelphia Consolidated Holding Corp.
$0.70 Income PRIDES 323,000 3,472
SAVINGS & LOANS - 1.8%
Ahmanson (H.F.) & Co., Series D, $3.00 84,800 13,292
Golden State Bancorp, Inc., Series A 71,800 6,570
19,862
SECURITIES INDUSTRY - 0.9%
Merrill Lynch & Co, Inc. $2.3906 STRYPES 105,000 3,557
Salomon, Inc. $3.484 DECS 106,100 6,445
10,002
TOTAL FINANCE 137,442
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - 3.0%
DRUGS & PHARMACEUTICALS - 0.6%
Alkermes, Inc. $3.25 (d) 140,000 $ 6,878
MEDICAL EQUIPMENT & SUPPLIES - 1.7%
Herbalife International, Inc. $2.0125 DECS 200,000 4,550
McKesson Financing Trust:
$2.50 TOPRS (d) 94,700 10,097
$2.50 40,000 4,265
18,912
MEDICAL FACILITIES MANAGEMENT - 0.7%
PacifiCare Health Systems, Inc. 4% 239,000 7,394
TOTAL HEALTH 33,184
INDUSTRIAL MACHINERY & EQUIPMENT - 1.0%
ELECTRICAL EQUIPMENT - 1.0%
Loral Space & Communications Ltd.:
Series C, $3.00 (d) 135,000 9,517
Series C, $3.00 31,000 2,186
11,703
MEDIA & LEISURE - 1.7%
BROADCASTING - 1.1%
Chancellor Media Corp. $3.50 18,000 2,152
TCI Pacific Communications, Inc. Class A $5.00 52,500 10,343
12,495
ENTERTAINMENT - 0.6%
Premier Parks, Inc. $4.05 PIES 118,400 6,467
TOTAL MEDIA & LEISURE 18,962
NONDURABLES - 0.4%
FOODS - 0.4%
Dole Food Company Inc. $2.7475 ACES 95,000 4,109
RETAIL & WHOLESALE - 1.7%
APPAREL STORES - 1.7%
AnnTaylor Finance Trust $4.25 TOPRS 249,000 15,438
TJX Companies, Inc., Series E, $7.00 7,900 3,871
19,309
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 1.5%
PRINTING - 0.8%
Big Flower Trust I $3.00 QUIPS (d) 137,500 $ 8,602
SERVICES - 0.7%
Cendant Corp. $3.75 Income PRIDES 51,700 1,955
MedPartners, Inc. $1.44 TAPS 480,000 5,670
7,625
TOTAL SERVICES 16,227
TECHNOLOGY - 1.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Intermedia Communications, Inc., Series D, $1.75 (d) 30,000 1,508
COMPUTERS & OFFICE EQUIPMENT - 1.0%
Wang Laboratories, Inc. $3.25 206,600 10,872
TOTAL TECHNOLOGY 12,380
TRANSPORTATION - 0.3%
TRUCKING & FREIGHT - 0.3%
CNF Trust I $2.50 TECONS 60,000 3,645
UTILITIES - 7.9%
CELLULAR - 0.8%
SkyTel Communications, Inc. $2.25 150,000 5,063
AirTouch Communications, Inc. Class C $2.125 50,000 3,481
8,544
ELECTRIC UTILITY - 2.8%
Houston Industries, Inc. $3.215 ACES 329,800 22,962
KTI, Inc., Series B, $2.1875 (d) 178,800 8,873
31,835
GAS - 0.1%
Enron Corp., Series J, $10.50 1,100 753
TELEPHONE SERVICES - 4.2%
IXC Communications, Inc. $3.375 (d) 151,377 6,935
Enhance Financial Services Group, Inc. $7.625 DECS 244,000 13,496
US West, Inc., Series D, $2.25 157,000 12,089
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
WinStar Communications, Inc.:
Series A, $1.50 75,000 $ 3,094
Series D, $3.50 (a)(d) 220,000 11,165
46,779
TOTAL UTILITIES 87,911
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $355,061) 400,306
CASH EQUIVALENTS - 3.0%
Taxable Central Cash Fund (b) 31,856,001 31,856
MATURITY
AMOUNT (000S)
Investments in repurchase agreements
(U.S. Treasury obligations) in a joint
trading account at 5.55%, dated
5/29/98 due 6/1/98 $ 2,458 2,457
TOTAL CASH EQUIVALENTS
(Cost $34,313) 34,313
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,004,338) $ 1,122,245
SECURITY TYPE ABBREVIATIONS
ACES - Automatic Common Exchange Securities
DECS - Dividend Enhanced Convertible Stock/Debt Exchangeable for
Common Stock
PIES - Premium Income Equity Securities
PRIDES - Preferred Redeemable Increased Dividend Equity Securities
QUIPS - Quarterly Income Preferred Securities
STRYPES - Structured Yield Product
Exchangeable for Common Stock
TAPS - Threshold Appreciation
Price Securities
TRACES - Trust Automatic Common Exchange Securities
TECONS - Term Convertible Shares
TIDES - Term Income Deferred Equity Securities
TIPES - Trust Convertible Preferred Securities
TOPRS - Trust Originated Preferred
Securities
CURRENCY ABBREVIATIONS
JPY - Japanese yen
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.56%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(d) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to
$346,050,000 or 31.4% of net assets.
(e) Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
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
(f) Non-income producing - issuer filed for protection under Federal
Bankruptcy Code or is in default of interest payment.
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 0.8% AAA, AA, A 0.2%
Baa 4.6% BBB 6.5%
Ba 8.0% BB 6.4%
B 5.5% B 10.7%
Caa 2.0% CCC 5.7%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 9.2%. FMR has
determined that unrated debt securities that are lower quality account
for 9.2% of the total value of investment in securities.
INCOME TAX INFORMATION
At May 31,1998, the aggregate cost of investment securities for income
tax purposes was $1,006,408,000. Net unrealized appreciation
aggregated $115,837,000, of which $116,092,000 related to appreciated
investment securities and $255,000 related to depreciated investment
securities.
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) MAY 31, 1998 (UNAUDITED)

ASSETS

INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 1,122,245
AGREEMENTS OF $2,457) (COST $1,004,338) -
SEE ACCOMPANYING SCHEDULE

FOREIGN CURRENCY HELD AT VALUE (COST $61) 61

RECEIVABLE FOR INVESTMENTS SOLD 46,343

RECEIVABLE FOR FUND SHARES SOLD 1,641

DIVIDENDS RECEIVABLE 1,160

INTEREST RECEIVABLE 4,435

OTHER RECEIVABLES 397

TOTAL ASSETS 1,176,282

LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED $ 30,245

PAYABLE FOR FUND SHARES REDEEMED 12,962

ACCRUED MANAGEMENT FEE 492

OTHER PAYABLES AND ACCRUED EXPENSES 342

COLLATERAL ON SECURITIES LOANED, AT VALUE 30,897

TOTAL LIABILITIES 74,938

NET ASSETS $ 1,101,344

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 905,171

UNDISTRIBUTED NET INVESTMENT INCOME 4,673

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 73,589
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 117,911
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

NET ASSETS, FOR 55,512 SHARES OUTSTANDING $ 1,101,344

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $19.84
PER SHARE ($1,101,344 (DIVIDED BY) 55,512 SHARES)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED)

INVESTMENT INCOME $ 8,855
DIVIDENDS

INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $126) 10,933

TOTAL INCOME 19,788

EXPENSES

MANAGEMENT FEE $ 2,610
BASIC FEE

PERFORMANCE ADJUSTMENT (222)

TRANSFER AGENT FEES 1,029

ACCOUNTING AND SECURITY LENDING FEES 241

NON-INTERESTED TRUSTEES' COMPENSATION 3

CUSTODIAN FEES AND EXPENSES 14

REGISTRATION FEES 49

AUDIT 26

LEGAL 4

INTEREST 4

MISCELLANEOUS 3

TOTAL EXPENSES BEFORE REDUCTIONS 3,761

EXPENSE REDUCTIONS (67) 3,694

NET INVESTMENT INCOME 16,094

REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:

INVESTMENT SECURITIES 82,744

FOREIGN CURRENCY TRANSACTIONS (131) 82,613

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:

INVESTMENT SECURITIES 39,885

ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 4 39,889

NET GAIN (LOSS) 122,502

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 138,596
FROM OPERATIONS

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30,
(UNAUDITED) 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 16,094 $ 37,422
NET INVESTMENT INCOME

NET REALIZED GAIN (LOSS) 82,613 112,126

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 39,889 (3,229)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 138,596 146,319
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS (16,058) (47,359)
FROM NET INVESTMENT INCOME

FROM NET REALIZED GAIN (95,599) (49,453)

TOTAL DISTRIBUTIONS (111,657) (96,812)

SHARE TRANSACTIONS 226,184 457,041
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS 105,095 88,795

COST OF SHARES REDEEMED (286,332) (713,412)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 44,947 (167,576)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 71,886 (118,069)

NET ASSETS

BEGINNING OF PERIOD 1,029,458 1,147,527

END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 1,101,344 $ 1,029,458
INCOME OF $4,673 AND $8,396, RESPECTIVELY)

OTHER INFORMATION
SHARES

SOLD 11,761 24,408

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 6,190 5,058

REDEEMED (15,045) (38,427)

NET INCREASE (DECREASE) 2,906 (8,961)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED NOVEMBER 30,
MAY 31, 1998

(UNAUDITED) 1997 1996 1995 1994 1993
SELECTED PER-SHARE DATA

NET ASSET VALUE, $ 19.57 $ 18.64 $ 17.66 $ 15.63 $ 17.63 $ 15.77
BEGINNING OF PERIOD

INCOME FROM INVESTMENT
OPERATIONS

NET INVESTMENT .29 D .64 D .83 .79 .78 .75
INCOME

NET REALIZED AND 2.12 1.90 1.79 1.94 (.86) 2.24
UNREALIZED GAIN
(LOSS)

TOTAL FROM INVESTMENT 2.41 2.54 2.62 2.73 (.08) 2.99
OPERATIONS

LESS DISTRIBUTIONS

FROM NET INVESTMENT (.30) (.80) (.74) (.70) (.91) (.73)
INCOME

FROM NET REALIZED (1.84) (.81) (.90) - (1.01) (.40)
GAIN

TOTAL DISTRIBUTIONS (2.14) (1.61) (1.64) (.70) (1.92) (1.13)

