FIDELITY FINANCIAL TRUST, N-30D, 1998-01-20

FIDELITY FINANCIAL TRUST
N-30D, 1998-01-20

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FIDELITY

(REGISTERED TRADEMARK)

RETIREMENT GROWTH
FUND
ANNUAL REPORT
NOVEMBER 30, 1997
CONTENTS

PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.

PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.

FUND TALK 6 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.

INVESTMENT CHANGES 9 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.

INVESTMENTS 10 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.

FINANCIAL STATEMENTS 19 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 23 NOTES TO THE FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT 28 THE AUDITORS' OPINION.
ACCOUNTANTS

DISTRIBUTIONS 29

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:
Although financial turmoil in Pacific Basin countries was a catalyst
for significant volatility in U.S. markets in late October and into
November, the Standard & Poor's 500 Index has risen more than 31%
year-to-date, almost three times its historical annual average.
Meanwhile, bond markets - primarily influenced by a relatively steady
flow of positive news on the inflation front - continued to post solid
returns through the first 11 months of 1997.
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 NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

FIDELITY RETIREMENT GROWTH 15.78% 98.65% 365.49%

S&P 500(REGISTERED TRADEMARK) 28.51% 150.41% 456.23%

CAPITAL APPRECIATION FUNDS AVERAGE 18.03% 108.72% 343.91%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 one year average represents a peer group of 213 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 NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

FIDELITY RETIREMENT GROWTH 15.78% 14.71% 16.62%

S&P 500 28.51% 20.15% 18.69%

CAPITAL APPRECIATION FUNDS AVERAGE 18.03% 15.34% 15.15%

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
IMAHDR PRASUN SHR__CHT 19971130 19971209 140446 S00000000000001
Retirement Growth S&P 500
00073 SP001
1987/11/30 10000.00 10000.00
1987/12/31 10964.62 10761.00
1988/01/31 11156.81 11214.04
1988/02/29 12107.62 11736.61
1988/03/31 12097.50 11373.95
1988/04/30 12320.03 11500.20
1988/05/31 12259.34 11600.25
1988/06/30 12896.58 12132.71
1988/07/31 12744.86 12086.60
1988/08/31 12390.84 11675.66
1988/09/30 12765.09 12173.04
1988/10/31 12856.12 12511.45
1988/11/30 12694.28 12332.54
1988/12/31 12666.91 12548.36
1989/01/31 13644.46 13466.90
1989/02/28 13366.63 13131.57
1989/03/31 13716.49 13437.54
1989/04/30 14364.75 14134.94
1989/05/31 14642.58 14707.41
1989/06/30 14436.78 14623.58
1989/07/31 15795.06 15944.09
1989/08/31 15980.27 16256.59
1989/09/30 16216.94 16189.94
1989/10/31 15651.00 15814.33
1989/11/30 16072.88 16136.94
1989/12/31 16519.03 16524.23
1990/01/31 15705.18 15415.45
1990/02/28 15869.35 15614.31
1990/03/31 16000.68 16028.09
1990/04/30 15541.02 15627.39
1990/05/31 16996.62 17151.06
1990/06/30 17379.67 17034.43
1990/07/31 17314.01 16979.92
1990/08/31 15541.02 15444.94
1990/09/30 13888.42 14692.77
1990/10/31 13439.70 14629.59
1990/11/30 14369.97 15574.66
1990/12/31 14841.48 16009.20
1991/01/31 15525.62 16707.20
1991/02/28 16805.63 17901.76
1991/03/31 17247.01 18334.98
1991/04/30 17357.36 18378.99
1991/05/31 17931.16 19172.96
1991/06/30 16783.56 18294.84
1991/07/31 17875.98 19147.38
1991/08/31 18637.37 19601.17
1991/09/30 18869.09 19273.83
1991/10/31 19542.20 19532.10
1991/11/30 18990.47 18744.96
1991/12/31 21606.96 20889.38
1992/01/31 21654.37 20500.84
1992/02/29 21962.53 20767.35
1992/03/31 21286.95 20362.38
1992/04/30 21524.00 20961.04
1992/05/31 21926.98 21063.75
1992/06/30 21121.01 20749.90
1992/07/31 21844.01 21598.57
1992/08/31 21251.39 21155.80
1992/09/30 21500.29 21405.44
1992/10/31 22175.88 21480.36
1992/11/30 23432.23 22212.84
1992/12/31 23896.49 22486.05
1993/01/31 24492.44 22674.94
1993/02/28 23722.06 22983.32
1993/03/31 24390.70 23468.26
1993/04/30 24201.73 22900.33
1993/05/31 25480.86 23514.06
1993/06/30 25815.18 23582.25
1993/07/31 25989.61 23487.92
1993/08/31 27443.17 24378.11
1993/09/30 27544.92 24190.40
1993/10/31 28358.91 24691.14
1993/11/30 27995.52 24456.58
1993/12/31 29184.64 24752.50
1994/01/31 30009.30 25594.09
1994/02/28 29701.43 24900.49
1994/03/31 28340.32 23814.83
1994/04/30 28599.58 24119.66
1994/05/31 28794.03 24515.22
1994/06/30 28162.08 23914.60
1994/07/31 28875.04 24699.00
1994/08/31 30268.56 25711.65
1994/09/30 29928.29 25081.72
1994/10/31 30057.92 25646.06
1994/11/30 29182.91 24712.03
1994/12/31 29202.47 25078.51
1995/01/31 29330.06 25728.79
1995/02/28 30002.43 26731.44
1995/03/31 30638.46 27520.29
1995/04/30 31438.04 28330.76
1995/05/31 31837.84 29463.14
1995/06/30 32492.04 30147.57
1995/07/31 34073.03 31147.26
1995/08/31 34327.44 31225.44
1995/09/30 35072.50 32543.16
1995/10/31 34309.27 32426.98
1995/11/30 35435.95 33850.52
1995/12/31 36292.86 34502.48
1996/01/31 36832.87 35676.95
1996/02/29 37214.04 36007.67
1996/03/31 37334.41 36354.43
1996/04/30 38518.04 36890.29
1996/05/31 38859.08 37841.69
1996/06/30 38016.50 37985.87
1996/07/31 35869.92 36307.65
1996/08/31 36491.83 37073.38
1996/09/30 38156.93 39159.87
1996/10/31 37856.01 40239.90
1996/11/30 40203.20 43281.64
1996/12/31 39317.82 42424.23
1997/01/31 41205.26 45074.89
1997/02/28 41046.07 45428.28
1997/03/31 38567.39 43561.63
1997/04/30 39840.84 46162.26
1997/05/31 42251.31 48972.62
1997/06/30 44457.11 51166.59
1997/07/31 48482.12 55237.92
1997/08/31 46799.35 52143.49
1997/09/30 49255.29 54999.39
1997/10/31 45730.56 53162.41
1997/11/28 46549.20 55623.30
IMATRL PRASUN SHR__CHT 19971130 19971209 140449 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Retirement Growth Fund on November 30, 1987. As
the chart shows, by November 30, 1997, the value of the investment
would have grown to $46,549 - a 365.49% increase on the initial
investment. For comparison, look at how the S&P 500 did over the same
period. With dividends and capital gains, if any, reinvested, the same
$10,000 investment would have grown to $55,623 - a 456.23% 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
The 12 months that ended
November 30, 1997, was a period
that truly tested the U.S. stock
market's resolve. But despite
frequent shifts in sentiment, an
interest-rate hike and global
volatility concerns, U.S. stocks still
managed to perform well. The
Standard & Poor's 500 Index - a
broad gauge of the U.S. stock
market - returned 28.51% during
the period, well above the
market's long-term annual
average of around 11%. In the first
half of the period, large-cap stocks
were responsible for much of the
market's gain, as investors were
drawn to stocks with recognizable
names and consistent
earnings-growth track records.
Consequently, stock prices soared
and enthusiasm was high. The
Federal Reserve Board - in an
attempt to halt inflation before it
appeared - raised a key
short-term interest rate by 0.25%
in March. The market paused
briefly, but then kept rolling as the
Dow Jones Industrial Average
reached the 8,000-point mark for
the first time ever in August. With
several multinational companies
announcing earnings shortfalls in
mid-August, small-cap stocks
came into favor among investors.
During August and September,
the Russell 2000 Index - which
measures small-cap stock
performance - was up 9.78%
while the S&P was down 0.43%.
Volatility in Asian markets in late
October sent skittish investors
running for cover. The Dow slid
554 points in one day, then
snapped back the next, reclaiming
330-plus points. Sensing
continued fallout from this
volatility, investors again became
quality-conscious and large-caps
regained their perch through
November.
An interview with Fergus Shiel, Portfolio Manager of Fidelity
Retirement Growth Fund
Q. HOW DID THE FUND PERFORM, FERGUS?
A. For the 12 months that ended November 30, 1997, the fund had a
total return of 15.78%, while the capital appreciation funds average
returned 18.03%, according to Lipper Analytical Services. The Standard
& Poor's 500 Index gained 28.51% over the same period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. The fund owned primarily mid-capitalization stocks with high
earnings- growth potential. The S&P 500 is a large-capitalization
index, and it performed well mainly because its 50 largest components
did well, which makes a big difference to a capitalization-weighted
index. Relative to the Lipper average, the fund was overweighted in
the technology sector, which hurt the fund's performance in October
and November, when the sector was very weak due to selling connected
with the turmoil in Asia.
Q. DURING THE PAST SIX MONTHS, THE TECHNOLOGY SECTOR INCREASED FROM
17.5% TO ALMOST 30% OF THE FUND'S HOLDINGS. CAN YOU COMMENT ON THAT
INCREASE?
A. Technology is still the fastest growing sector of the market even
though technology stocks have been hit hard in the last couple of
months. Even if we experience more volatility, I believe that
high-quality issues, such as KLA Tencor and Applied Materials, are
unlikely to decline an additional 50% from current levels. On the
other hand, if the sector turns around, they could easily gain 50%.
Because of the favorable risk/reward considerations, and as a
defensive tactic, I added significantly to the fund's holdings of
first-tier technology stocks and lightened up to some extent on
lesser-quality technology stocks.
Q. WHAT STOCKS DID WELL FOR THE FUND?
A. Wal-Mart was the fund's largest holding for much of the period and
also one of its best performers. The stock benefited from the
company's renewed focus on aggressive inventory management and
maximizing the profits from each square foot of floor space. A few
years ago, the main emphasis at Wal-Mart seemed to be on growing the
number of stores rather than keeping costs in check. Now the company
is benefiting from a more balanced management approach.
Q. HOW ABOUT SOME OTHER EXAMPLES OF STRONG PERFORMERS?
A. In the technology area, Dell Computer certainly helped the fund's
performance. Computer hardware manufacturing, which is Dell's niche,
is an area where economies of scale can be enormously beneficial. Dell
has the manufacturing capacity to effectively service large buyers who
want to purchase thousands of units at a time. The company is also one
of the leaders in the on-line marketing of personal computers, with
daily on-line sales of about $3 million dollars currently. And
finally, Dell owns roughly a 5% share of the server market and will
likely gain more of that high-margin business. I'll also mention
Omnicom, an advertising agency. Ad agencies are very stable businesses
with substantial cash flows. Omnicom is a big player in a sector where
the big players are gaining market share and driving out the mid-sized
agencies.
Q. WHAT STOCKS HURT THE FUND'S PERFORMANCE?
A. Micron Technology declined when, contrary to my expectations, the
price of DRAM (Dynamic Random Access Memory) chips went down instead
of up. I think that the avalanche of chip selling was spurred by Asian
chip manufacturers' attempts to liquidate inventories as a result of
currency weakness and regional financial instability. Another
disappointment, Scholastic Corp., suffered as its subscription book
program slowed down, and the market became saturated with its
Goosebumps line of children's books. Finally, Circus Circus repeatedly
missed completion dates for its new projects in Las Vegas.
Q. WHAT'S YOUR OUTLOOK, FERGUS?
A. I try not to predict where the market is going. Rather, my approach
is to try to find the stocks most capable of providing capital
appreciation for my shareholders. Over the long term, I think that
mid-cap stocks such as the fund emphasizes will likely provide
excellent growth opportunities.
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 INVESTMENT
OPPORTUNITIES IN EUROPE:
"The fund generally has 13% or so
of its holdings in international
equities, and at the end of the
period its international holdings
were concentrated primarily in
Europe. There were several
reasons for this. Obviously, the
turmoil in Asia led me to avoid
many stocks from that part of the
world. Over and above that,
however, a very respectable
economic recovery was underway
in Europe, which meant that the
prospects of many companies
there were constantly improving.
"In addition, Europe is one of the
new frontiers for technology
investments. Many European
companies are going through the
same restructuring process that
American firms experienced
within the last 20 years. They are
trying to cut costs and raise profits.
However, mass layoffs are
politically and socially
unacceptable in many European
countries, such as France and
Germany. The best way for
companies there to trim costs
without laying off workers is to apply
technology in such a way as to make
each worker more productive.
"There are many fine European
technology companies, such as
Ericsson and Nokia, that are
comparable in quality to their
United States counterparts, yet
their stocks trade at lower
valuations. I will continue to look
for these opportunities as the
European recovery progresses."
FUND FACTS
GOAL: capital appreciation
by investing mainly in
common stocks with the
potential for growth
FUND NUMBER: 073
TRADING SYMBOL: FDFFX
START DATE: March 25, 1983
SIZE: as of November 30,
1997, more than $4.0 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 NOVEMBER 30, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO

WAL-MART STORES, INC. 5.3 3.7

GENERAL ELECTRIC CO. 3.1 2.7

TEXAS INSTRUMENTS, INC. 2.5 1.1

MICROSOFT CORP. 2.1 0.9

PFIZER, INC. 2.0 1.0

COMPAQ COMPUTER CORP. 2.0 0.9

DELL COMPUTER CORP. 1.8 0.0

OMNICOM GROUP, INC. 1.7 1.0

PHILIP MORRIS COMPANIES, INC. 1.6 2.1

FEDERAL HOME LOAN MORTGAGE CORPORATION 1.5 0.0

TOP FIVE MARKET SECTORS AS OF NOVEMBER 30, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO

TECHNOLOGY 29.4 17.5

FINANCE 14.0 16.1

RETAIL & WHOLESALE 11.5 9.4

HEALTH 10.1 14.5

NONDURABLES 10.0 8.2
</TABLE>

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF NOVEMBER 30, 1997 * AS OF MAY 31, 1997 **
ROW: 1, COL: 1, VALUE: 97.3
ROW: 1, COL: 2, VALUE: 0.0
ROW: 1, COL: 3, VALUE: 2.7
STOCKS 97.2%
BONDS 0.2%
SHORT-TERM
INVESTMENTS 2.6%
FOREIGN
INVESTMENTS 15.1%
STOCKS 97.3%
BONDS 0.0%
SHORT-TERM
INVESTMENTS 2.7%
FOREIGN
INVESTMENTS 13.1%
ROW: 1, COL: 1, VALUE: 90.2
ROW: 1, COL: 2, VALUE: 2.0
ROW: 1, COL: 3, VALUE: 3.3
*
**
INVESTMENTS NOVEMBER 30, 1997