NET ASSET VALUE, $ 19.84 $ 19.57 $ 18.64 $ 17.66 $ 15.63 $ 17.63
END OF PERIOD

TOTAL RETURN B, C 14.31% 14.84% 16.02% 18.00% (.54)% 19.94%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF $ 1,101 $ 1,029 $ 1,148 $ 1,049 $ 903 $ 1,056
PERIOD (IN MILLIONS)

RATIO OF EXPENSES TO .72% A .74% .85% .70% .86% .92%
AVERAGE NET ASSETS

RATIO OF EXPENSES TO .71% A, E .73% E .83% E .70% .85% E .92%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS

RATIO OF NET INVESTMENT 3.08% A 3.46% 4.48% 4.59% 4.61% 4.62%
INCOME TO AVERAGE
NET ASSETS

PORTFOLIO TURNOVER RATE 282% A 212% 175% 203% 318% 312%

AVERAGE COMMISSION $ .0354 $ .0447 $ .0436
RATE F

</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 7 OF NOTES TO FINANCIAL
STATEMENTS).
D NET INVESTMENT INCOME PER SHARE HAS
BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD.
E 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 7 OF NOTES TO FINANCIAL
STATEMENTS).
F 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, 1998 (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 require 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contract, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the funds
are informed of the ex-dividend date.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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 trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned among the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for foreign currency transactions, market discount 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.
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 Account, at a bank custodian. The securities are
marked-to-market daily and maintained
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
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 Fidelity Investments Money Management, Inc.,
(formerly FMR Texas, Inc.) 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 earned
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 $0 or 0.0% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,436,784,000 and $1,439,574,000, 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. 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. The basic fee
is subject to a performance adjustment (up to a maximum of
(plus/minus).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 .46% of average
net assets after the performance adjustment.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security lending program. The
security lending fee is based on the number and duration of lending
transactions. The accounting fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $53,000 for the
period.
5. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund
negotiated lenders' fees. These fees are included in interest income.
The fund receives U.S. Treasury obligations and/or cash as collateral
against the loaned securities, in an amount at least equal to 102% of
the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan.
At period end, the value of the securities loaned and the value of
collateral amounted to $29,366,000 and $30,897,000, respectively.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balances during the period for which loans were outstanding amounted
to $7,271,000 and $5,748,000, respectively. The weighted average
interest rate was 5.81%.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $59,000 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 $4,000 and $4,000, respectively, under these arrangements.
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
Robert C. Pozen, Senior Vice President
Richard A. Spillane, Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
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 *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
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
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 (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE

(2_FIDELITY_LOGOS)FIDELITY

EQUITY-INCOME II
FUND
SEMIANNUAL REPORT
MAY 31, 1998
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 20 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 24 NOTES TO THE FINANCIAL STATEMENTS.

FIDELITY EQUITY-INCOME II 15.61% 28.75% 137.82% 379.22%

S&P 500 (REGISTERED TRADEMARK) 15.06% 30.69% 172.18% 315.85%

EQUITY INCOME FUNDS AVERAGE 11.02% 24.65% 125.73% N/A

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on 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 221 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, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

FIDELITY EQUITY-INCOME II 28.75% 18.92% 22.31%

S&P 500 30.69% 22.17% 20.10%

EQUITY INCOME FUNDS AVERAGE 24.65% 17.56% N/A

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 LIFE OF FUND
Equity-Income II S&P 500
00319 SP001
1990/08/21 10000.00 10000.00
1990/08/31 10090.00 10035.72
1990/09/30 9790.00 9546.98
1990/10/31 9790.00 9505.93
1990/11/30 10180.00 10120.01
1990/12/31 10451.06 10402.36
1991/01/31 10954.00 10855.90
1991/02/28 11929.70 11632.10
1991/03/31 12424.99 11913.60
1991/04/30 12770.41 11942.19
1991/05/31 13420.62 12458.09
1991/06/30 13105.67 11887.51
1991/07/31 13833.74 12441.47
1991/08/31 14361.43 12736.33
1991/09/30 14456.53 12523.64
1991/10/31 14904.71 12691.45
1991/11/30 14456.53 12179.99
1991/12/31 15320.99 13573.38
1992/01/31 15754.68 13320.91
1992/02/29 16262.56 13494.08
1992/03/31 16199.86 13230.95
1992/04/30 16550.87 13619.94
1992/05/31 16731.70 13686.68
1992/06/30 16626.27 13482.75
1992/07/31 17139.50 14034.19
1992/08/31 16786.65 13746.49
1992/09/30 17001.04 13908.70
1992/10/31 17140.75 13957.38
1992/11/30 17807.03 14433.32
1992/12/31 18240.51 14610.85
1993/01/31 18739.36 14733.59
1993/02/28 19071.82 14933.96
1993/03/31 19793.85 15249.07
1993/04/30 19849.55 14880.04
1993/05/31 20150.30 15278.83
1993/06/30 20341.51 15323.14
1993/07/31 20543.02 15261.84
1993/08/31 21214.73 15840.27
1993/09/30 21136.47 15718.30
1993/10/31 21530.18 16043.67
1993/11/30 21203.96 15891.25
1993/12/31 21685.43 16083.53
1994/01/31 22723.07 16630.37
1994/02/28 22286.55 16179.69
1994/03/31 21374.40 15474.26
1994/04/30 21955.29 15672.33
1994/05/31 22216.10 15929.35
1994/06/30 22047.50 15539.08
1994/07/31 22643.38 16048.77
1994/08/31 23418.02 16706.77
1994/09/30 22879.58 16297.45
1994/10/31 23274.88 16664.14
1994/11/30 22244.70 16057.23
1994/12/31 22370.95 16295.36
1995/01/31 22345.60 16717.90
1995/02/28 23154.03 17369.40
1995/03/31 23916.45 17881.97
1995/04/30 24475.31 18408.59
1995/05/31 25046.86 19144.39
1995/06/30 25390.89 19589.11
1995/07/31 26386.61 20238.68
1995/08/31 26527.03 20289.48
1995/09/30 27125.59 21145.70
1995/10/31 26317.59 21070.21
1995/11/30 27612.95 21995.19
1995/12/31 28274.79 22418.82
1996/01/31 29056.25 23181.96
1996/02/29 29427.41 23396.85
1996/03/31 30226.90 23622.16
1996/04/30 30706.27 23970.35
1996/05/31 30999.21 24588.55
1996/06/30 30759.08 24682.23
1996/07/31 29714.58 23591.77
1996/08/31 30397.52 24089.32
1996/09/30 31443.22 25445.07
1996/10/31 32022.26 26146.84
1996/11/30 33894.04 28123.28
1996/12/31 33564.33 27566.16
1997/01/31 34714.35 29288.50
1997/02/28 35041.04 29518.12
1997/03/31 33624.26 28305.22
1997/04/30 35208.43 29995.04
1997/05/31 37220.75 31821.14
1997/06/30 38981.23 33246.72
1997/07/31 41547.49 35892.17
1997/08/31 39153.27 33881.49
1997/09/30 41322.15 35737.18
1997/10/31 40012.85 34543.55
1997/11/30 41451.65 36142.58
1997/12/31 42684.77 36763.14
1998/01/31 42875.18 37169.74
1998/02/28 45524.77 39850.43
1998/03/31 48002.14 41891.17
1998/04/30 48114.83 42312.59
1998/05/29 47921.66 41585.24
IMATRL PRASUN SHR__CHT 19980531 19980605 150407 R00000000000097
$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, 1998, the value of
the investment would have grown to $47,922 - a 379.22% increase on the
initial investment. For comparison, look at how the Standard & Poor's
500 Index did over the same period. With dividends and capital gains,
if any, reinvested, the same $10,000 would have grown to $41,585 - a
315.85% 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

MARKET RECAP
Although renewed concerns about
economic difficulties in Asia late
in the period tempered the rapid
growth of U.S. equity markets, the
Standard & Poor's 500 Index - a
measure of the U.S. stock market
- - still managed to return 15.06%
during the six months that ended
May 31, 1998. As feared, some
U.S. corporations with business
exposure to Asia did report
disappointing earnings and their
stocks were harshly punished.
However, investors seemed to
adopt a new attitude - one that
overlooked short-term troubles
and focused on longer-term
growth - helping many of these
stocks to rebound quickly. In
addition, the continued strength of
the U.S. economy, combined with
low interest rates and low inflation,
seemed to buoy the stock market
for much of the period. The
upward climb of the stock market
stagnated in mid- and late May
when investors were inundated
with worrisome news about the
stability of Asian markets.
Specifically, the president of
Indonesia resigned amidst civil
strife and a battle over nuclear
testing erupted between Pakistan
and India. Concerns about falling
demand for U.S. exports
particularly hurt technology
companies, especially during the
intensified investigation of
Microsoft by the Justice
Department in May. As a result of
concerns about these tumultuous
events and their potential impact
on the U.S. economy, the Dow
Jones Industrial Average produced
a negative return in May for the first
time in 1998 - although the Dow
was still up 13.29% for the first five
months of 1998.
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, 1998, the fund's total return
was 15.61%. By comparison, the equity income funds average tracked by
Lipper Analytical Services returned 11.02% and the Standard & Poor's
500 Index returned 15.06% during the same period. For the 12 months
that ended May 31, 1998, the fund returned 28.75%, while the Lipper
peer group returned 24.65% and the S&P 500 returned 30.69%.
Q. WHY DID THE FUND OUTPACE BOTH THE LIPPER PEER GROUP AND THE S&P 500
DURING THE SIX-MONTH PERIOD?
A. The fund's performance was attributable both to good stock
selection and industry allocation. Specifically, many of the fund's
larger holdings performed well - notably Unilever, American Home
Products and Wal-Mart. In addition, the fund's performance was boosted
by its overweighted positions - relative to the Lipper group or the
S&P 500 - in a few top-performing industry groups, including
pharmaceuticals and finance.
Q. WHAT ATTRACTED YOU TO PHARMACEUTICAL STOCKS?
A. Favorable demographic trends, strong product pipelines,
international expansion opportunities and superior returns contributed
to the generally attractive business prospects of the
larger-capitalization pharmaceutical companies. Excitement on the
product side and hopes for industry consolidation drove this sector's
outperformance during the period. Of note, the fund held a large
position in American Home Products, which was the subject of merger
discussions with SmithKline Beecham in early 1998 - causing its stock
to soar. Although these negotiations fell apart, American Home
Products' shares did not give up much ground. Participating in the
drug group's rally, Schering-Plough was another positive contributor.
Q. WHAT ABOUT FINANCIALS? WHAT WAS THEIR DRAW?
A. Broadly, the finance sector remained the largest portion of the
fund's investments because I was continually attracted to the
individual investment stories offered there - a combination of strong
business fundamentals, earnings-growth prospects and relatively cheap
valuations. The environment for financial services companies remained
positive during the period, characterized by low inflation, a
favorable interest-rate backdrop, robust capital markets and improving
demographics as Baby Boomers focused on saving for retirement. Looking
at specific holdings within the finance sector, Citicorp was a
positive contributor since a merger with Travelers was announced -
raising investors' appreciation of its global franchise - and as
investor concerns about the Asian crisis eased. Chase Manhattan also
performed well because the company's management team emphasized cost
and capital discipline as a means of enhancing returns and shareholder
value.
Q. LET'S TALK SOME MORE ABOUT THE INDIVIDUAL STOCKS THAT HELPED
PERFORMANCE . . .
A. As I mentioned earlier, Unilever and Wal-Mart helped the fund's
performance. For Unilever, a consumer nondurables company, its
restructuring continued to bear fruit, resulting in sales-growth
acceleration and operating-margin expansion. Wal-Mart enjoyed a
terrific productivity loop - meaning better business execution drove
accelerated sales, which in turn improved operating efficiency and so
on. Tyco International was another large holding that performed well
recently. Through a series of acquisitions, Tyco's management team has
successfully transformed the company so that its sustainable growth
rate has risen and its economic sensitivity has been reduced.
Q. WHICH STOCKS DETRACTED FROM PERFORMANCE?
A. Tobacco stocks - particularly Philip Morris - performed poorly as
litigation against the companies intensified and Congress squeezed
them for larger settlements. British Petroleum suffered from the
declining price of oil caused by the Asian crisis. In addition, Union
Pacific's stock slipped as the company faced integration problems
related to its Santa Fe acquisition.
Q. WHAT'S YOUR OUTLOOK?
A. Although the stock market has already had a terrific run, I'm still
relatively optimistic about the opportunity to find good companies
that are well-positioned through new products, mergers, globalization
or restructuring efforts. Many market observers say that corporate
earnings growth is slowing, but I think strong individual stories
still exist. With continuing uncertainty in the emerging markets, the
U.S. market could be bolstered as investors seek a safe haven.
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.

BETTINA DOULTON ON THE RECENT
MERGER MANIA IN THE
MARKET:
"The merger and acquisition
activity that we have seen so far in
1998 is nothing less than
spectacular, both in its pace and
the size of the deals. Nearly every
industry seems to be consolidating.
Daimler-Benz and Chrysler are
merging in the auto industry; SBC
Communications and Ameritech in
the telecommunications industry;
and American Home Products and
Monsanto in the
pharmaceuticals/life sciences
group. In the finance sector,
several large mergers have been
announced, including BankOne and
First Chicago, Nationsbank and
BankAmerica, and Travelers and
Citicorp.
"While the strategic rationales vary
deal by deal, geographic expansion
and globalization, franchise
strengthening, scale advantages or
slowing stand-alone growth rates
appear to be at the heart of most
mergers or acquisitions.
"The implication of these
mega-mergers should not be
underestimated. First, the
competitive landscape of several
industries could be altered.
Second, the character of the S&P
500 may be altered as combinations
of already-large companies
consolidate and thus become a
larger percentage of the index."
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, 1998,
more than $18.4 billion
MANAGER: Bettina Doulton,
since 1996; manager, Fidelity
Puritan Fund, since 1996;
joined Fidelity in 1986
(checkmark)
INVESTMENT CHANGES

TOP TEN STOCKS AS OF MAY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO

CITICORP 4.8 3.9

GENERAL ELECTRIC CO. 4.5 4.3

AMERICAN EXPRESS CO. 3.4 3.8

AMERICAN HOME PRODUCTS CORP. 3.3 2.4

BRISTOL-MYERS SQUIBB CO. 2.4 3.0

TIME WARNER, INC. 2.1 1.1

UNILEVER NV (NY SHARES) 2.1 1.6

MERCK & CO., INC. 2.1 0.5

AT&T CORP. 2.0 0.8

BRITISH PETROLEUM PLC ADR 2.0 2.2

TOP FIVE MARKET SECTORS AS OF MAY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO

FINANCE 27.3 25.9

HEALTH 11.0 11.0

ENERGY 9.7 10.0

INDUSTRIAL MACHINERY & EQUIPMENT 8.7 7.9

NONDURABLES 8.3 10.9

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF MAY 31, 1998 * AS OF NOVEMBER 30, 1997 **
ROW: 1, COL: 1, VALUE: 2.9
ROW: 1, COL: 2, VALUE: 2.3
ROW: 1, COL: 3, VALUE: 1.3
ROW: 1, COL: 4, VALUE: 94.0
STOCKS 90.8%
BONDS 0.4%
CONVERTIBLE
SECURITIES 1.5%
SHORT-TERM
INVESTMENTS 7.3%
FOREIGN
INVESTMENTS 9.6%
STOCKS 96.0%
BONDS 0.2%
CONVERTIBLE
SECURITIES 1.4%
SHORT-TERM
INVESTMENTS 2.4%
FOREIGN
INVESTMENTS 8.7%
ROW: 1, COL: 1, VALUE: 6.3
ROW: 1, COL: 2, VALUE: 2.5
ROW: 1, COL: 3, VALUE: 1.5
ROW: 1, COL: 4, VALUE: 89.8
*
**
INVESTMENTS MAY 31, 1998 (UNAUDITED)