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

COMMON STOCKS - 97.3%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.2%
DEFENSE ELECTRONICS - 0.2%
Thomson C.S.F 193,752 $ 5,602
BASIC INDUSTRIES - 2.6%
CHEMICALS & PLASTICS - 2.0%
Cytec Industries, Inc. (a) 763,800 34,944
du Pont (E.I.) de Nemours & Co. 344,000 20,833
Morton International, Inc. 700,200 23,850
Valspar Corp. 100,600 3,056
82,683
PAPER & FOREST PRODUCTS - 0.6%
Clondalkin Group PLC unit 916,279 7,478
Pentair, Inc. 401,500 15,157
22,635
TOTAL BASIC INDUSTRIES 105,318
CONSTRUCTION & REAL ESTATE - 0.0%
CONSTRUCTION - 0.0%
Sundance Homes, Inc. (a) 17,000 20
DURABLES - 0.8%
CONSUMER DURABLES - 0.1%
Waterford Wedgwood PLC Unit 4,300,000 5,225
CONSUMER ELECTRONICS - 0.4%
Philips Electronics NV (Bearer) 240,000 15,839
TEXTILES & APPAREL - 0.3%
Phillips-Van Heusen Corp. 403,500 5,548
Stride Rite Corp. 360,000 4,298
9,846
TOTAL DURABLES 30,910
ENERGY - 1.1%
OIL & GAS - 1.1%
Chevron Corp. 210,000 16,839
Mobil Corp. 100,000 7,194
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Texaco, Inc. 278,600 $ 15,741
USX-Marathon Group 163,900 5,614
45,388
FINANCE - 14.0%
BANKS - 4.5%
Allied Irish Banks PLC 1,658,397 14,386
Bank of Ireland, Inc. 3,648,409 49,266
Bank of New York Co., Inc. 260,900 14,023
Comerica, Inc. 129,300 11,015
Lloyds TSB Group PLC 1,470,000 16,746
Merita Ltd.:
Series A 5,919,400 29,959
Series B 379,000 1,826
Providian Financial Corp. 557,600 24,569
Societe Generale Class A 80,000 10,510
U.S. Bancorp 73,395 7,895
180,195
CREDIT & OTHER FINANCE - 1.5%
Associates First Capital Corp. 261,400 16,795
Axime SA Ex Segin (a) 75,305 9,995
Axime SA Ex Segin (a)(c) 31,119 4,130
Household International, Inc. 206,100 25,969
Woodchester Investments PLC unit 1,006,591 3,822
60,711
FEDERAL SPONSORED CREDIT - 2.9%
Federal Home Loan Mortgage Corporation 1,500,500 61,895
Federal National Mortgage Association 1,046,300 55,258
117,153
INSURANCE - 2.7%
ACE Ltd. 178,700 17,736
Allstate Corp. 131,100 11,258
American International Group, Inc. 238,250 24,018
Progressive Corp. 148,900 15,188
Provident Companies, Inc. 463,170 15,198
St. Paul Companies, Inc. (The) 72,400 5,792
UNUM Corp. 381,400 18,093
107,283
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
SAVINGS & LOANS - 1.0%
Washington Mutual, Inc. 599,800 $ 41,461
SECURITIES INDUSTRY - 1.4%
Merrill Lynch & Co., Inc. 770,600 54,086
TOTAL FINANCE 560,889
HEALTH - 10.1%
DRUGS & PHARMACEUTICALS - 6.9%
American Home Products Corp. 354,100 24,743
Astra AB Class A Free shares 981,666 17,025
Elan Corp. PLC ADR (a) 875,100 46,162
Gilead Sciences, Inc. (a) 30,100 1,039
Lilly (Eli) & Co. 500,000 31,531
Pfizer, Inc. 1,113,600 81,014
Sangstat Medical Corp. (a) 35,000 1,221
Schering-Plough Corp. 672,300 42,145
Sepracor, Inc. (a) 41,800 1,541
Warner-Lambert Co. 207,500 29,024
275,445
MEDICAL EQUIPMENT & SUPPLIES - 1.7%
AmeriSource Health Corp. Class A (a) 361,500 23,407
Cooper Companies, Inc. (a) 133,100 5,199
McKesson Corp. 168,600 18,862
St. Jude Medical, Inc. (a) 769,350 22,792
70,260
MEDICAL FACILITIES MANAGEMENT - 1.5%
HEALTHSOUTH Corp. (a) 794,200 20,848
Health Management Associates, Inc. Class A (a) 733,500 17,971
Tenet Healthcare Corp. (a) 535,800 16,978
Universal Health Services, Inc. Class B (a) 104,500 4,565
60,362
TOTAL HEALTH 406,067
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - 6.4%
ELECTRICAL EQUIPMENT - 5.4%
Alcatel Alsthom Compagnie Generale d'Electricite SA 444,166 $ 55,643
American Power Conversion Corp. (a) 716,100 21,752
General Electric Co. 1,706,100 125,825
Leitch Technology Corp. (a) 100,000 2,633
Westinghouse Electric Corp. 422,000 12,660
218,513
INDUSTRIAL MACHINERY & EQUIPMENT - 1.0%
ASM Lithography Holding NV (a) 529,200 33,075
Gasonics International Corp. (a) 334,300 4,429
Mettler-Toledo International, Inc. 100,000 1,788
39,292
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 257,805
MEDIA & LEISURE - 5.7%
BROADCASTING - 0.6%
TCI Group Class A 950,000 21,761
ENTERTAINMENT - 1.0%
Cinar Films, Inc. Class B (sub-vtg.) (a) 50,000 1,966
MGM Grand, Inc. (a) 322,700 12,626
Viacom, Inc. Class B (non-vtg.) (a) 728,900 25,511
40,103
LEISURE DURABLES & TOYS - 0.5%
Brunswick Corp. 228,800 7,650
Callaway Golf Co. 233,900 7,456
Harley-Davidson, Inc. 218,500 5,777
20,883
LODGING & GAMING - 1.8%
Jurys Hotel Group PLC 1,661,600 10,235
Mirage Resorts, Inc. (a) 2,571,200 61,066
71,301
PUBLISHING - 1.8%
Cognizant Corp. 1,000,900 42,914
Dow Jones & Co., Inc. 202,200 10,224
Independent Newspapers PLC 3,734,999 21,116
74,254
TOTAL MEDIA & LEISURE 228,302
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - 10.0%
AGRICULTURE - 0.2%
IAWS Group PLC 2,142,750 $ 8,267
IAWS Group PLC Class A (Reg.) 37,600 140
8,407
BEVERAGES - 1.8%
Coca-Cola Co. (The) 800,000 50,000
PepsiCo, Inc. 600,000 22,125
72,125
FOODS - 1.6%
General Mills, Inc. 243,000 17,982
Greencore Group PLC 2,957,779 13,387
Heinz (H.J.) Co. 334,500 16,746
Sara Lee Corp. 334,700 17,697
65,812
HOUSEHOLD PRODUCTS - 4.8%
Avon Products, Inc. 564,000 32,606
Clorox Co. 433,500 33,650
Colgate-Palmolive Co. 570,000 38,083
Gillette Co. 309,500 28,571
IWP International 715,000 3,183
Procter & Gamble Co. 722,400 55,128
191,221
TOBACCO - 1.6%
Philip Morris Companies, Inc. 1,467,700 63,845
TOTAL NONDURABLES 401,410
RETAIL & WHOLESALE - 11.5%
DRUG STORES - 0.8%
CVS Corp. 184,900 12,273
Walgreen Co. 673,600 21,682
33,955
GENERAL MERCHANDISE STORES - 7.7%
Arnotts PLC 760,000 4,511
Costco Companies, Inc. (a) 205,000 9,084
Dayton Hudson Corp. 631,900 41,982
Kohls Corp. (a) 449,900 32,561
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - CONTINUED
Meyer (Fred), Inc. (a) 218,000 $ 7,385
Wal-Mart Stores, Inc. 5,308,100 211,992
307,515
GROCERY STORES - 1.5%
American Stores Co. 622,600 12,335
Hannaford Brothers Co. 198,200 7,965
Safeway, Inc. (a) 678,300 41,207
61,507
RETAIL & WHOLESALE, MISCELLANEOUS - 1.5%
Home Depot, Inc. 561,800 31,426
Office Depot, Inc. (a) 1,221,700 28,862
60,288
TOTAL RETAIL & WHOLESALE 463,265
SERVICES - 3.5%
ADVERTISING - 2.5%
ADVO, Inc. (a)(d) 1,389,500 30,222
Omnicom Group, Inc. 920,600 68,239
98,461
PRINTING - 0.0%
Valassis Communications, Inc. (a) 55,000 1,653
SERVICES - 1.0%
Block (H&R), Inc. 236,800 9,709
CGI Group, Inc. Class A (sub.vtg.) (a) 251,900 7,076
Ecolab, Inc. 468,000 23,868
40,653
TOTAL SERVICES 140,767
TECHNOLOGY - 29.4%
COMMUNICATIONS EQUIPMENT - 1.7%
DSC Communications Corp. (a) 871,600 19,665
Ericsson (L.M.) Telephone Co. Class B ADR 618,500 25,011
Mitel Corp. (a) 774,700 6,392
Nokia Corp. AB sponsored ADR 216,800 18,022
69,090
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - 9.8%
Affiliated Computer Services, Inc. Class A (a) 1,116,600 $ 26,100
Advant Corp. 1,067,100 25,544
CBT Group PLC sponsored ADR (a) 127,600 9,012
CUC International, Inc. (a) 1,300,000 37,375
Electronic Data Systems Corp. 626,200 23,796
Equifax, Inc. 499,800 17,056
First Data Corp. 100,000 2,831
Microsoft Corp. (a) 591,900 83,754
Oracle Corp. (a) 789,500 26,300
Saville Systems Ireland PLC sponsored ADR (a) 679,600 22,809
SunGard Data Systems, Inc. (a) 2,218,400 57,401
Sybase, Inc. (a) 986,900 13,817
Synopsys, Inc. (a) 1,009,700 41,524
Viewlogic Systems, Inc. (a) 200,300 5,333
Wonderware Corp. (a) 134,800 2,460
395,112
COMPUTERS & OFFICE EQUIPMENT - 6.3%
Apple Computer, Inc. (a) 908,400 16,124
Compaq Computer Corp. 1,270,050 79,299
Dell Computer Corp. (a) 850,800 71,627
EMC Corp. (a) 1,832,600 55,551
Quantum Corp. (a) 476,300 12,681
Xerox Corp. 200,900 15,607
250,889
ELECTRONIC INSTRUMENTS - 2.4%
Applied Materials, Inc. (a) 1,047,400 34,564
KLA-Tencor Corp. (a) 898,400 34,813
Novellus Systems, Inc. (a) 586,600 22,071
Smart Modular Technologies, Inc. (a) 100,000 6,200
97,648
ELECTRONICS - 9.2%
Alliance Semiconductor Corp. (a) 1,650,800 10,421
Altera Corp. (a) 938,300 43,924
Atmel Corp. (a) 690,700 15,498
DII Group, Inc. (a) 880,200 19,694
Etec Systems, Inc. (a) 321,200 14,695
Electroglas, Inc. (a) 588,800 11,187
Galileo Technology Ltd. 14,000 427
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Lattice Semiconductor Corp. (a) 431,400 $ 24,347
Micrel, Inc. (a) 148,400 5,138
Microchip Technology, Inc. (a) 566,000 19,810
Micron Technology, Inc. (a) 1,537,400 38,243
Sanmina Corp. (a) 532,600 36,217
Speedfam International, Inc. (a) 53,500 1,371
Taiwan Semiconductor Manufacturing Co. sponsored ADR 424,600 9,341
Texas Instruments, Inc. 2,007,600 98,874
VLSI Technology, Inc. (a) 488,900 11,000
Vitesse Semiconductor Corp. (a) 223,500 10,002
370,189
TOTAL TECHNOLOGY 1,182,928
TRANSPORTATION - 0.4%
AIR TRANSPORTATION - 0.2%
Ryanair Holdings PLC sponsored ADR 303,800 8,127
SHIPPING - 0.2%
Irish Continental Group PLC 694,000 8,290
TOTAL TRANSPORTATION 16,417
UTILITIES - 1.6%
TELEPHONE SERVICES - 1.6%
ESAT Telecom Group PLC sponsored ADR (a) 422,300 5,991
MCI Communications Corp. 531,400 23,348
SBC Communications, Inc. 248,700 18,109
WorldCom, Inc. (a) 500,000 16,000
63,448
TOTAL COMMON STOCKS
(Cost $3,474,383) 3,908,536
CASH EQUIVALENTS - 2.7%
SHARES VALUE (NOTE 1)
(000S)
Taxable Central Cash Fund (b)
(Cost $110,080) 110,080,298 $ 110,080
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $3,584,463) $ 4,018,616
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.69%. 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
$4,130,000 or 0.1% of net assets.
(d) Affiliated company (see Note 7 of Notes to Financial Statements).
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investment in securities, is as follows:
United States 86.9%
Ireland 6.0
France 2.1
Finland 1.2
Netherlands 1.2
Sweden 1.0
Others (individually less than 1%) 1.6
TOTAL 100.0%
INCOME TAX INFORMATION
At November 30, 1997, the aggregate cost of investment securities for
income tax purposes was $3,608,061,000. Net unrealized appreciation
aggregated $410,555,000 of which $554,624,000 related to appreciated
investment securities and $144,069,000 related to depreciated
investment securities.
The fund hereby designates approximately $197,856,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
The fund intends to elect to defer to its fiscal year ending November
30, 1998 approximately $15,075,000 of losses recognized during the
period November 1, 1997 to November 30, 1997.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) NOVEMBER 30, 1997

1.ASSETS 2. 3.

4.INVESTMENT IN SECURITIES, AT VALUE (COST $3,584,463) - 5. $ 4,018,616
SEE ACCOMPANYING SCHEDULE

6.RECEIVABLE FOR INVESTMENTS SOLD 7. 63,433

8.RECEIVABLE FOR FUND SHARES SOLD 9. 732

10.DIVIDENDS RECEIVABLE 11. 2,840

12.INTEREST RECEIVABLE 13. 772

14.OTHER RECEIVABLES 15. 213

16. 17.TOTAL ASSETS 18. 4,086,606

19.LIABILITIES 20. 21.

22.PAYABLE FOR INVESTMENTS PURCHASED $ 63,320 23.

24.PAYABLE FOR FUND SHARES REDEEMED 7,526 25.

26.ACCRUED MANAGEMENT FEE 1,339 27.

28.OTHER PAYABLES AND ACCRUED EXPENSES 743 29.

30. 31.TOTAL LIABILITIES 32. 72,928

33.34.NET ASSETS 35. $ 4,013,678

36.NET ASSETS CONSIST OF: 37. 38.

39.PAID IN CAPITAL 40. $ 2,928,541

41.UNDISTRIBUTED NET INVESTMENT INCOME 42. 25,339

43.ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 44. 625,657
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS

45.NET UNREALIZED APPRECIATION (DEPRECIATION) ON 46. 434,141
INVESTMENTS AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

47.48.NET ASSETS, FOR 196,091 SHARES OUTSTANDING 49. $ 4,013,678

50.51.NET ASSET VALUE, OFFERING PRICE AND REDEMPTION 52. $20.47
PRICE PER SHARE ($4,013,678 (DIVIDED BY) 196,091 SHARES)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1997

53.INVESTMENT INCOME 55. $ 42,238
54.DIVIDENDS

56.INTEREST 57. 8,409

58. 59.TOTAL INCOME 60. 50,647

61.EXPENSES 62. 63.

64.MANAGEMENT FEE $ 24,183 65.
BASIC FEE

66. PERFORMANCE ADJUSTMENT (7,529) 67.

68.TRANSFER AGENT FEES 7,710 69.

70.ACCOUNTING FEES AND EXPENSES 811 71.

72.NON-INTERESTED TRUSTEES' COMPENSATION 21 73.

74.CUSTODIAN FEES AND EXPENSES 275 75.

76.REGISTRATION FEES 49 77.

78.AUDIT 81 79.

80.LEGAL 37 81.

82.INTEREST 10 83.

84.MISCELLANEOUS 25 85.

86. TOTAL EXPENSES BEFORE REDUCTIONS 25,673 87.

88. EXPENSE REDUCTIONS (1,626) 24,047

89.90.NET INVESTMENT INCOME 91. 26,600

92.REALIZED AND UNREALIZED GAIN (LOSS) 94. 95.
93.NET REALIZED GAIN (LOSS) ON:

96. INVESTMENT SECURITIES (INCLUDING REALIZED GAIN OF $1,680 646,372 97.

ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)

98. FOREIGN CURRENCY TRANSACTIONS (5) 646,367

99.CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 100. 101.
ON:

102. INVESTMENT SECURITIES (88,772) 103.

104. ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (11) (88,783)

105.106.NET GAIN (LOSS) 107. 557,584

108.109.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 112. $ 584,184
110.111.
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1997 1996

113.INCREASE (DECREASE) IN NET ASSETS

114.OPERATIONS $ 26,600 $ 52,190
NET INVESTMENT INCOME

115. NET REALIZED GAIN (LOSS) 646,367 404,544

116. CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (88,783) 59,393

117. 584,184 516,127
118.NET INCREASE (DECREASE) IN NET ASSETS RESULTING
119.
120.
FROM OPERATIONS

121.DISTRIBUTIONS TO SHAREHOLDERS (53,940) (68,464)
FROM NET INVESTMENT INCOME

122. FROM NET REALIZED GAIN (425,251) (312,726)

123. 124.TOTAL DISTRIBUTIONS (479,191) (381,190)

125.SHARE TRANSACTIONS 466,641 659,602
NET PROCEEDS FROM SALES OF SHARES

126. REINVESTMENT OF DISTRIBUTIONS 478,301 380,575

127. COST OF SHARES REDEEMED (1,241,607) (939,573)

128.129.NET INCREASE (DECREASE) IN NET ASSETS (296,665) 100,604
RESULTING
130.
131.
FROM SHARE TRANSACTIONS

132. (191,672) 235,541
133.TOTAL INCREASE (DECREASE) IN NET ASSETS

134.NET ASSETS 135. 136.