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

COMMON STOCKS - 96.0%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 3.5%
AEROSPACE & DEFENSE - 2.9%
AlliedSignal, Inc. 3,847,000 $ 164,459
Gulfstream Aerospace Corp. (a) 1,182,000 50,235
Lockheed Martin Corp. 1,915,054 214,965
Textron, Inc. 888,600 65,923
United Technologies Corp. 437,200 41,097
536,679
DEFENSE ELECTRONICS - 0.6%
Raytheon Co.:
Class A 310,100 16,532
Class B 1,710,500 93,543
110,075
SHIP BUILDING & REPAIR - 0.0%
General Dynamics Corp. 68,800 3,057
TOTAL AEROSPACE & DEFENSE 649,811
BASIC INDUSTRIES - 1.4%
CHEMICALS & PLASTICS - 0.7%
Air Products & Chemicals, Inc. 166,100 14,451
du Pont (E.I.) de Nemours & Co. 877,900 67,598
IMC Global, Inc. 58,400 1,898
Monsanto Co. 543,900 30,118
Union Carbide Corp. 118,900 5,938
120,003
METALS & MINING - 0.4%
Aluminum Co. of America 1,008,700 69,978
PAPER & FOREST PRODUCTS - 0.3%
Georgia-Pacific Corp. 81,200 5,212
Kimberly-Clark Corp. 1,188,900 58,925
64,137
TOTAL BASIC INDUSTRIES 254,118
CONSTRUCTION & REAL ESTATE - 1.5%
BUILDING MATERIALS - 0.9%
Masco Corp. 2,792,400 157,072
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Apartment Investment & Management Co. Class A 77,900 $ 3,038
Boston Properties, Inc. 106,400 3,617
Equity Office Properties Trust 1,116,683 30,709
Equity Residential Properties Trust (SBI) 487,300 23,847
Mack-Cali Realty Corp. 108,600 3,910
Patriot American Hospitality, Inc. 600,009 14,363
Public Storage, Inc. 73,500 2,205
Simon Debartolo Group, Inc. 171,200 5,714
Starwood Hotels & Resorts 618,000 29,162
116,565
TOTAL CONSTRUCTION & REAL ESTATE 273,637
DURABLES - 1.3%
AUTOS, TIRES, & ACCESSORIES - 1.1%
Ford Motor Co. 3,234,100 167,769
General Motors Corp. 33,900 2,438
Goodyear Tire & Rubber Co. 501,700 36,060
206,267
CONSUMER DURABLES - 0.2%
Minnesota Mining & Manufacturing Co. 466,600 43,219
TOTAL DURABLES 249,486
ENERGY - 9.7%
OIL & GAS - 9.7%
Amoco Corp. 1,632,900 68,276
Atlantic Richfield Co. 957,200 75,499
British Petroleum PLC:
Ord. 2 -
ADR 4,187,961 371,158
Burlington Resources, Inc. 1,513,600 63,761
Chevron Corp. 1,061,400 84,779
Coastal Corp. (The) 888,100 62,611
Exxon Corp. 2,370,200 167,099
Mobil Corp. 435,900 34,000
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Occidental Petroleum Corp. 224,000 $ 6,188
Royal Dutch Petroleum Co. 4,586,500 257,131
Texaco, Inc. 3,473,500 200,595
Total SA Class B 2,067,649 256,471
USX-Marathon Group 4,032,400 141,134
1,788,702
FINANCE - 27.1%
BANKS - 12.7%
Banc One Corp. 3,469,710 191,268
Bank of New York Co., Inc. 5,784,928 353,604
BankBoston Corp. 793,300 83,594
BankAmerica Corp. 2,347,700 194,125
Chase Manhattan Corp. 2,575,200 350,066
Citicorp 5,947,800 886,966
Credit Suisse Group 300,000 65,887
NationsBank Corp. 783,000 59,312
U.S. Bancorp 2,712,300 106,119
Wells Fargo & Co. 169,300 61,202
2,352,143
CREDIT & OTHER FINANCE - 5.3%
American Express Co. 6,156,212 631,782
Associates First Capital Corp. 1,803,231 134,904
Beneficial Corp. 477,700 64,012
First Chicago NBD Corp. 565,000 49,402
Household International, Inc. 740,900 100,253
980,353
FEDERAL SPONSORED CREDIT - 2.6%
Freddie Mac 3,428,500 155,997
Fannie Mae 5,353,300 320,529
476,526
INSURANCE - 4.4%
Allstate Corp. 2,718,400 255,869
American International Group, Inc. 713,900 88,390
Hartford Financial Services Group, Inc. 1,878,600 206,764
MBIA, Inc. 1,902,500 141,855
MGIC Investment Corp. 722,000 43,275
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
Progressive Corp. 191,100 $ 26,348
St. Paul Companies, Inc. (The) 1,282,600 56,915
819,416
SAVINGS & LOANS - 0.7%
Washington Mutual, Inc. 1,948,970 137,646
SECURITIES INDUSTRY - 1.4%
Morgan Stanley, Dean Witter, Discover and Co. 1,046,400 81,684
Travelers Group, Inc. (The) 2,923,571 178,338
260,022
TOTAL FINANCE 5,026,106
HEALTH - 10.9%
DRUGS & PHARMACEUTICALS - 8.7%
American Home Products Corp. 12,467,100 602,317
Bristol-Myers Squibb Co. 4,096,100 440,331
Lilly (Eli) & Co. 1,024,400 62,936
Merck & Co., Inc. 3,260,100 381,635
Schering-Plough Corp. 1,529,150 127,971
1,615,190
MEDICAL EQUIPMENT & SUPPLIES - 1.5%
Baxter International, Inc. 2,091,700 119,619
Becton, Dickinson & Co. 138,200 9,778
Johnson & Johnson 2,205,900 152,345
281,742
MEDICAL FACILITIES MANAGEMENT - 0.7%
Columbia/HCA Healthcare Corp. 1,610,000 52,627
Tenet Healthcare Corp. (a) 2,029,300 71,026
123,653
TOTAL HEALTH 2,020,585
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 8.7%
ELECTRICAL EQUIPMENT - 5.7%
Alcatel Alsthom Compagnie Generale d'Electricite
SA sponsored ADR 718,600 $ 31,079
Emerson Electric Co. 1,637,400 99,472
General Electric Co. 9,958,200 830,265
Honeywell, Inc. 1,095,600 91,962
1,052,778
INDUSTRIAL MACHINERY & EQUIPMENT - 2.9%
Cooper Industries, Inc. 1,685,438 108,500
Ingersoll-Rand Co. 1,736,100 78,233
Stanley Works 2,005,300 95,252
Tyco International Ltd. 4,733,338 262,109
544,094
POLLUTION CONTROL - 0.1%
USA Waste Services, Inc. (a) 273,900 12,925
Waste Management, Inc. 106,800 3,471
16,396
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,613,268
MEDIA & LEISURE - 2.9%
BROADCASTING - 2.1%
Time Warner, Inc. 5,074,282 394,843
PUBLISHING - 0.3%
Times Mirror Co. Class A 830,100 53,126
RESTAURANTS - 0.5%
McDonald's Corp. 1,529,400 100,367
TOTAL MEDIA & LEISURE 548,336
NONDURABLES - 8.3%
BEVERAGES - 0.4%
Anheuser-Busch Companies, Inc. 267,800 12,302
PepsiCo, Inc. 1,431,800 58,435
70,737
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
FOODS - 1.7%
Campbell Soup Co. 276,200 $ 15,053
Dean Foods Co. 143,800 7,082
Flowers Industries, Inc. 785,500 16,201
Heinz (H.J.) Co. 1,649,400 87,522
Quaker Oats Co. 251,200 14,491
Ralston Purina Co. 504,300 56,135
Sara Lee Corp. 2,133,200 125,592
322,076
HOUSEHOLD PRODUCTS - 4.3%
Avon Products, Inc. 475,700 38,918
Procter & Gamble Co. 1,972,800 165,592
Unilever PLC 17,288,800 189,574
Unilever NV:
Ord. 200,000 15,870
(NY shares) 4,837,100 381,828
791,782
TOBACCO - 1.9%
Philip Morris Companies, Inc. 9,290,500 347,232
TOTAL NONDURABLES 1,531,827
RETAIL & WHOLESALE - 5.2%
APPAREL STORES - 0.4%
Payless ShoeSource, Inc. (a) 1,024,808 71,800
DRUG STORES - 0.5%
Rite Aid Corp. 2,749,200 98,456
GENERAL MERCHANDISE STORES - 4.3%
Dayton Hudson Corp. 1,436,900 66,636
Federated Department Stores, Inc. (a) 3,881,100 201,090
Nordstrom, Inc. 554,200 39,937
Penney (J.C.) Co., Inc. 2,025,600 145,463
Wal-Mart Stores, Inc. 6,145,500 339,155
792,281
TOTAL RETAIL & WHOLESALE 962,537
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 1.2%
LEASING & RENTAL - 0.4%
Ryder Systems, Inc. 1,931,700 $ 65,799
PRINTING - 0.6%
Donnelley (R.R.) & Sons Co. 2,486,300 111,884
SERVICES - 0.2%
Service Corp. International 444,600 18,173
ServiceMaster Co. 608,800 20,128
38,301
TOTAL SERVICES 215,984
TECHNOLOGY - 5.2%
COMPUTERS & OFFICE EQUIPMENT - 4.0%
Diebold, Inc. 461,800 13,508
International Business Machines Corp. 2,230,300 261,781
Pitney Bowes, Inc. 5,526,800 259,760
Xerox Corp. 2,055,400 211,192
746,241
ELECTRONICS - 0.9%
Intel Corp. 500,000 35,718
Motorola, Inc. 1,693,200 89,634
Texas Instruments, Inc. 819,700 42,112
167,464
PHOTOGRAPHIC EQUIPMENT - 0.3%
Eastman Kodak Co. 634,700 45,302
TOTAL TECHNOLOGY 959,007
TRANSPORTATION - 1.0%
RAILROADS - 1.0%
Burlington Northern Santa Fe Corp. 688,700 68,526
CSX Corp. 1,459,700 69,518
Union Pacific Corp. 1,086,500 52,559
190,603
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 8.1%
ELECTRIC UTILITY - 1.1%
American Electric Power Co., Inc. 682,800 $ 30,982
CMS Energy Corp. 1,632,300 71,107
Duke Energy Corp. 1,364,400 78,624
Entergy Corp. 32,200 847
PG&E Corp. 855,400 26,945
208,505
GAS - 0.1%
Enron Corp. 465,200 23,318
TELEPHONE SERVICES - 6.9%
AT&T Corp. 6,108,500 371,855
ALLTEL Corp. 1,742,400 68,716
Ameritech Corp. 3,236,600 137,353
Bell Atlantic Corp. 3,648 334
BellSouth Corp. 597,000 38,507
Frontier Corp. 554,400 16,875
GTE Corp. 3,004,800 175,217
MCI Communications Corp. 2,132,900 114,044
SBC Communications, Inc. 5,787,500 224,989
Sprint Corp. 727,700 52,212
Tele Danmark AS Class B 372,600 34,821
WorldCom, Inc. (a) 650,000 29,575
1,264,498
TOTAL UTILITIES 1,496,321
TOTAL COMMON STOCKS
(Cost $12,364,131) 17,780,328
CONVERTIBLE PREFERRED STOCKS - 0.2%
FINANCE - 0.2%
CREDIT & OTHER FINANCE - 0.2%
Union Pacific Capital Trust $3.13 TIDES (d)
(Cost $32,325) 644,000 31,959
CORPORATE BONDS - 1.4%
MOODY'S RATINGS (C) PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
CONVERTIBLE BONDS - 1.2%
RETAIL & WHOLESALE - 0.4%
GENERAL MERCHANDISE STORES - 0.4%
Federated Department Stores, Inc.
5%, 10/1/03 Baa3 $ 43,100 $ 66,185
SERVICES - 0.7%
ADT Operations, Inc. liquid yield option notes
0%, 7/6/10 Baa1 87,940 132,341
TECHNOLOGY - 0.1%
COMPUTERS & OFFICE EQUIPMENT - 0.1%
Unisys Corp. 8 1/4%, 3/15/06 B- 4,000 14,720
TOTAL CONVERTIBLE BONDS 213,246
NONCONVERTIBLE BONDS - 0.2%
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
American Standard, Inc. 0%, 6/1/05 (c) B1 15,000 15,694
FINANCE - 0.0%
ASSET BACKED SECURITIES - 0.0%
Airplanes Pass Through Trust Class D
10 7/8%, 3/15/19 Ba2 12,610 13,871
HEALTH - 0.1%
MEDICAL FACILITIES MANAGEMENT - 0.1%
Tenet Healthcare Corp.:
8 5/8%, 12/1/03 Ba1 7,480 7,873
8%, 1/15/05 Ba1 5,560 5,699
8 5/8%, 1/15/07 Ba3 490 502
14,074
TOTAL NONCONVERTIBLE BONDS 43,639
TOTAL CORPORATE BONDS
(Cost $149,386) 256,885
CASH EQUIVALENTS - 2.4%
SHARES VALUE (NOTE 1)
(000S)
Taxable Central Cash Fund (b)
(Cost $450,866) 450,866,158 $ 450,866
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $12,996,708) $ 18,520,038
SECURITY TYPE ABBREVIATIONS
TIDES - Term Income Deferred Equity
Securities
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.56%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Debt obligation initially issued in zero coupon form which
converts to coupon form at a specified rate and date. The rate shown
is the rate at period end.
(d) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to
$31,959,000 or 0.2% of net assets.
(e) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
INCOME TAX INFORMATION
At May 31, 1998, the aggregate cost of investment securities for
income tax purposes was $12,998,690,000. Net unrealized appreciation
aggregated $5,521,348,000 of which $5,646,882,000 related to
appreciated investment securities and $125,534,000 related to
depreciated investment securities.
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) MAY 31, 1998 (UNAUDITED)

ASSETS

INVESTMENT IN SECURITIES, AT VALUE (COST $12,996,708) - $ 18,520,038
SEE ACCOMPANYING SCHEDULE

CASH 420

RECEIVABLE FOR INVESTMENTS SOLD 78,465

RECEIVABLE FOR FUND SHARES SOLD 14,282

DIVIDENDS RECEIVABLE 34,328

INTEREST RECEIVABLE 3,199

OTHER RECEIVABLES 295

TOTAL ASSETS 18,651,027

LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED $ 116,460

PAYABLE FOR FUND SHARES REDEEMED 26,017

ACCRUED MANAGEMENT FEE 7,621

OTHER PAYABLES AND ACCRUED EXPENSES 2,725

TOTAL LIABILITIES 152,823

NET ASSETS $ 18,498,204

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 11,824,097

UNDISTRIBUTED NET INVESTMENT INCOME 47,205

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 1,103,627
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 5,523,275
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

NET ASSETS, FOR 621,424 SHARES OUTSTANDING $ 18,498,204

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $29.77
PER SHARE ($18,498,204 (DIVIDED BY) 621,424 SHARES)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED)

INVESTMENT INCOME $ 156,253
DIVIDENDS

INTEREST 19,657

TOTAL INCOME 175,910

EXPENSES

MANAGEMENT FEE $ 43,715

TRANSFER AGENT FEES 15,390

ACCOUNTING FEES AND EXPENSES 422

NON-INTERESTED TRUSTEES' COMPENSATION 62

CUSTODIAN FEES AND EXPENSES 193

REGISTRATION FEES 85

AUDIT 57

LEGAL 57

INTEREST 6

MISCELLANEOUS 34

TOTAL EXPENSES BEFORE REDUCTIONS 60,021

EXPENSE REDUCTIONS (1,470) 58,551

NET INVESTMENT INCOME 117,359

REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:

INVESTMENT SECURITIES 1,114,303

FOREIGN CURRENCY TRANSACTIONS (2) 1,114,301

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:

INVESTMENT SECURITIES 1,305,934

ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (43) 1,305,891

NET GAIN (LOSS) 2,420,192

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 2,537,551
FROM OPERATIONS

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30,
(UNAUDITED) 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 117,359 $ 251,924
NET INVESTMENT INCOME

NET REALIZED GAIN (LOSS) 1,114,301 1,914,279

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,305,891 1,038,158

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,537,551 3,204,361
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS (95,633) (297,983)
FROM NET INVESTMENT INCOME

FROM NET REALIZED GAIN (1,714,017) (715,007)

TOTAL DISTRIBUTIONS (1,809,650) (1,012,990)

SHARE TRANSACTIONS 1,369,127 2,859,865
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS 1,754,871 980,564

COST OF SHARES REDEEMED (2,004,077) (4,977,444)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,119,921 (1,137,015)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 1,847,822 1,054,356

NET ASSETS

BEGINNING OF PERIOD 16,650,382 15,596,026

END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 18,498,204 $ 16,650,382
INCOME OF $47,205 AND $25,479, RESPECTIVELY)

OTHER INFORMATION
SHARES

SOLD 47,772 110,027

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 66,182 40,102

REDEEMED (70,430) (191,956)

NET INCREASE (DECREASE) 43,524 (41,827)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED NOVEMBER 30,
MAY 31, 1998

(UNAUDITED) 1997 1996 1995 1994 1993
SELECTED PER-SHARE DATA

NET ASSET VALUE, $ 28.81 $ 25.17 $ 21.53 $ 18.57 $ 18.85 $ 16.57
BEGINNING OF PERIOD

INCOME FROM INVESTMENT
OPERATIONS

NET INVESTMENT INCOME .19 D .42 D .48 .42 .37 .44

NET REALIZED AND 3.87 4.87 4.23 3.80 .53 2.62
UNREALIZED GAIN
(LOSS)

TOTAL FROM INVESTMENT 4.06 5.29 4.71 4.22 .90 3.06
OPERATIONS

LESS DISTRIBUTIONS (.16) (.49) (.43) (.40) (.47) (.41)
FROM NET INVESTMENT
INCOME

FROM NET REALIZED (2.94) (1.16) (.64) (.86) (.71) (.37)
GAIN

TOTAL DISTRIBUTIONS (3.10) (1.65) (1.07) (1.26) (1.18) (.78)

NET ASSET VALUE, END $ 29.77 $ 28.81 $ 25.17 $ 21.53 $ 18.57 $ 18.85
OF PERIOD

TOTAL RETURN B, C 15.61% 22.30% 22.75% 24.13% 4.91% 19.08%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF $ 18,498 $ 16,650 $ 15,596 $ 11,553 $ 7,605 $ 4,815
PERIOD (IN MILLIONS)

RATIO OF EXPENSES TO .69% A .70% .73% .76% .83% .89%
AVERAGE NET ASSETS

RATIO OF EXPENSES TO .67% A, E .68% E .72% E .75% E .81% E .88% E
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS

RATIO OF NET INVESTMENT 1.34% A 1.58% 2.13% 2.37% 2.36% 2.69%
INCOME TO AVERAGE
NET ASSETS

PORTFOLIO TURNOVER RATE 59% A 77% 46% 45% 75% 55%

AVERAGE COMMISSION $ .0443 $ .0421 $ .0397
RATE F

</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 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).
F 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, 1998 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Equity-Income II Fund (the fund) is a fund of Fidelity
Financial Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
date and settlement on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Under the Plan, deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of a
cross-section of Fidelity funds, including shares of the fund.
Deferred amounts remain in the fund until distributed in accordance
with the Plan.
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.
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.
2. OPERATING POLICIES - CONTINUED
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 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 Fidelity Investments Money Management, Inc.,
(formerly FMR Texas, Inc.) 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 earned
by the fund are recorded as interest income in the accompanying
financial statements.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by
the SEC, the fund, along with other registered investment companies
having management contracts with FMR, may participate in an interfund
lending program. This program provides an alternative credit facility
allowing the fund to borrow from, or lend money to, other
participating funds.
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).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $5,178,914,000 and $5,007,060,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates 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 .50% 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. 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 .18% 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 $1,027,000 for the
period.
5. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a borrower.
The maximum loan and the average daily loan balance during the period
for which the loan was outstanding amounted to $38,011,000. The
weighted average interest rate was 5.66%.
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 $1,469,000 under this arrangement.
In addition, the fund has entered into an arrangement with its
custodian 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 fees were reduced by $1,000 under
this arrangement.
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 Xpress(registered trademark) provides 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.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.

For quotes.*

For account balances and holdings.

To review orders and mutual
fund activity.

To change your PIN.

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.
(COMPUTER_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
(COMPUTER_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 WRITE FIDELITY

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 500
Merrimack, NH 03054-0500
(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 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY

For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI

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
Robert C. Pozen, Senior Vice President
Bettina E. Doulton, Vice President
Richard A. Spillane, Jr., Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
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 *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* 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
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 (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE

FIDELITY

(REGISTERED TRADEMARK)

RETIREMENT GROWTH
FUND
SEMIANNUAL REPORT
MAY 31, 1998
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 20 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 24 NOTES TO THE FINANCIAL STATEMENTS.

FIDELITY RETIREMENT GROWTH 16.77% 28.64% 113.31% 343.36%

S&P 500 (REGISTERED TRADEMARK) 15.06% 30.69% 172.18% 451.71%

CAPITAL APPRECIATION FUNDS AVERAGE 9.06% 22.75% 110.89% 317.64%

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 247 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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

FIDELITY RETIREMENT GROWTH 28.64% 16.36% 16.06%

S&P 500 30.69% 22.17% 18.62%

CAPITAL APPRECIATION FUNDS AVERAGE 22.75% 15.41% 14.45%

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
Retirement Growth S&P 500
00073 SP001
1988/05/31 10000.00 10000.00
1988/06/30 10519.80 10459.00
1988/07/31 10396.04 10419.26
1988/08/31 10107.26 10065.00
1988/09/30 10412.54 10493.77
1988/10/31 10486.80 10785.50
1988/11/30 10354.79 10631.26
1988/12/31 10332.46 10817.31
1989/01/31 11129.85 11609.14
1989/02/28 10903.22 11320.07
1989/03/31 11188.60 11583.83
1989/04/30 11717.39 12185.03
1989/05/31 11944.02 12678.52
1989/06/30 11776.15 12606.26
1989/07/31 12884.10 13744.60
1989/08/31 13035.18 14013.99
1989/09/30 13228.23 13956.54
1989/10/31 12766.59 13632.75
1989/11/30 13110.72 13910.85
1989/12/31 13474.64 14244.71
1990/01/31 12810.79 13288.89
1990/02/28 12944.70 13460.32
1990/03/31 13051.83 13817.02
1990/04/30 12676.88 13471.59
1990/05/31 13864.22 14785.07
1990/06/30 14176.68 14684.54
1990/07/31 14123.11 14637.54
1990/08/31 12676.88 13314.31
1990/09/30 11328.84 12665.90
1990/10/31 10962.82 12611.44
1990/11/30 11721.65 13426.14
1990/12/31 12106.26 13800.73
1991/01/31 12664.32 14402.44
1991/02/28 13708.43 15432.22
1991/03/31 14068.47 15805.67
1991/04/30 14158.48 15843.61
1991/05/31 14626.52 16528.05
1991/06/30 13690.43 15771.07
1991/07/31 14581.52 16506.00
1991/08/31 15202.59 16897.19
1991/09/30 15391.60 16615.01
1991/10/31 15940.66 16837.65
1991/11/30 15490.62 16159.09
1991/12/31 17624.90 18007.69
1992/01/31 17663.57 17672.75
1992/02/29 17914.94 17902.49
1992/03/31 17363.86 17553.40
1992/04/30 17557.22 18069.47
1992/05/31 17885.94 18158.01
1992/06/30 17228.51 17887.45
1992/07/31 17818.26 18619.05
1992/08/31 17334.86 18237.36
1992/09/30 17537.88 18452.56
1992/10/31 18088.96 18517.14
1992/11/30 19113.78 19148.58
1992/12/31 19492.47 19384.11
1993/01/31 19978.60 19546.93
1993/02/28 19350.19 19812.77
1993/03/31 19895.60 20230.82
1993/04/30 19741.46 19741.23
1993/05/31 20784.86 20270.30
1993/06/30 21057.56 20329.08
1993/07/31 21199.84 20247.77
1993/08/31 22385.52 21015.16
1993/09/30 22468.51 20853.34
1993/10/31 23132.49 21285.00
1993/11/30 22836.07 21082.80
1993/12/31 23806.05 21337.90
1994/01/31 24478.73 22063.39
1994/02/28 24227.59 21465.47
1994/03/31 23117.33 20529.57
1994/04/30 23328.81 20792.35
1994/05/31 23487.42 21133.35
1994/06/30 22971.94 20615.58
1994/07/31 23553.50 21291.77
1994/08/31 24690.21 22164.73
1994/09/30 24412.64 21621.70
1994/10/31 24518.38 22108.19
1994/11/30 23804.64 21303.01
1994/12/31 23820.59 21618.93
1995/01/31 23924.66 22179.51
1995/02/28 24473.12 23043.84
1995/03/31 24991.93 23723.87
1995/04/30 25644.16 24422.54
1995/05/31 25970.27 25398.71
1995/06/30 26503.90 25988.72
1995/07/31 27793.52 26850.50
1995/08/31 28001.05 26917.90
1995/09/30 28608.80 28053.83
1995/10/31 27986.22 27953.68
1995/11/30 28905.26 29180.85
1995/12/31 29604.25 29742.87
1996/01/31 30044.74 30755.32
1996/02/29 30355.66 31040.42
1996/03/31 30453.85 31339.34
1996/04/30 31419.34 31801.28
1996/05/31 31697.53 32621.44
1996/06/30 31010.23 32745.72
1996/07/31 29259.26 31299.02
1996/08/31 29766.55 31959.11
1996/09/30 31124.78 33757.77
1996/10/31 30879.32 34688.81
1996/11/30 32793.94 37310.94
1996/12/31 32071.72 36571.81
1997/01/31 33611.31 38856.82
1997/02/28 33481.47 39161.45
1997/03/31 31459.60 37552.31
1997/04/30 32498.36 39794.18
1997/05/31 34464.58 42216.85
1997/06/30 36263.86 44108.17
1997/07/31 39547.09 47617.85
1997/08/31 38174.44 44950.30
1997/09/30 40177.76 47412.23
1997/10/31 37302.62 45828.66
1997/11/30 37970.40 47950.07
1997/12/31 38018.68 48773.37
1998/01/31 39304.77 49312.81
1998/02/28 43636.87 52869.25
1998/03/31 45080.90 55576.68
1998/04/30 45780.35 56135.78
1998/05/29 44336.32 55170.81
IMATRL PRASUN SHR__CHT 19980531 19980612 160249 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Retirement Growth Fund on May 31, 1988. As the
chart shows, by May 31, 1998, the value of the investment would have
grown to $44,336 - a 343.36% increase on the initial investment. For
comparison, look at how the Standard & Poor's 500 Index did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 would have grown to $55,171 - a 451.71% 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