137. BEGINNING OF PERIOD 4,205,350 3,969,809

138. $ 4,013,678 $ 4,205,350
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $25,339 AND $52,707, RESPECTIVELY)

139.OTHER INFORMATION 141. 142.
140.SHARES

143. SOLD 24,402 35,293

144. ISSUED IN REINVESTMENT OF DISTRIBUTIONS 27,647 21,160

145. REDEEMED (65,810) (50,139)

146. NET INCREASE (DECREASE) (13,761) 6,314

</TABLE>

FINANCIAL HIGHLIGHTS

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

147. 1997 1996 1995 1994 1993

148.SELECTED PER-SHARE DATA

149.NET ASSET VALUE, BEGINNING $ 20.04 $ 19.50 $ 18.01 $ 19.26 $ 19.77
150. OF PERIOD

151.INCOME FROM INVESTMENT
OPERATIONS

152. NET INVESTMENT INCOME .13 B .26 .34 .19 .09

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

154. TOTAL FROM INVESTMENT 2.74 2.40 3.43 .77 3.18
OPERATIONS

155.

156.LESS DISTRIBUTIONS

157. FROM NET INVESTMENT (.26) (.34) C (.20) (.14) (.16)
INCOME

158. FROM NET REALIZED GAIN (2.05) (1.52) C (1.74) (1.88) (3.53)

159. TOTAL DISTRIBUTIONS (2.31) (1.86) (1.94) (2.02) (3.69)

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

161.TOTAL RETURN A 15.78% 13.45% 21.43% 4.24% 19.47%

162.RATIOS AND SUPPLEMENTAL DATA

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

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

165.RATIO OF EXPENSES TO .59% D .70% D .99% 1.07% 1.05%
AVERAGE
NET ASSETS AFTER EXPENSE
REDUCTIONS

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

167.PORTFOLIO TURNOVER RATE 205% 230% 108% 72% 101%

168.AVERAGE COMMISSION RATE E $ .0377 $ .0307

</TABLE>

A 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).
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
D 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).
E 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 November 30, 1997

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 permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities (including restricted
securities) for which exchange quotations are not readily available
(and in certain cases debt securities which trade on an exchange) are
valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which quotations are not readily available are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts and foreign currency options, disposition of
foreign currencies, and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually
received. The effects of changes in foreign currency exchange rates on
investments in securities are included with the net realized and
unrealized gain or loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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 trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between
the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS.
Distributions are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions,
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. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading 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
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS -
CONTINUED
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 Securities and Exchange Commission, the fund may invest in the
Taxable Central Cash Fund (the Cash Fund) managed by FMR Texas, Inc.,
an affiliate of Fidelity Management & Research Company (FMR). The Cash
Fund is an open-end money market fund available only to investment
companies and other accounts managed by FMR and its affiliates. The
Cash Fund seeks preservation of capital, liquidity, and current income
by investing in U.S. Treasury securities and repurchase agreements for
these securities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
received by the fund are recorded as interest income in the
accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $7,912,031,000 and $8,671,166,000, 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 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 annual rate of .41% 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 annual rate of .19% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $2,935,000 for the
period.
5. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund
must pledge to the bank securities having a market value in excess of
220% of the total bank borrowings. The interest rate on the borrowings
is the bank's base rate, as revised from time to time. The maximum
loan and the average daily loan balance during the period for which
the loan was outstanding amounted to $33,899,000 and $15,767,000,
respectively. The weighted average interest rate was 5.74%.
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 $1,467,000 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 $12,000 and $147,000, respectively, under these
arrangements.
7. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNT IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
ADVO, Inc. $ - $ - $ - $ 30,222
Affiliated Computer Services, Inc.
Class A - 12,262 - -
TOTALS $ - $ 12,262 $ - $ 30,222
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Financial Trust and the Shareholders of
Fidelity Retirement Growth Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity Retirement Growth Fund(a fund of Fidelity Financial Trust) at
November 30, 1997, the results of its operations for the year then
ended, and the changes in its net assets and the financial highlights
for the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fidelity Retirement Growth Fund's management;
our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at November 30, 1997 by
correspondence with the custodian and the application of alternative
auditing procedures where securities purchased were not yet received
by the custodian, provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
January 6, 1998
DISTRIBUTIONS

The Board of Trustees of Fidelity Retirement Growth Fund voted to pay
to shareholders of record at the opening of business on record date,
the following distributions derived from capital gains realized from
sales of portfolio securities, and dividends derived from net
investment income:
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS
12/22/97 12/19/97 $.13 $3.41
A total of 5.99% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
A total of 36% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1998 of these percentages
for use in preparing 1997 income tax returns.
MANAGING YOUR INVESTMENTS

Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate
the service, and on your first call, the system will help you create a
personal identification number (PIN) for security.
SM
(PHONE_GRAPHIC)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.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)
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

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
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Capital Appreciation Fund
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Dividend Growth Fund
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Growth Company Fund
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Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(registered trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Stock Fund
Stock Selector
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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 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE

(2_FIDELITY_LOGOS)FIDELITY

EQUITY-INCOME II
FUND
ANNUAL REPORT
NOVEMBER 30, 1997
CONTENTS

PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.

PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.

FUND TALK 6 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.

INVESTMENT CHANGES 9 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.

INVESTMENTS 10 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.

FINANCIAL STATEMENTS 20 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 24 NOTES TO THE FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT 28 THE AUDITORS' OPINION.
ACCOUNTANTS

DISTRIBUTIONS 29

FIDELITY EQUITY-INCOME II 22.30% 132.78% 314.52%

S&P 500(REGISTERED TRADEMARK) 28.51% 150.41% 261.43%

EQUITY INCOME FUNDS AVERAGE 23.99% 119.16% N/A

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 one year average represents a peer group of
178 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 NOVEMBER 30, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND

FIDELITY EQUITY-INCOME II 22.30% 18.41% 21.56%

S&P 500 28.51% 20.15% 19.30%

EQUITY INCOME FUNDS AVERAGE 23.99% 16.84% N/A

$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19971130 19971209 140634 S00000000000001
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
1997/11/28 41451.65 36142.58
IMATRL PRASUN SHR__CHT 19971130 19971209 140638 R00000000000091
$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 November 30, 1997, the value
of the investment would have grown to $41,452 - a 314.52% increase on
the initial investment. For comparison, look at how the S&P 500 did
over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $36,143 -
a 261.43% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
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
The 12 months that ended
November 30, 1997, was a period
that truly tested the U.S. stock
market's resolve. But despite
frequent shifts in sentiment, an
interest-rate hike and global
volatility concerns, U.S. stocks still
managed to perform well. The
Standard & Poor's 500 Index - a
broad gauge of the U.S. stock
market - returned 28.51% during
the period, well above the market's
long-term annual average of
around 11%. In the first half of the
period, large-cap stocks were
responsible for much of the
market's gain, as investors were
drawn to stocks with recognizable
names and consistent
earnings-growth track records.
Consequently, stock prices soared
and enthusiasm was high. The
Federal Reserve Board - in an
attempt to halt inflation before it
appeared - raised a key
short-term interest rate by 0.25% in
March. The market paused briefly,
but then kept rolling as the Dow
Jones Industrial Average reached
the 8,000-point mark for the first
time ever in August. With several
multinational companies
announcing earnings shortfalls in
mid-August, small-cap stocks came
into favor among investors.
During August and September, the
Russell 2000 Index - which
measures small-cap stock
performance - was up 9.78%
while the S&P was down 0.43%.
Volatility in Asian markets in late
October sent skittish investors
running for cover. The Dow slid
554 points in one day, then
snapped back the next, reclaiming
330-plus points. Sensing continued
fallout from this volatility, investors
again became quality-conscious
and large-caps regained their
perch through November.
An interview with Bettina Doulton, Portfolio Manager of Fidelity
Equity-Income II Fund
Q. HOW DID THE FUND PERFORM, BETTINA?
A. For the 12 months that ended November 30, 1997, the fund's total
return was 22.30%. The equity income funds average returned 23.99% for
the same period, according to Lipper Analytical Services. The Standard
& Poor's 500 Index returned 28.51%.
Q. WHAT FACTORS CONTRIBUTED TO PERFORMANCE?
A. Subsequent to a fund repositioning earlier in the year, the fund's
performance - in absolute terms - improved over the second half of the
period. In addition, the month of August was a difficult stretch for
the fund as it lost considerable ground to its Lipper peer group.
While I'm never satisfied when the fund underperforms, its recent
performance has certainly been encouraging.
Q. WHAT HAPPENED DURING AUGUST?
A. During August, some U.S. companies began to feel the effects of the
Southeast Asian economic crises, which began to unfold earlier in the
summer. In particular, several blue-chip multinationals revised their
earnings expectations downward in the third quarter of 1997. Slowing
sales in the region and adverse currency translation effects were both
responsible for this earnings deterioration; Coca-Cola and Gillette
were the two most noteworthy examples. The fund didn't hold either of
these two stocks, but their earnings difficulties triggered a sell-off
of many other blue-chip multinationals - including some prominent fund
holdings such as Citicorp and Procter & Gamble - and a market rotation
into small- to medium-capitalization stocks.
Q. WHAT STRATEGIES BENEFITED FUND PERFORMANCE?
A. Emphasizing finance and pharmaceutical stocks, which were among the
best-performing groups during the period, was one of the most helpful
strategies. While I typically focus on individual stocks - rather than
industry sectors - my analysis uncovered many attractive investments
among diversified finance companies and drug firms. Cost-cutting,
consolidation and moderate interest rates buoyed finance stocks, while
solid pipelines of successful new products continued to support
pharmaceutical stocks. Diversified consumer financial company American
Express and drug-maker Bristol-Myers Squibb - both top holdings - were
among the most notable outperformers relative to the market. Relative
to its index, the fund also benefited from overweighted positions in
several retailers, particularly Wal-Mart. Retailing stocks were very
strong generally, helped by strong sales and more disciplined capital
management.
Q. WERE THE FUND'S TOP HOLDINGS GOOD CONTRIBUTORS?
A. Yes, they were. Over the past year, five of the 10 largest stock
holdings outperformed the S&P 500, several by remarkable margins. In
addition to those stocks I've already highlighted, other
strong-performing top holdings included BankAmerica and General
Electric.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS, IN VIEW OF THE
SOUTHEAST ASIAN CRISES?
A. Looking broadly, I remain optimistic regarding U.S. stocks. That
said, I think it's safe to say that recent high levels of market
volatility will continue, in part because of the uncertainty that has
resulted from economic difficulties in Southeast Asia. At this point,
it's not entirely clear the degree to which these events will
influence global economic growth and corporate profits overall.
Nevertheless, I am expecting slower economic growth, particularly in
Southeast Asia. Accordingly, I have reduced the fund's exposure to
cyclicals, or economically sensitive stocks - particularly
infrastructure-related companies - whose earnings appeared
disproportionately sensitive to the potential fallout from Southeast
Asia. However, there are some beneficial aspects related to the
Southeast Asian crises. Perhaps most importantly, Asian currency
devaluations will provide downward pressure on U.S. import prices and
inflation, which should help maintain the favorable interest-rate
environment. Additionally, many companies that manufacture in
Southeast Asia will have lower costs of production.
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.

TOP TEN STOCKS AS OF NOVEMBER 30, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO

GENERAL ELECTRIC CO. 4.3 3.6

CITICORP 3.9 2.3

AMERICAN EXPRESS CO. 3.8 3.6

PHILIP MORRIS COMPANIES, INC. 3.2 3.2

BRISTOL-MYERS SQUIBB CO. 3.0 2.0

AMERICAN HOME PRODUCTS CORP. 2.4 1.4

BRITISH PETROLEUM PLC ADR 2.2 2.2

BANKAMERICA CORP. 2.2 1.4

BANK OF NEW YORK CO., INC. 2.1 1.8

SCHERING-PLOUGH CORP. 1.9 1.6

TOP FIVE MARKET SECTORS AS OF NOVEMBER 30, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO

FINANCE 25.9 17.9

HEALTH 11.0 10.6

NONDURABLES 10.9 11.8

ENERGY 10.0 10.1

INDUSTRIAL MACHINERY & EQUIPMENT 7.9 8.1

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF NOVEMBER 30, 1997 * AS OF MAY 31, 1997 **
0
ROW: 1, COL: 1, VALUE: 7.3
ROW: 1, COL: 2, VALUE: 2.5
ROW: 1, COL: 3, VALUE: 1.4
ROW: 1, COL: 4, VALUE: 88.8
STOCKS 91.4%
BONDS 1.2%
CONVERTIBLE
SECURITIES 1.5%
SHORT-TERM
INVESTMENTS 5.9%
FOREIGN
INVESTMENTS 9.0%
STOCKS 90.8%
BONDS 0.4%
CONVERTIBLE
SECURITIES 1.5%
SHORT-TERM
INVESTMENTS 7.3%
FOREIGN
INVESTMENTS 9.6%
ROW: 1, COL: 1, VALUE: 5.9
ROW: 1, COL: 2, VALUE: 2.5
ROW: 1, COL: 3, VALUE: 2.2
ROW: 1, COL: 4, VALUE: 89.40000000000001
*
**
INVESTMENTS NOVEMBER 30, 1997

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

COMMON STOCKS - 90.8%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 3.4%
AEROSPACE & DEFENSE - 3.2%
AlliedSignal, Inc. 4,912,200 $ 182,366
Gulfstream Aerospace Corp. (a) 1,182,000 34,721
Lockheed Martin Corp. 2,267,054 221,180
Sundstrand Corp. 803,200 41,214
United Technologies Corp. 656,300 49,181
528,662
DEFENSE ELECTRONICS - 0.2%
Raytheon Co. 749,600 41,930
TOTAL AEROSPACE & DEFENSE 570,592
BASIC INDUSTRIES - 2.7%
CHEMICALS & PLASTICS - 1.9%
Air Products & Chemicals, Inc. 956,100 73,321
Cytec Industries, Inc. (a) 413,000 18,895
Monsanto Co. 1,387,400 60,612
Nalco Chemical Co. 1,116,100 43,319
Praxair, Inc. 745,900 32,773
W.R. Grace & Co. 1,161,100 84,470
313,390
PAPER & FOREST PRODUCTS - 0.8%
Kimberly-Clark Corp. 2,729,400 142,099
TOTAL BASIC INDUSTRIES 455,489
CONSTRUCTION & REAL ESTATE - 2.0%
BUILDING MATERIALS - 0.9%
Masco Corp. 3,309,300 155,951
REAL ESTATE INVESTMENT TRUSTS - 1.1%
Beacon Properties Corp. 606,900 27,310
Cali Realty Corp. 577,300 22,912
Duke Realty Investors, Inc. 543,200 12,494
Equity Residential Properties Trust (SBI) 441,700 22,085
Macerich Co. 606,000 16,438
Patriot American Hospitality, Inc. 600,009 18,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Public Storage, Inc. 574,800 $ 15,879
Reckson Associates Realty Corp. 462,400 12,282
Starwood Lodging Trust combined certificate (SBI) 618,000 33,140
181,290
TOTAL CONSTRUCTION & REAL ESTATE 337,241
DURABLES - 0.9%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Johnson Controls, Inc. 245,500 11,247
CONSUMER DURABLES - 0.8%
Minnesota Mining & Manufacturing Co. 1,363,200 132,827
CONSUMER ELECTRONICS - 0.1%
Philips Electronics NV (Bearer) 200,000 13,199
TOTAL DURABLES 157,273
ENERGY - 10.0%
ENERGY SERVICES - 0.5%
Halliburton Co. 777,800 41,953
Schlumberger Ltd. 525,800 43,280
85,233
OIL & GAS - 9.5%
Amoco Corp. 1,016,900 91,521
British Petroleum PLC:
Ord. 340 5
ADR 4,418,514 366,737
Burlington Resources, Inc. 1,687,100 75,076
Chevron Corp. 943,100 75,625
Coastal Corp. (The) 994,200 58,223
Exxon Corp. 1,120,200 68,332
Mobil Corp. 517,100 37,199
Royal Dutch Petroleum Co. 5,964,400 314,249
Texaco, Inc. 3,073,500 173,653
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
ENERGY - CONTINUED
OIL & GAS - CONTINUED
Total SA:
Class B 1,857,442 $ 194,957
sponsored ADR 559,413 29,404
USX-Marathon Group 2,924,300 100,157
1,585,138
TOTAL ENERGY 1,670,371
FINANCE - 25.8%
BANKS - 12.6%
Banc One Corp. 1,006,100 51,689
Bank of New York Co., Inc. 6,434,928 345,877
BankAmerica Corp. 4,951,000 361,423
Chase Manhattan Corp. 2,645,500 287,368
Citicorp 5,402,700 647,986
National City Corp. 280,300 18,710
NationsBank Corp. 3,220,000 193,401
Norwest Corp. 490,900 18,378
U.S. Bancorp 791,400 85,125
Wells Fargo & Co. 321,400 98,750
2,108,707
CREDIT & OTHER FINANCE - 4.8%
American Express Co. 7,995,612 630,654
Beneficial Corp. 595,700 46,241
First Chicago NBD Corp. 715,000 55,949
Household International, Inc. 565,600 71,265
804,109
FEDERAL SPONSORED CREDIT - 2.6%
Federal Home Loan Mortgage Corporation 3,192,000 131,670
Federal National Mortgage Association 5,503,300 290,643
422,313
INSURANCE - 4.9%
Allstate Corp. 3,462,500 297,342
American International Group, Inc. 350,000 35,285
Hartford Financial Services Group, Inc. 1,588,300 133,020
MBIA, Inc. 1,924,200 120,984
Progressive Corp. 253,600 25,867
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
INSURANCE - CONTINUED
St. Paul Companies, Inc. (The) 663,800 $ 53,104
Travelers Group, Inc. (The) 2,461,072 124,284
Terra Nova (Bermuda) Holdings Ltd. 952,100 25,469
815,355
SAVINGS & LOANS - 0.9%
Washington Mutual, Inc. 2,211,370 152,861
TOTAL FINANCE 4,303,345
HEALTH - 10.9%
DRUGS & PHARMACEUTICALS - 9.1%
American Home Products Corp. 5,696,500 398,043
Bristol-Myers Squibb Co. 5,397,300 505,322
Glaxo PLC sponsored ADR 92,000 4,203
Merck & Co., Inc. 850,600 80,435
Novartis AG (Reg.) 26,227 41,881
Pfizer, Inc. 700,000 50,925
Schering-Plough Corp. 5,172,500 324,251
SmithKline Beecham PLC ADR 2,306,900 114,480
1,519,540
MEDICAL EQUIPMENT & SUPPLIES - 0.9%
Baxter International, Inc. 2,450,000 124,031
Johnson & Johnson 466,400 29,354
153,385
MEDICAL FACILITIES MANAGEMENT - 0.9%
Columbia/HCA Healthcare Corp. 3,060,000 90,270
Tenet Healthcare Corp. (a) 1,545,800 48,983
139,253
TOTAL HEALTH 1,812,178
INDUSTRIAL MACHINERY & EQUIPMENT - 7.8%
ELECTRICAL EQUIPMENT - 4.5%
Emerson Electric Co. 595,400 32,747
General Electric Co. 9,642,600 711,142
743,889
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 2.2%
Cooper Industries, Inc. 1,656,238 $ 85,503
Ingersoll-Rand Co. 1,636,100 66,876
Stanley Works 2,258,000 99,493
Tyco International Ltd. 3,046,838 119,588
371,460
POLLUTION CONTROL - 1.1%
Browning-Ferris Industries, Inc. 4,647,700 165,865
Waste Management, Inc. 951,900 23,440
189,305
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,304,654
MEDIA & LEISURE - 1.6%
BROADCASTING - 1.1%
Time Warner, Inc. 3,189,300 185,777
PUBLISHING - 0.5%
McGraw-Hill, Inc. 523,000 35,793
Times Mirror Co. Class A 713,100 42,340
78,133
TOTAL MEDIA & LEISURE 263,910
NONDURABLES - 10.9%
BEVERAGES - 0.5%
PepsiCo, Inc. 2,164,500 79,816
FOODS - 2.4%
Campbell Soup Co. 1,015,300 56,857
Heinz (H.J.) Co. 2,338,700 117,081
Nabisco Holdings Corp. Class A 728,300 33,957
Ralston Purina Co. 854,000 79,422
Sara Lee Corp. 2,315,000 122,406
409,723
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 4.2%
Procter & Gamble Co. 3,637,400 $ 277,579
Unilever PLC Ord. 17,288,800 136,186
Unilever NV:
Ord. 200,000 11,621
ADR 4,637,100 269,241
694,627
TOBACCO - 3.8%
Philip Morris Companies, Inc. 12,279,000 534,136
RJR Nabisco Holdings Corp. 2,836,800 103,366
637,502
TOTAL NONDURABLES 1,821,668
RETAIL & WHOLESALE - 5.4%
APPAREL STORES - 0.4%
Payless ShoeSource, Inc. (a) 1,042,308 66,186
DRUG STORES - 0.9%
Rite Aid Corp. 2,150,700 141,409
GENERAL MERCHANDISE STORES - 3.7%
Dayton Hudson Corp. 1,436,700 95,451
Federated Department Stores, Inc. (a) 3,881,100 176,832
Penney (J.C.) Co., Inc. 608,400 39,090
Wal-Mart Stores, Inc. 7,583,000 302,846
614,219
GROCERY STORES - 0.4%
Albertson's, Inc. 559,600 24,832
American Stores Co. 2,201,400 43,616
Asda Group PLC 2,000,000 5,392
73,840
TOTAL RETAIL & WHOLESALE 895,654
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
SERVICES - 1.2%
ADVERTISING - 0.2%
WPP Group PLC (d) 6,000,000 $ 26,884
LEASING & RENTAL - 0.5%
Ryder Systems, Inc. 2,129,100 77,313
PRINTING - 0.5%
Donnelley (R.R.) & Sons Co. 2,546,800 89,775
TOTAL SERVICES 193,972
TECHNOLOGY - 2.6%
COMPUTER SERVICES & SOFTWARE - 0.1%
Electronic Data Systems Corp. 607,100 23,070
COMPUTERS & OFFICE EQUIPMENT - 2.3%
Pitney Bowes, Inc. 2,738,900 230,239
Xerox Corp. 1,847,100 143,496
373,735
ELECTRONICS - 0.2%
Thomas & Betts Corp. 688,800 31,254
TOTAL TECHNOLOGY 428,059
TRANSPORTATION - 0.7%
RAILROADS - 0.7%
CSX Corp. 1,459,700 76,361
Union Pacific Corp. 797,600 47,856
124,217
UTILITIES - 4.9%
ELECTRIC UTILITY - 0.6%
American Electric Power Co., Inc. 743,000 36,825
CMS Energy Corp. 1,632,300 64,272
101,097
TELEPHONE SERVICES - 4.3%
AT&T Corp. 2,510,800 140,291
ALLTEL Corp. 1,657,900 65,901
Ameritech Corp. 1,943,300 149,756
Bell Atlantic Corp. 507,248 45,272
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
Frontier Corp. 934,800 $ 22,903
GTE Corp. 873,300 44,156
MCI Communications Corp. 2,132,900 93,714
SBC Communications, Inc. 1,857,400 135,242
Sprint Corp. 400,000 23,425
720,660
TOTAL UTILITIES 821,757
TOTAL COMMON STOCKS
(Cost $11,002,523) 15,160,380
CONVERTIBLE PREFERRED STOCKS - 0.1%
DURABLES - 0.1%
AUTOS, TIRES, & ACCESSORIES - 0.1%
Republic Industries, Inc. $1.55 402,000 10,779
HEALTH - 0.0%
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
McKesson Financing Trust $2.50 50,000 3,950
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $13,129) 14,729
CORPORATE BONDS - 1.8%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
CONVERTIBLE BONDS - 1.4%
CONSTRUCTION & REAL ESTATE - 0.0%
REAL ESTATE INVESTMENT TRUSTS - 0.0%
Centerpoint Properties Trust 8.22%, 1/15/04 Baa3 $ 1,030 1,839
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
POLLUTION CONTROL - 0.1%
WMX Technologies, Inc. 2%, 1/24/05 Baa2 $ 22,500 $ 18,759
MEDIA & LEISURE - 0.3%
BROADCASTING - 0.3%
Time Warner, Inc. liquid yield option notes
0%, 6/22/13 Ba1 87,460 42,855
RETAIL & WHOLESALE - 0.4%
GENERAL MERCHANDISE STORES - 0.4%
Federated Department Stores, Inc.
5%, 10/1/03 Baa3 43,100 60,717
SERVICES - 0.6%
ADT Operations, Inc. liquid yield option notes
0%, 7/6/10 Ba3 87,940 93,656
TECHNOLOGY - 0.0%
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Unisys Corp. 8 1/4%, 3/15/06 B3 4,000 8,970
TOTAL CONVERTIBLE BONDS 226,796
NONCONVERTIBLE BONDS - 0.4%
CONSTRUCTION & REAL ESTATE - 0.1%
BUILDING MATERIALS - 0.1%
American Standard, Inc. 10 1/2%, 6/1/05 (c) B1 15,000 15,112
FINANCE - 0.1%
ASSET BACKED SECURITIES - 0.1%
Airplanes Pass Through Trust Class D
10 7/8%, 3/15/19 Ba2 12,610 14,218
SAVINGS & LOANS - 0.0%
Coast Savings Financial, Inc. 10%, 3/1/00 Ba2 2,800 2,965
TOTAL Finance 17,183
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) AMOUNT (000S) (000S)
NONCONVERTIBLE BONDS - CONTINUED
HEALTH - 0.1%
MEDICAL FACILITIES MANAGEMENT - 0.1%
Tenet Healthcare Corp.:
8 5/8%, 12/1/03 Ba1 $ 7,480 $ 7,760
8%, 1/15/05 Ba1 5,560 5,581
8 5/8%, 1/15/07 Ba3 490 499
13,840
TRANSPORTATION - 0.1%
AIR TRANSPORTATION - 0.1%
AMR Corp. 7 3/4%, 12/1/97 Baa3 26,000 26,000
TOTAL NONCONVERTIBLE BONDS 72,135
TOTAL CORPORATE BONDS
(Cost $240,983) 298,931
CASH EQUIVALENTS - 7.3%
SHARES
Taxable Central Cash Fund (b)
(Cost $1,225,337) 1,225,337,125 1,225,337
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $12,481,972) $ 16,699,377
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 5.69%. 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 at one coupon which converts to a
higher coupon at a specified 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
$26,884,000 or 0.2% of net assets.
INCOME TAX INFORMATION
At November 30, 1997, the aggregate cost of investment securities for
income tax purposes was $12,486,830,000. Net unrealized appreciation
aggregated $4,212,547,000 of which $4,341,335,000 related to
appreciated investment securities and $128,788,000 related to
depreciated investment securities.
The fund hereby designates approximately $201,994,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) NOVEMBER 30, 1997