MARKET RECAP
Although renewed concerns about
economic difficulties in Asia late
in the period tempered the rapid
growth of U.S. equity markets, the
Standard & Poor's 500 Index - a
measure of the U.S. stock market
- - still managed to return 15.06%
during the six months that ended
May 31, 1998. As feared, some
U.S. corporations with business
exposure to Asia did report
disappointing earnings and their
stocks were harshly punished.
However, investors seemed to
adopt a new attitude - one that
overlooked short-term troubles
and focused on longer-term
growth - helping many of these
stocks to rebound quickly. In
addition, the continued strength of
the U.S. economy, combined with
low interest rates and low inflation,
seemed to buoy the stock market
for much of the period. The
upward climb of the stock market
stagnated in mid- and late May
when investors were inundated
with worrisome news about the
stability of Asian markets.
Specifically, the president of
Indonesia resigned amidst civil
strife and a battle over nuclear
testing erupted between Pakistan
and India. Concerns about falling
demand for U.S. exports
particularly hurt technology
companies, especially during the
intensified investigation of
Microsoft by the Justice
Department in May. As a result of
concerns about these tumultuous
events and their potential impact
on the U.S. economy, the Dow
Jones Industrial Average produced
a negative return in May for the first
time in 1998 - although the Dow
was still up 13.29% for the first five
months of 1998.
An interview with 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, 1998, the fund returned
16.77%, compared to 15.06% for the Standard & Poor's 500 Index and
9.06% for the capital appreciation funds average tracked by Lipper
Analytical Services. For the 12 months that ended May 31, 1998, the
fund returned 28.64%, while the index and the average had returns of
30.69% and 22.75%, respectively.
Q. WHAT ACCOUNTED FOR THE FUND'S STRONG PERFORMANCE DURING THE
SIX-MONTH PERIOD?
A. I took advantage of the U.S. equity market's weakness early in the
period to accumulate more high-quality stocks in the technology
sector. I bought more of some stocks that the fund already owned and
replaced many second- and third-tier technology stocks with the shares
of industry leaders. This benefited the fund early in 1998, as the
U.S. and Asian markets staged a vigorous rally that was led by
technology shares. Toward the end of the period, I took some profits,
reducing the fund's technology holdings from 29.4% six months ago to
22.9% at the end of the period. However, initially overweighting the
fund - relative to the S&P 500 - with top-flight technology stocks at
fairly cheap prices was primarily what enabled it to outperform the
index and the average. In addition, I allocated approximately 14% of
the fund's capital to selected European stocks, and many of these
holdings performed well during the period.
Q. WHAT MADE YOU DECIDE THAT THE TIME WAS RIGHT TO TAKE PROFITS IN
TECHNOLOGY STOCKS?
A. I had two reasons. First, I felt increasingly certain that there
were serious problems in Asia that would not be corrected overnight,
and that companies in some U.S. industries would suffer substantially
from reduced demand. The other factor had to do with the global
oversupply of components for personal computers. On the one hand,
production capacity for components such as semiconductors that have
the status of "commodities" - that is, they are readily available from
a variety of sources - has increased enormously. However, demand for
personal computers has not seen a corresponding rise. This situation
has been developing for some time, and I decided that the early-1998
rally offered a good opportunity to lighten up on the stocks of
semiconductor chip manufacturers and semiconductor capital equipment
manufacturers.
Q. WHAT STOCKS HELPED THE FUND'S PERFORMANCE?
A. Dell Computer recovered nicely after weakness early in the period.
Investors responded positively to Dell's increased penetration of the
lucrative server market, as well as the company's low cost structure
and rapid inventory turnover. Wal-Mart - the fund's largest holding at
the end of the period - continued to do well on the strength of the
company's strong sales growth, combined with cost savings due to more
efficient inventory management. Bank of Ireland benefited from a
healthy increase in the company's loan portfolio, as well as the
overall strong growth in the Irish economy.
Q. WHAT HOLDINGS DISAPPOINTED YOU?
A. Intel performed poorly. The company lost market share to other
computer chip makers in the rapidly growing low-price end of the
personal computer market. Another technology holding - KLA-Tencor -
was hurt by reduced demand for semiconductor capital equipment because
of the slowing Asian economies.
Q. WHAT'S YOUR OUTLOOK, FERGUS?
A. I believe the overall outlook for U.S. stocks is quite favorable.
We have a modestly but steadily growing economy, virtually no
inflation and stable interest rates that, on balance, may edge lower
over the next year or two. As I mentioned, however, there are pockets
of weakness being experienced by companies dependent on Asia for a
significant percentage of their business. I believe that the companies
that succeed in this environment will be those that operate
efficiently and have strong market shares. Ideally, they will sell a
proprietary product or have some other way of defending their market
share. In my opinion, this is not a time for just swimming with the
tide. It is a time for dynamic management. These are some of the
qualities I look for when selecting investments for the fund.
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.

FERGUS SHIEL ON THE ASIAN
SLOWDOWN AND GROWTH
PROSPECTS IN THE TECHNOLOGY
SECTOR:
"Although the passage of time hasn't
made it any easier to quantify what
the damage from Asia will be, one
thing has become clearer - the
slowing Asian economies will affect
the U.S. economy on a very
selective basis, not across the
board.
"In the technology sector, for
example, this means if a company
buys components from Asia, as
most U.S. personal computer
makers do, it can do so at a lower
cost than before because many
Asian currencies have depreciated
sharply against the U.S. dollar.
However, if you run a company
that sells capital equipment to
Asian semiconductor
manufacturers, you are facing
reduced demand, because cheaper
Asian currencies make it more
costly for those manufacturers to
purchase your product.
"At the present time, I believe the
best growth areas in the technology
sector are software and network
construction. There is tremendous
worldwide demand for networks to
carry voice and especially data
traffic. In fact, I expect the data
network market to increase to the
point where we consider voice
networks as merely subsets of data
networks. The growth potential is
extremely dynamic there, and I will
be looking for companies through
which the fund can benefit from
these high-growth areas."
FUND FACTS
GOAL: to provide 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, 1998,
more than $4.4 billion
MANAGER: J. Fergus Shiel,
since 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,
1991-1993; joined Fidelity
in 1989
(checkmark)
INVESTMENT CHANGES

TOP TEN STOCKS AS OF MAY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO

WAL-MART STORES, INC. 4.0 5.3

PHILIP MORRIS COMPANIES, INC. 2.6 1.6

EXXON CORP. 2.4 0.0

RJR NABISCO HOLDINGS CORP. 1.9 0.0

DELL COMPUTER CORP. 1.9 1.8

HOUSEHOLD INTERNATIONAL, INC. 1.9 0.6

FIRST CHICAGO NBD CORP. 1.8 0.0

AMERICA ONLINE, INC. 1.7 0.0

MERCK & CO., INC. 1.7 0.0

GENERAL ELECTRIC CO. 1.7 3.1

TOP FIVE MARKET SECTORS AS OF MAY 31, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO

TECHNOLOGY 22.9 29.4

FINANCE 16.1 14.0

HEALTH 9.4 10.1

RETAIL & WHOLESALE 8.3 11.5

NONDURABLES 8.1 10.0

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF MAY 31, 1998 * AS OF NOVEMBER 30, 1997 **
ROW: 1, COL: 1, VALUE: 96.8
ROW: 1, COL: 2, VALUE: 3.2
STOCKS 97.3%
SHORT-TERM
INVESTMENTS 2.7%
FOREIGN
INVESTMENTS 13.1%
STOCKS 96.8%
SHORT-TERM
INVESTMENTS 3.2%
FOREIGN
INVESTMENTS 15.6%
ROW: 1, COL: 1, VALUE: 97.3
ROW: 1, COL: 2, VALUE: 2.7
*
**
INVESTMENTS MAY 31, 1998 (UNAUDITED)