169.ASSETS 170. 171.

172.INVESTMENT IN SECURITIES, AT VALUE (COST $12,481,972) 173. $ 16,699,377
- -
SEE ACCOMPANYING SCHEDULE

174.RECEIVABLE FOR INVESTMENTS SOLD 175. 35,437

176.RECEIVABLE FOR FUND SHARES SOLD 177. 10,210

178.DIVIDENDS RECEIVABLE 179. 26,480

180.INTEREST RECEIVABLE 181. 7,179

182.OTHER RECEIVABLES 183. 297

184. 185.TOTAL ASSETS 186. 16,778,980

187.LIABILITIES 188. 189.

190.PAYABLE FOR INVESTMENTS PURCHASED $ 97,040 191.

192.PAYABLE FOR FUND SHARES REDEEMED 22,094 193.

194.ACCRUED MANAGEMENT FEE 6,791 195.

196.OTHER PAYABLES AND ACCRUED EXPENSES 2,673 197.

198. 199.TOTAL LIABILITIES 200. 128,598

201.202.NET ASSETS 203. $ 16,650,382

204.NET ASSETS CONSIST OF: 205. 206.

207.PAID IN CAPITAL 208. $ 10,502,182

209.UNDISTRIBUTED NET INVESTMENT INCOME 210. 25,479

211.ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) 212. 1,905,337
ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS

213.NET UNREALIZED APPRECIATION (DEPRECIATION) ON 214. 4,217,384
INVESTMENTS AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

215.216.NET ASSETS, FOR 577,900 SHARES OUTSTANDING 217. $ 16,650,382

218.219.NET ASSET VALUE, OFFERING PRICE AND REDEMPTION 220. $28.81
PRICE
PER SHARE ($16,650,382 (DIVIDED BY) 577,900 SHARES)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1997

221.INVESTMENT INCOME 223. $ 284,055
222.DIVIDENDS (INCLUDING $447 RECEIVED FROM AFFILIATED
ISSUERS)

224.INTEREST 225. 76,871

226. 227.TOTAL INCOME 228. 360,926

229.EXPENSES 230. 231.

232.MANAGEMENT FEE $ 79,595 233.

234.TRANSFER AGENT FEES 30,084 235.

236.ACCOUNTING FEES AND EXPENSES 841 237.

238.NON-INTERESTED TRUSTEES' COMPENSATION 95 239.

240.CUSTODIAN FEES AND EXPENSES 383 241.

242.REGISTRATION FEES 154 243.

244.AUDIT 111 245.

246.LEGAL 94 247.

248.INTEREST 8 249.

250.MISCELLANEOUS 107 251.

252. TOTAL EXPENSES BEFORE REDUCTIONS 111,472 253.

254. EXPENSE REDUCTIONS (2,470) 109,002

255.256.NET INVESTMENT INCOME 257. 251,924

258.REALIZED AND UNREALIZED GAIN (LOSS) 260. 261.
259.NET REALIZED GAIN (LOSS) ON:

262. INVESTMENT SECURITIES (INCLUDING REALIZED GAIN (LOSS) OF 1,914,650 263.
$6,899 ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)

264. FOREIGN CURRENCY TRANSACTIONS (371) 1,914,279

265.CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 266. 267.
ON:

268. INVESTMENT SECURITIES 1,038,176 269.

270. ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (18) 1,038,158

271.272.NET GAIN (LOSS) 273. 2,952,437

274.275.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 276. $ 3,204,361
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1997 1996

277.INCREASE (DECREASE) IN NET ASSETS

278.OPERATIONS $ 251,924 $ 291,770
NET INVESTMENT INCOME

279. NET REALIZED GAIN (LOSS) 1,914,279 828,609

280. CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,038,158 1,678,837

281. 3,204,361 2,799,216
282.NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS

283.DISTRIBUTIONS TO SHAREHOLDERS (297,983) (257,012)
FROM NET INVESTMENT INCOME

284. FROM NET REALIZED GAIN (715,007) (347,350)

285. 286.TOTAL DISTRIBUTIONS (1,012,990) (604,362)

287.SHARE TRANSACTIONS 2,859,865 4,678,475
NET PROCEEDS FROM SALES OF SHARES

288. REINVESTMENT OF DISTRIBUTIONS 980,564 583,372

289. COST OF SHARES REDEEMED (4,977,444) (3,413,375)

290.291. (1,137,015) 1,848,472
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS

292. 1,054,356 4,043,326
293.TOTAL INCREASE (DECREASE) IN NET ASSETS

294.NET ASSETS 295. 296.

297. BEGINNING OF PERIOD 15,596,026 11,552,700

298. $ 16,650,382 $ 15,596,026
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $25,479 AND $70,992, RESPECTIVELY)

299.OTHER INFORMATION 301. 302.
300.SHARES

303. SOLD 110,027 206,780

304. ISSUED IN REINVESTMENT OF DISTRIBUTIONS 40,102 26,774

305. REDEEMED (191,956) (150,529)

306. NET INCREASE (DECREASE) (41,827) 83,025

</TABLE>

FINANCIAL HIGHLIGHTS

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

308. 1997 1996 1995 1994 1993

309.SELECTED PER-SHARE
DATA

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

311.INCOME FROM
INVESTMENT OPERATIONS

312. NET INVESTMENT .42 B .48 .42 .37 .44
INCOME

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

314. TOTAL FROM 5.29 4.71 4.22 .90 3.06
INVESTMENT OPERATIONS

315.

316.LESS DISTRIBUTIONS

317. FROM NET INVESTMENT (.49) (.43) (.40) (.47) (.41)
INCOME

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

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

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

321.TOTAL RETURN A 22.30% 22.75% 24.13% 4.91% 19.08%

322.RATIOS AND SUPPLEMENTAL DATA

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

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

325.RATIO OF EXPENSES TO .68% C .72% C .75% C .81% C .88% C
AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS

326.RATIO OF NET 1.58% 2.13% 2.37% 2.36% 2.69%
INVESTMENT INCOME TO
AVERAGE
NET ASSETS

327.PORTFOLIO TURNOVER 77% 46% 45% 75% 55%
RATE

328.AVERAGE COMMISSION $ .0421 $ .0397
RATE D

</TABLE>

F THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE6 OF NOTES TO FINANCIAL
STATEMENTS).
G NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
H 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).
I 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 November 30, 1997

8. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Equity-Income II Fund (the fund) is a fund of Fidelity
Financial Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities (including restricted
securities) for which exchange quotations are not readily available
(and in certain cases debt securities which trade on an exchange) are
valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which quotations are not readily available are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information".
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
the securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
between the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for 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.
9. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
the principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR Texas, 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
received by the fund are recorded as interest income in the
accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities (excluding 144A issues).
10. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $11,409,005,000 and $13,265,883,000, respectively.
11. 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 annual 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES - CONTINUED
of all shareholder reports, except proxy statements. For the period,
the transfer agent fees were equivalent to an annual rate of .19% 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 $3,692,000 for the
period.
12. 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 $24,352,000 and $12,348,000, respectively. The weighted average
interest rate was 6.0%.
13. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $2,470,000 under this arrangement.
14. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNTS IN THOUSANDS
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
Angerstein Underwriting Trust PLC $ - $ 5,243 $ 134 $ -
Berkley (W.R.) Corp. - 2,486 286 -
Ferro Corp. - 7,649 - -
Gryphon Holdings, Inc. - 7,125 - -
McDermott (J.Ray) SA - 14,345 - -
Russell Corp. - 3,082 - -
Ryerson Tull, Inc. Class A - 1,755 - -
Stewart & Stevenson Services, Inc. - 1,295 - -
Syndicate Capital Trust PLC - 2,197 - -
Terra Nova (Bermuda) Holdings Ltd. - 1,705 27 -
Western Atlas, Inc. - 27,052 - -
TOTALS $ - $ 73,934 $ 447 $ -
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Financial Trust and the Shareholders of
Fidelity Equity-Income II Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments (except for Moody's and Standard
& Poor's ratings), and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in
all material respects, the financial position of Fidelity
Equity-Income II Fund (a fund of Fidelity Financial Trust) at November
30, 1997, the results of its operations for the year then ended, and
the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fidelity Equity-Income II Fund's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at November 30, 1997 by correspondence with the
custodian and the application of alternative auditing procedures where
securities purchased were not yet received by the custodian, provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
January 8, 1998
DISTRIBUTIONS

The Board of Trustees of Fidelity Equity-Income II Fund voted to pay
to shareholders of record at the opening of business on record date,
the following distributions derived from capital gains realized from
sales of portfolio securities, and dividends derived from net
investment income:
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS
12/22/97 12/19/97 $.09 $2.51
1/5/98 1/2/98 - $.43
A total of 49% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
A total of 2.91% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
The fund will notify shareholders in January 1998 of these percentages
for use in preparing 1997 income tax returns.
MANAGING YOUR INVESTMENTS

For quotes.*

For account balances and holdings.

To review orders and mutual
fund activity.

To change your PIN.

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
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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
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
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(registered trademark)
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SM
AUTOMATED LINE FOR QUICKEST SERVICE

(2_FIDELITY_LOGOS)FIDELITY

CONVERTIBLE SECURITIES
FUND
ANNUAL REPORT
NOVEMBER 30, 1997
CONTENTS

PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.

PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.

FUND TALK 6 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.

INVESTMENT CHANGES 9 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS.

INVESTMENTS 10 A COMPLETE LIST OF THE FUND'S INVESTMENTS
WITH THEIR MARKET VALUES.

FINANCIAL STATEMENTS 22 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.

NOTES 26 NOTES TO THE FINANCIAL STATEMENTS.

REPORT OF INDEPENDENT 30 THE AUDITORS' OPINION.
ACCOUNTANTS

DISTRIBUTIONS 31

FIDELITY CONVERTIBLE SECURITIES 14.84% 87.55% 351.30%

MERRILL LYNCH CONVERTIBLE SECURITIES INDEX 16.79% 92.19% N/A

CONVERTIBLE SECURITIES FUNDS AVERAGE 16.37% 82.19% 253.89%

CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 one year average represents a peer group of 50 mutual funds.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS

FIDELITY CONVERTIBLE SECURITIES 14.84% 13.40% 16.26%

MERRILL LYNCH CONVERTIBLE SECURITIES INDEX 16.79% 13.96% N/A

CONVERTIBLE SECURITIES FUNDS AVERAGE 16.37% 12.62% 13.30%

$10,000 OVER 10 YEARS
IMAHDR PRASUN SHR__CHT 19971130 19971209 140020 S00000000000001
Convertible Securities FB Conv. Sec. Index
00308 FB002
1987/11/30 10000.00 10000.00
1987/12/31 10280.47 10509.00
1988/01/31 10663.74 10801.15
1988/02/29 11103.36 11298.00
1988/03/31 11250.23 11259.59
1988/04/30 11467.46 11492.66
1988/05/31 11387.42 11378.89
1988/06/30 11860.36 11816.97
1988/07/31 11779.20 11694.08
1988/08/31 11605.30 11487.09
1988/09/30 11757.65 11692.71
1988/10/31 11945.78 11841.21
1988/11/30 11769.41 11648.20
1988/12/31 11914.13 11918.43
1989/01/31 12423.18 12453.57
1989/02/28 12556.50 12451.08
1989/03/31 12922.06 12612.95
1989/04/30 13401.11 13036.74
1989/05/31 13708.19 13301.39
1989/06/30 13818.28 13204.29
1989/07/31 14440.17 13583.25
1989/08/31 14912.80 13882.08
1989/09/30 14925.24 13761.31
1989/10/31 14623.21 13326.45
1989/11/30 14862.31 13543.67
1989/12/31 15045.44 13558.57
1990/01/31 14487.72 13018.94
1990/02/28 14656.33 13190.79
1990/03/31 14944.10 13392.61
1990/04/30 14825.92 13093.95
1990/05/31 15416.85 13729.01
1990/06/30 15588.99 13712.53
1990/07/31 15482.67 13590.49
1990/08/31 14459.35 12807.68
1990/09/30 13745.81 12247.98
1990/10/31 13476.55 11789.91
1990/11/30 14176.63 12366.44
1990/12/31 14610.00 12624.89
1991/01/31 15515.41 13191.75
1991/02/28 16516.84 13979.30
1991/03/31 16955.99 14321.79
1991/04/30 17150.24 14466.44
1991/05/31 17733.02 14894.65
1991/06/30 17396.32 14479.09
1991/07/31 18097.78 15029.29
1991/08/31 18785.22 15589.89
1991/09/30 19098.79 15561.82
1991/10/31 19921.16 15785.91
1991/11/30 19070.43 15405.47
1991/12/31 20269.54 16300.53
1992/01/31 21292.65 16752.06
1992/02/29 21989.55 17185.94
1992/03/31 21618.72 17043.29
1992/04/30 21798.37 17237.59
1992/05/31 22217.57 17551.31
1992/06/30 22085.01 17468.82
1992/07/31 22689.66 17949.21
1992/08/31 22251.29 17836.13
1992/09/30 22781.36 18192.85
1992/10/31 23315.41 18236.52
1992/11/30 24063.09 18763.55
1992/12/31 24732.80 19180.10
1993/01/31 25559.88 19778.52
1993/02/28 25114.53 19855.66
1993/03/31 26364.30 20582.38
1993/04/30 26605.29 20578.26
1993/05/31 27264.00 20938.38
1993/06/30 27232.79 21137.29
1993/07/31 27508.52 21355.01
1993/08/31 28157.31 21940.13
1993/09/30 28484.41 22188.06
1993/10/31 29139.22 22711.70
1993/11/30 28860.93 22368.75
1993/12/31 29132.23 22737.83
1994/01/31 29858.32 23390.41
1994/02/28 29380.16 23018.50
1994/03/31 28094.09 22079.35
1994/04/30 27628.54 21677.50
1994/05/31 27521.11 21725.19
1994/06/30 27500.39 21479.70
1994/07/31 27990.17 22085.43
1994/08/31 29477.66 22520.51
1994/09/30 29293.55 22121.90
1994/10/31 29477.21 22312.14
1994/11/30 28705.84 21502.21
1994/12/31 28620.70 21665.63
1995/01/31 28620.70 21637.46
1995/02/28 29216.96 22345.01
1995/03/31 30080.38 22934.92
1995/04/30 30758.03 23455.54
1995/05/31 31096.86 24147.48
1995/06/30 31874.68 25026.45
1995/07/31 32710.99 25914.89
1995/08/31 33091.13 26186.99
1995/09/30 33719.22 26577.18
1995/10/31 32894.46 25761.26
1995/11/30 33872.67 26657.75
1995/12/31 34167.54 26804.37
1996/01/31 34863.18 27396.75
1996/02/29 35702.52 28133.72
1996/03/31 36159.00 28370.04
1996/04/30 37006.15 29031.06
1996/05/31 37605.36 29678.46
1996/06/30 37189.42 28975.08
1996/07/31 35436.38 27845.05
1996/08/31 36417.25 28880.88
1996/09/30 37212.21 29634.68
1996/10/31 37654.96 29818.41
1996/11/30 39299.47 29911.44
1996/12/31 39308.38 29576.44
1997/01/31 40584.33 30516.97
1997/02/28 39823.24 30358.28
1997/03/31 38440.99 29729.86
1997/04/30 38984.33 30030.13
1997/05/31 41248.22 31420.53
1997/06/30 42480.45 32334.87
1997/07/31 44631.94 34106.82
1997/08/31 44425.94 34130.69
1997/09/30 47389.73 35571.01
1997/10/31 44945.30 34596.36
1997/11/28 45106.72 34388.78
IMATRL PRASUN SHR__CHT 19971130 19971209 140024 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Convertible Securities Fund on November 30, 1987.
As the chart shows, by November 30, 1997, the value of the investment
would have grown to $45,130 - a 351.30% increase on the initial
investment. For comparison, look at how the First Boston Convertible
Securities Index - a market capitalization weighted index of over 250
convertible bonds and preferred stocks - did over the same period.
(The Merrill Lynch Convertible Securities Index does not extend as far
back as the fund's start date, and therefore is not appropriate for
this comparison.) With dividends, and capital gains, if any,
reinvested, the same $10,000 investment in the First Boston
Convertible Securities Index would have grown to $34,389 - a 243.89%
increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
long-term growth and
short-term volatility. In turn, the
share price and return of a
fund that invests in stocks or
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)

FUND TALK: THE MANAGER'S OVERVIEW

MARKET RECAP
The 12 months that ended
November 30, 1997, was a period
that truly tested the U.S. stock
market's resolve. But despite
frequent shifts in sentiment, an
interest-rate hike and global
volatility concerns, U.S. stocks still
managed to perform well. The
Standard & Poor's 500 Index - a
broad gauge of the U.S. stock
market - returned 28.51% during
the period, well above the market's
long-term annual average of
around 11%. In the first half of the
period, large-cap stocks were
responsible for much of the
market's gain, as investors were
drawn to stocks with recognizable
names and consistent
earnings-growth track records.
Consequently, stock prices soared
and enthusiasm was high. The
Federal Reserve Board - in an
attempt to halt inflation before it
appeared - raised a key
short-term interest rate by 0.25% in
March. The market paused briefly,
but then kept rolling as the Dow
Jones Industrial Average reached
the 8,000-point mark for the first
time ever in August. With several
multinational companies
announcing earnings shortfalls in
mid-August, small-cap stocks came
into favor among investors.
During August and September, the
Russell 2000 Index - which
measures small-cap stock
performance - was up 9.78%
while the S&P was down 0.43%.
Volatility in Asian markets in late
October sent skittish investors
running for cover. The Dow slid
554 points in one day, then
snapped back the next, reclaiming
330-plus points. Sensing continued
fallout from this volatility, investors
again became quality-conscious
and large-caps regained their
perch through November.
An interview with David Felman, Portfolio Manager of Fidelity
Convertible Securities Fund
Q. HOW DID THE FUND DO, DAVID?
A. For the 12 months that ended November 30, 1997, the fund returned
14.84%. In comparison, the First Boston Convertible Securities Index
was up 14.97%, the Merrill Lynch Convertible Securities Index rose
16.79%, and the convertible securities funds average gained 16.37%
over the same 12-month period, according to Lipper Analytical
Services.
Q. WHY DID THE FUND LAG THE INDICES AND THE LIPPER AVERAGE?
A. Because the fund was underweighted in energy, broadcasting and
finance. These areas of the market did very well over the period.
Energy services companies fared well, as increased demand and tight
drilling capacity helped them receive higher prices for their
services. Merger and acquisition activity aided broadcast companies,
and falling interest rates benefited the finance sector.
Q. YOU INCREASED THE FUND'S TECHNOLOGY HOLDINGS FROM ROUGHLY 6% TO
ABOUT 30% DURING THE PERIOD. WHY WAS THAT?
A. Toward the end of the period, technology stocks, and the
convertible securities associated with them, declined sharply in
response to the turmoil in Asia. I took advantage of many attractive
opportunities to purchase "busted" technology convertibles - that is,
convertibles in the technology sector whose common stock was trading
far below where it was when the convertible was issued. There was
little downside risk associated with these issues because they were
trading near their investment value - in other words, their value
purely as bonds. Generally speaking, however, technology stocks have a
much greater upside potential than nontechnology issues. Therefore,
the risk/reward factors of many of these convertibles seemed extremely
favorable to me.
Q. THE FUND'S TOP 10 HOLDINGS CHANGED SIGNIFICANTLY FROM WHAT THEY
WERE SIX MONTHS AGO. CAN YOU DISCUSS SOME OF THE CHANGES?
A. Sure. Unisys, the fund's top holding at the end of the period, is a
restructuring story. The company brought in a new CEO and initiated an
aggressive cost-cutting program. Another top 10 holding at the end of
the period, Intermedia, is a competitive provider of local exchange
telecommunications services. Deregulation in that industry has created
opportunities for many new players, including Intermedia. Furthermore,
I thought that the company was attractive as a potential takeover
target. Finally, Lam Research is a good example of a "busted
convertible," which I mentioned in the previous answer. The company's
common stock was down sharply, the convertible offered a high yield
and there seemed to be relatively low downside risk combined with the
potential for enhanced returns if the stock recovered.
Q. WHAT HOLDINGS PERFORMED WELL FOR THE FUND?
A. Worldcom did well. The company is a major player in the rapidly
unfolding telecommunications sector, where deregulation is making it
possible for companies to offer complete packages of local, long
distance and wireless services to their customers. Worldcom benefited
from well-received product offerings and rapidly growing revenues.
Another holding that helped the fund, EMC Corp., manufactures storage
devices for a range of computer systems. The company's valuation moved
up nicely in response to substantial increases in sales and revenues.
Another top performer was Golden State Bancorp (formerly Glendale
Federal Savings Bank). In this case, investors took more favorable
notice of its pending lawsuit against the federal government.
Q. WHAT WERE THE FUND'S DISAPPOINTMENTS DURING THE PERIOD?
A. Quantum is a manufacturer of computer hard drives. The security
performed well early in the period but then dropped considerably as
overcapacity in the industry slowed sales and revenues. However,
Quantum was still a top 10 holding at the end of the period because of
my belief that the market was overlooking the potential profitability
of the company's tape drive business.
Q. WHAT'S YOUR OUTLOOK, DAVID?
A. I make a conscious effort not to let macroeconomic predictions
about the market and the economy affect my decisions. My approach is
almost exclusively bottom-up. In other words, I will continue to
evaluate issues on a case-by-case basis and try to add the ones that
will provide the best performance over the next six to 12 months.
DAVID FELMAN ON
MANDATORY CONVERTIBLES
"RECENTLY WALL STREET HAS CREATED
A NUMBER OF NEW TYPES OF
CONVERTIBLE SECURITIES, ONE OF WHICH
IS THE `MANDATORY CONVERTIBLE.' IN
1990, MANDATORY CONVERTIBLES WERE
VIRTUALLY UNKNOWN. NOW THEY ARE
ROUGHLY 15% OF THE CONVERTIBLE
SECURITIES MARKET.
"MANDATORY CONVERTIBLES HAVE
SEVERAL CHARACTERISTICS THAT
DISTINGUISH THEM FROM TRADITIONAL
CONVERTIBLES. FIRST, THE MANDATORY
CONVERTIBLE TYPICALLY HAS A SHORTER
MATURITY. SECOND, THE ISSUER
DECIDES WHEN THE CONVERSION WILL
TAKE PLACE; THE HOLDER OF THE
SECURITY HAS NO CHOICE IN THE
MATTER. THIRD, A MANDATORY
CONVERTIBLE HAS LESS DOWNSIDE
PROTECTION IN A DECLINING MARKET
BECAUSE THERE IS NO GUARANTEE THAT
AN INVESTOR WILL RECEIVE THE VALUE OF
THE PRINCIPAL OF THE ORIGINAL
INVESTMENT. INSTEAD, THE INVESTOR
RECEIVES WHATEVER THE VALUE OF THE
COMMON STOCK IS ON THE CONVERSION
DATE. FINALLY, MANDATORY
CONVERTIBLES MAY HAVE MORE UPSIDE
POTENTIAL THAN TRADITIONAL
CONVERTIBLES. HOWEVER, THEY CAN ALSO
BE MORE VOLATILE THAN TRADITIONAL
CONVERTIBLES.
"THE FUND TYPICALLY HOLDS SOME
MANDATORY CONVERTIBLES, AND THEY
CAN BE IDENTIFIED BY NAMES SUCH
AS DECS, STRYPES, ACES, PRIDES
AND TECONS. I ANALYZE MANDATORY
CONVERTIBLES USING THE SAME
CRITERIA I DO OTHER CONVERTIBLES.
THEY CAN BE A VALUABLE ADDITION TO
THE PORTFOLIO AS A WHOLE."
FUND FACTS
GOAL: HIGH TOTAL RETURN THROUGH
A COMBINATION OF CURRENT
INCOME AND CAPITAL
APPRECIATION BY INVESTING
MAINLY IN SECURITIES THAT ARE
CONVERTIBLE INTO COMMON STOCK
FUND NUMBER: 308
TRADING SYMBOL: FCVSX
START DATE: JANUARY 5, 1987
SIZE: AS OF NOVEMBER 30,
1997, MORE THAN $1.0 BILLION
MANAGER: DAVID FELMAN,
SINCE JULY 1997; MANAGER,
FIDELITY SELECT
TELECOMMUNICATIONS PORTFOLIO,
1994-1996; FIDELITY SELECT
CHEMICALS PORTFOLIO, JANUARY
1995-JULY 1995; JOINED
FIDELITY IN 1993
(CHECKMARK)
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 NOVEMBER 30, 1997

<TABLE>
<CAPTION>
<S> <C> <C>
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS 6 MONTHS AGO

UNISYS CORP. 8 1/4%, 3/15/06 3.2 0.0

WORLDCOM, INC. 8% DEPOSITARY SHARES DECS 2.7 4.9

TOSCO FINANCING TRUST $2.875 TOPRS 2.5 2.5

FEDERATED DEPARTMENT STORES, INC. 2.5 2.2
5%,10/1/03

USA WASTE SERVICES, INC. 4%, 2/1/02 2.0 1.9

INTERMEDIA COMMUNICATIONS, INC., SERIES D, $1.75 2.0 0.0

QUANTUM CORP. 5%, 3/1/03 2.0 0.0

EMC CORP. 3 1/4%, 3/15/02 1.9 3.0

LAM RESEARCH CORP. 5%, 9/1/02 1.8 0.0

HOST MARRIOTT FINANCIAL TRUST $3.375 QUIPS 1.7 1.8

</TABLE>

TOP FIVE MARKET SECTORS AS OF NOVEMBER 30, 1997
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO

TECHNOLOGY 30.4 6.2

RETAIL & WHOLESALE 11.3 11.4

FINANCE 10.3 10.8

INDUSTRIAL MACHINERY & EQUIPMENT 9.4 9.7

UTILITIES 7.9 9.1

ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF NOVEMBER 30, 1997* AS OF MAY 31, 1997 **
ROW: 1, COL: 1, VALUE: 1.2
ROW: 1, COL: 2, VALUE: 3.8
ROW: 1, COL: 3, VALUE: 14.1
ROW: 1, COL: 4, VALUE: 80.90000000000001
CONVERTIBLE
SECURITIES 78.2%
STOCKS 12.1%
SHORT-TERM
INVESTMENTS 9.5%
NONCONVERTIBLE
BONDS 0.2%
FOREIGN
INVESTMENTS 4.1%
CONVERTIBLE
SECURITIES 82.9%
STOCKS 14.1%
SHORT-TERM
INVESTMENTS 2.8%
NONCONVERTIBLE
BONDS 0.2%
FOREIGN
INVESTMENTS 4.0%
ROW: 1, COL: 1, VALUE: 1.2
ROW: 1, COL: 2, VALUE: 9.5
ROW: 1, COL: 3, VALUE: 12.1
ROW: 1, COL: 4, VALUE: 77.2
*
**
INVESTMENTS NOVEMBER 30, 1997

SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES

CORPORATE BONDS - 45.3%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (E) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - 45.1%
AEROSPACE & DEFENSE - 0.7%
Orbital Sciences, Corp. 5%, 10/1/02 (c) B $ 6,000 $ 6,945
CONSTRUCTION & REAL ESTATE - 0.9%
BUILDING MATERIALS - 0.