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

COMMON STOCKS - 96.8%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.2%
Textron, Inc. 100,000 $ 7,419
BASIC INDUSTRIES - 2.3%
CHEMICALS & PLASTICS - 1.8%
Crompton & Knowles Corp. 266,800 7,187
Cytec Industries, Inc. (a) 826,800 40,513
Morton International, Inc. 740,200 22,530
PPG Industries, Inc. 100,000 7,287
Valspar Corp. 100,600 4,062
81,579
PACKAGING & CONTAINERS - 0.1%
Owens-Illinois, Inc. (a) 102,700 4,615
PAPER & FOREST PRODUCTS - 0.4%
Pentair, Inc. 401,500 17,616
TOTAL BASIC INDUSTRIES 103,810
CONSTRUCTION & REAL ESTATE - 0.0%
BUILDING MATERIALS - 0.0%
Hoganas AB Class B Free shares 26,400 1,012
DURABLES - 2.7%
AUTOS, TIRES, & ACCESSORIES - 1.3%
Federal-Mogul Corp. 560,500 33,174
ITT Industries, Inc. 150,000 5,531
Mayflower Corp. 1,500,000 5,870
TRW, Inc. 237,100 12,700
57,275
CONSUMER DURABLES - 0.2%
Sola Group Ltd. 50,000 1,978
Waterford Wedgwood PLC Unit 4,300,000 6,731
8,709
TEXTILES & APPAREL - 1.2%
Fruit of the Loom, Inc. Class A (a) 571,900 20,553
Pillowtex Corp. 303,000 14,165
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - CONTINUED
TEXTILES & APPAREL - CONTINUED
Warnaco Group, Inc. Class A 307,300 $ 12,676
Westpoint Stevens, Inc. Class A (a) 278,400 9,118
56,512
TOTAL DURABLES 122,496
ENERGY - 5.0%
ENERGY SERVICES - 2.0%
Schlumberger Ltd. 500,000 39,031
Smedvig AS 576,800 9,438
Western Atlas, Inc. (a) 463,000 40,079
88,548
OIL & GAS - 3.0%
Cooper Cameron Corp. (a) 477,200 28,393
Exxon Corp. 1,520,000 107,160
135,553
TOTAL ENERGY 224,101
FINANCE - 16.1%
BANKS - 7.5%
Allied Irish Banks PLC 1,224,297 16,040
Bank of Ireland, Inc. 3,522,684 66,398
Bank of New York Co., Inc. 210,900 12,891
Comerica, Inc. 628,800 41,344
Credit Suisse Group (Reg.) 191,000 41,947
Julius Baer Holding AG 11,700 33,657
National City Corp. 645,800 43,753
Providian Financial Corp. 853,400 54,298
Skandinaviska Enskilda Banken Class A Free shares 1,175,000 19,523
SunTrust Banks, Inc. 36,900 2,915
U.S. Bancorp 50,000 1,956
Wachovia Corp. 50,000 4,003
338,725
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - 5.0%
American Express Co. 200,000 $ 20,525
Associates First Capital Corp. 563,721 42,173
First Chicago NBD Corp. 902,800 78,939
Household International, Inc. 630,200 85,274
226,911
FEDERAL SPONSORED CREDIT - 1.5%
Freddie Mac 1,027,400 46,747
Fannie Mae 354,500 21,226
67,973
INSURANCE - 1.9%
ACE Ltd. 300,000 10,688
Marsh & McLennan Companies, Inc. 141,100 12,355
Progressive Corp. 188,900 26,044
Sampo Insurance Co. Ltd. 100,000 4,641
Torchmark Corp. 699,900 30,008
83,736
SECURITIES INDUSTRY - 0.2%
Investors Group Inc. 200,000 7,289
TOTAL FINANCE 724,634
HEALTH - 9.4%
DRUGS & PHARMACEUTICALS - 6.4%
Elan Corp. PLC ADR (a) 785,100 48,038
ICON PLC sponsored ADR 131,000 3,341
Lilly (Eli) & Co. 364,300 22,382
Merck & Co., Inc. 644,600 75,458
Quintiles Transnational Corp. (a) 535,300 26,029
Rexall Sundown, Inc. 50,000 1,675
Schering-Plough Corp. 621,900 52,045
Warner-Lambert Co. 952,300 60,769
289,737
MEDICAL EQUIPMENT & SUPPLIES - 2.6%
AmeriSource Health Corp. Class A (a) 361,500 19,656
Cooper Companies, Inc. 148,300 5,858
Johnson & Johnson 400,000 27,625
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - CONTINUED
McKesson Corp. 253,300 $ 19,789
Sofamor/Danek Group, Inc. (a) 152,500 12,677
Steris Corp. (a) 495,000 30,937
116,542
MEDICAL FACILITIES MANAGEMENT - 0.4%
Universal Health Services, Inc. Class B (a) 332,800 18,304
TOTAL HEALTH 424,583
HOLDING COMPANIES - 0.9%
Kinnevik Investment B Free shares 1,153,400 42,072
INDUSTRIAL MACHINERY & EQUIPMENT - 4.3%
ELECTRICAL EQUIPMENT - 4.0%
Alcatel Alsthom Compagnie Generale d'Electricite SA (RFD) 138,000
29,489
Ericsson (L.M.) Telephone Co. Class B ADR 1,000,000 27,875
General Electric Co. 900,000 75,037
Loral Space & Communications Ltd. (a) 700,000 17,763
Philips Electronics NV (Bearer) 184,600 17,517
Siemens AG 160,000 10,380
178,061
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
ASM Lithography Holding NV (a) 303,900 11,644
Gasonics International Corp. (a) 334,300 3,468
15,112
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 193,173
MEDIA & LEISURE - 6.6%
BROADCASTING - 0.3%
Clear Channel Communications, Inc. 100,000 9,587
USA Networks, Inc. 56,500 1,384
10,971
LEISURE DURABLES & TOYS - 1.1%
Harley-Davidson, Inc. 704,000 25,168
Mattel, Inc. 677,800 25,672
50,840
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
LODGING & GAMING - 1.5%
Jurys Hotel Group PLC 1,661,600 $ 15,172
Mirage Resorts, Inc. (a) 2,571,200 53,513
68,685
PUBLISHING - 3.6%
ACNielsen Corp. 314,700 8,123
American Greetings Corp. Class A 880,000 41,800
Cognizant Corp. 760,900 40,517
Harte Hanks Communications, Inc. 1,011,300 22,881
Houghton Mifflin Co. 532,700 18,511
Independent Newspapers PLC 3,734,999 22,594
VNU Ord. 173,100 5,931
160,357
RESTAURANTS - 0.1%
Foodmaker, Inc. 300,000 5,063
TOTAL MEDIA & LEISURE 295,916
NONDURABLES - 8.1%
AGRICULTURE - 0.4%
IAWS Group PLC 2,956,075 12,945
IAWS Group PLC Class A (Reg.) 37,600 153
Royal Canin SA 48,800 3,023
Royal Canin SA (c) 61,200 3,792
19,913
FOODS - 0.7%
Avonmore Waterford Group PLC 1,055,000 4,620
Greencore Group PLC 2,957,779 16,295
Kerry Group PLC Class A 661,500 9,531
30,446
HOUSEHOLD PRODUCTS - 2.0%
Clorox Co. 387,800 32,381
Gillette Co. 479,500 56,162
88,543
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
TOBACCO - 5.0%
Philip Morris Companies, Inc. 3,164,000 $ 118,254
RJR Nabisco Holdings Corp. 3,082,600 86,891
UST, Inc. 866,200 23,063
228,208
TOTAL NONDURABLES 367,110
RETAIL & WHOLESALE - 8.3%
APPAREL STORES - 0.1%
Saks Holdings, Inc. (a) 251,400 5,924
DRUG STORES - 0.5%
Walgreen Co. 653,600 22,998
GENERAL MERCHANDISE STORES - 4.7%
Arnotts PLC (d) 1,425,287 12,886
Costco Companies, Inc. 300,000 17,363
Wal-Mart Stores, Inc. 3,304,300 182,355
212,604
GROCERY STORES - 1.5%
Safeway, Inc. (a) 1,776,600 64,735
RETAIL & WHOLESALE, MISCELLANEOUS - 1.5%
Best Buy Co., Inc. (a) 336,400 10,975
Office Depot, Inc. (a) 881,700 26,011
Signet Group PLC (a) 10,725,000 8,313
Toys "R" Us, Inc. (a) 797,700 21,139
66,438
TOTAL RETAIL & WHOLESALE 372,699
SERVICES - 4.5%
ADVERTISING - 2.4%
ADVO, Inc. (a)(d) 1,539,500 38,583
CKS Group, Inc. 100,000 2,000
Omnicom Group, Inc. 1,411,200 66,062
106,645
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - CONTINUED
LEASING & RENTAL - 0.7%
Viacom, Inc. Class B (non-vtg.) (a) 598,900 $ 32,940
PRINTING - 0.3%
Valassis Communications, Inc. (a) 451,900 15,901
SERVICES - 1.1%
Day Runner, Inc. 235,500 5,181
Ecolab, Inc. 1,346,000 41,557
Marlborough International PLC 622,000 2,900
49,638
TOTAL SERVICES 205,124
TECHNOLOGY - 22.9%
COMMUNICATIONS EQUIPMENT - 3.9%
Advanced Fibre Communication, Inc. (a) 213,900 7,928
Ciena Corp. (a) 360,000 18,720
Cisco Systems, Inc. (a) 918,700 69,476
Lucent Technologies, Inc. 550,000 39,016
Nokia Corp. AB sponsored ADR 226,600 14,715
Tellabs, Inc. (a) 386,400 26,553
176,408
COMPUTER SERVICES & SOFTWARE - 9.7%
Affiliated Computer Services, Inc. Class A (a) 716,200 23,857
America Online, Inc. (a) 929,500 77,439
Atos SA (a) 75,305 13,829
Atos SA (a)(c) 31,119 5,715
CBT Group PLC sponsored ADR 80,000 3,980
Deltek Systems, Inc. 235,000 4,964
Equifax, Inc. 447,500 16,278
First Data Corp. 1,121,800 37,300
HBO & Co. 448,600 25,893
Information Management Resources, Inc. 100,000 2,253
Microsoft Corp. (a) 753,800 63,931
PeopleSoft, Inc. (a) 1,128,600 49,306
Saville Systems PLC sponsored ADR (a) 230,000 9,186
Siebel Systems, Inc. (a) 2,057,721 46,813
SunGard Data Systems, Inc. (a) 649,100 22,151
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - CONTINUED
Technology Solutions, Inc. 100,000 $ 3,019
Yahoo, Inc. 282,500 30,934
436,848
COMPUTERS & OFFICE EQUIPMENT - 3.0%
CDW Computer Centers, Inc. (a) 224,800 9,259
Dell Computer Corp. (a) 1,051,600 86,658
EMC Corp. (a) 555,600 23,023
Fore Systems, Inc. 350,000 7,700
Ingram Micro, Inc. Class A 69,500 3,062
Lexmark International Group, Inc. 100,000 5,550
135,252
ELECTRONIC INSTRUMENTS - 1.5%
Applied Materials, Inc. (a) 475,600 15,219
KLA-Tencor Corp. (a) 762,600 25,738
Novellus Systems, Inc. (a) 535,200 20,237
Teradyne, Inc. (a) 200,000 6,150
67,344
ELECTRONICS - 4.8%
Alliance Semiconductor Corp. (a) 1,590,800 7,656
DII Group, Inc. (a) 842,800 15,855
Etec Systems, Inc. (a) 921,600 33,696
Electroglas, Inc. (a) 588,800 8,022
Intel Corp. 750,000 53,578
Lattice Semiconductor Corp. (a) 663,400 25,624
Micrel, Inc. (a) 361,400 11,305
Micron Technology, Inc. (a) 1,219,300 28,730
Molex, Inc. 285,000 7,944
Sanmina Corp. (a) 204,900 15,957
Schneider SA 70,400 5,947
214,314
TOTAL TECHNOLOGY 1,030,166
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 0.6%
AIR TRANSPORTATION - 0.3%
Ryanair Holdings PLC sponsored ADR 370,800 $ 13,024
SHIPPING - 0.3%
Irish Continental Group PLC 893,400 16,028
TOTAL TRANSPORTATION 29,052
UTILITIES - 4.9%
CELLULAR - 0.8%
Cellular Communications International, Inc. 200,000 9,425
SkyTel Communications, Inc. 204,000 4,616
Teleglobe, Inc. 400,000 20,742
34,783
TELEPHONE SERVICES - 4.1%
ESAT Telecom Group PLC sponsored ADR (a) 422,300 12,669
LCI International, Inc. (a) 476,600 17,843
MCI Communications Corp. 1,082,200 57,864
SBC Communications, Inc. 583,600 22,687
Southern New England Telecommunications Corp. 354,100 22,795
WorldCom, Inc. (a) 1,186,400 53,980
187,838
TOTAL UTILITIES 222,621
TOTAL COMMON STOCKS
(Cost $3,726,879) 4,365,988
CASH EQUIVALENTS - 3.2%
Taxable Central Cash Fund (b)
(Cost $142,737) 142,736,560 142,737
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,869,616) $ 4,508,725
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield of the Taxable Central Cash
Fund was 5.56%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) 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
$9,507,000 or 0.2% of net assets.
(d) Affiliated company (see Note 6 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 84.4%
Ireland 6.5
Sweden 2.0
Switzerland 1.7
France 1.4
Others (individually less than 1%) 4.0
TOTAL 100.0%
INCOME TAX INFORMATION
At May 31, 1998, the aggregate cost of investment securities for
income tax purposes was $3,875,280,000. Net unrealized appreciation
aggregated $633,445,000, of which $770,645,000 related to appreciated
investment securities and $137,200,000 related to depreciated
investment securities.
The fund intends to elect to defer to its fiscal year ending November
30, 1998 approximately $8,339,000 of losses recognized during the
period November 1, 1997 to November 30, 1997.
FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) MAY 31, 1998 (UNAUDITED)

ASSETS

INVESTMENT IN SECURITIES, AT VALUE (COST $3,869,616) - $ 4,508,725
SEE ACCOMPANYING SCHEDULE

FOREIGN CURRENCY HELD AT VALUE (COST $1,640) 1,634

RECEIVABLE FOR INVESTMENTS SOLD 67,782

RECEIVABLE FOR FUND SHARES SOLD 4,381

DIVIDENDS RECEIVABLE 5,077

INTEREST RECEIVABLE 452

OTHER RECEIVABLES 1,867

TOTAL ASSETS 4,589,918

LIABILITIES

PAYABLE FOR INVESTMENTS PURCHASED $ 97,864

PAYABLE FOR FUND SHARES REDEEMED 14,777

ACCRUED MANAGEMENT FEE 1,584

OTHER PAYABLES AND ACCRUED EXPENSES 881

TOTAL LIABILITIES 115,106

NET ASSETS $ 4,474,812

NET ASSETS CONSIST OF:

PAID IN CAPITAL $ 3,432,934

UNDISTRIBUTED NET INVESTMENT INCOME 7,415

ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 395,383
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS

NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 639,080
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

NET ASSETS, FOR 227,743 SHARES OUTSTANDING $ 4,474,812

NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $19.65
PER SHARE ($4,474,812 (DIVIDED BY) 227,743 SHARES)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED)

INVESTMENT INCOME $ 17,255
DIVIDENDS (INCLUDING $163 RECEIVED FROM AFFILIATED ISSUERS)

INTEREST 2,697

TOTAL INCOME 19,952

EXPENSES

MANAGEMENT FEE $ 12,709
BASIC FEE

PERFORMANCE ADJUSTMENT (4,006)

TRANSFER AGENT FEES 3,863

ACCOUNTING FEES AND EXPENSES 406

NON-INTERESTED TRUSTEES' COMPENSATION 19

CUSTODIAN FEES AND EXPENSES 165

REGISTRATION FEES 96

AUDIT 39

LEGAL 15

MISCELLANEOUS 7

TOTAL EXPENSES BEFORE REDUCTIONS 13,313

EXPENSE REDUCTIONS (822) 12,491

NET INVESTMENT INCOME 7,461

REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:

INVESTMENT SECURITIES 435,963

FOREIGN CURRENCY TRANSACTIONS (388) 435,575

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:

INVESTMENT SECURITIES 204,956

ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (17) 204,939

NET GAIN (LOSS) 640,514

NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 647,975
FROM OPERATIONS

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30,
(UNAUDITED) 1997

INCREASE (DECREASE) IN NET ASSETS

OPERATIONS $ 7,461 $ 26,600
NET INVESTMENT INCOME

NET REALIZED GAIN (LOSS) 435,575 646,367

CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 204,939 (88,783)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 647,975 584,184
FROM OPERATIONS

DISTRIBUTIONS TO SHAREHOLDERS (25,385) (53,940)
FROM NET INVESTMENT INCOME

FROM NET REALIZED GAIN (665,849) (425,251)

TOTAL DISTRIBUTIONS (691,234) (479,191)

SHARE TRANSACTIONS 461,151 466,641
NET PROCEEDS FROM SALES OF SHARES

REINVESTMENT OF DISTRIBUTIONS 690,187 478,301

COST OF SHARES REDEEMED (646,945) (1,241,607)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING 504,393 (296,665)
FROM SHARE TRANSACTIONS

TOTAL INCREASE (DECREASE) IN NET ASSETS 461,134 (191,672)

NET ASSETS

BEGINNING OF PERIOD 4,013,678 4,205,350

END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 4,474,812 $ 4,013,678
INCOME OF $7,415 AND $25,339, RESPECTIVELY)

OTHER INFORMATION
SHARES

SOLD 24,057 24,402

ISSUED IN REINVESTMENT OF DISTRIBUTIONS 42,187 27,647

REDEEMED (34,592) (65,810)

NET INCREASE (DECREASE) 31,652 (13,761)

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED NOVEMBER 30,
MAY 31, 1998

(UNAUDITED) 1997 1996 1995 1994 1993
SELECTED PER-SHARE DATA

NET ASSET VALUE, $ 20.47 $ 20.04 $ 19.50 $ 18.01 $ 19.26 $ 19.77
BEGINNING OF PERIOD

INCOME FROM INVESTMENT
OPERATIONS

NET INVESTMENT INCOME .03 D .13 D .26 .34 .19 .09

NET REALIZED AND 2.69 2.61 2.14 3.09 .58 3.09
UNREALIZED GAIN
(LOSS)

TOTAL FROM INVESTMENT 2.72 2.74 2.40 3.43 .77 3.18
OPERATIONS

LESS DISTRIBUTIONS (.13) (.26) (.34) (.20) (.14) (.16)
FROM NET INVESTMENT
INCOME

FROM NET REALIZED (3.41) (2.05) (1.52) (1.74) (1.88) (3.53)
GAIN

TOTAL DISTRIBUTIONS (3.54) (2.31) (1.86) (1.94) (2.02) (3.69)

NET ASSET VALUE, END $ 19.65 $ 20.47 $ 20.04 $ 19.50 $ 18.01 $ 19.26
OF PERIOD

TOTAL RETURN B, C 16.77% 15.78% 13.45% 21.43% 4.24% 19.47%

RATIOS AND SUPPLEMENTAL DATA

NET ASSETS, END OF $ 4,475 $ 4,014 $ 4,205 $ 3,970 $ 3,163 $ 2,688
PERIOD (IN MILLIONS)

RATIO OF EXPENSES TO .63% A .64% .74% .99% 1.07% 1.05%
AVERAGE NET ASSETS

RATIO OF EXPENSES TO .59% A, E .59% E .70% E .99% 1.07% 1.05%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS

RATIO OF NET INVESTMENT .35% A .66% 1.26% 1.92% 1.13% .80%
INCOME TO AVERAGE
NET ASSETS

PORTFOLIO TURNOVER RATE 245% A 205% 230% 108% 72% 101%

AVERAGE COMMISSION $ .0396 $ .0377 $ .0307
RATE F

</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 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).
F 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, 1998 (Unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Retirement Growth Fund (the fund) is a fund of Fidelity
Financial Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require 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. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts and foreign currency options, disposition of
foreign currencies, the difference between the amount of net
investment income accrued and the U.S. dollar amount actually
received, and gains and losses between trade date and settlement on
purchases and sales of securities. The effects of changes in foreign
currency exchange rates on investments in securities are included with
the net realized and unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Under the Plan, deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of a
cross-section of Fidelity funds, including shares of the fund.
Deferred amounts remain in the fund until distributed in accordance
with the Plan.
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,
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.
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.
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
2. OPERATING POLICIES - CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
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 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 Fidelity Investments Money Management, Inc.,
(formerly FMR Texas, Inc.) 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 earned
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).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $5,059,626,000 and $5,243,092,000, 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. The annual individual fund fee rate is .30%. In
the event that these rates were lower than the contractual rates in
effect during the
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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 (plus/minus).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 .41% 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 .18% 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 $1,073,000 for the
period.
5. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $750,000 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 $2,000 and $70,000, respectively, under these arrangements.
6. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions 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. $ 3,755 $ - $ - $ 38,583
Arnotts PLC 2,713 - 163 12,886
TOTALS $ 6,468 $ - $ 163 $ 51,469
MANAGING YOUR INVESTMENTS

For quotes.*

For account balances and holdings.

To review orders and mutual
fund activity.

To change your PIN.

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
Robert C. Pozen, Senior Vice President
Abigail P. Johnson, Vice President
J. Fergus Shiel, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
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 *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
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
Contrafund II
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(registered trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Selector
Small Cap Stock Fund
Stock Selector
TechnoQuant Growth Fund
SM
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 (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE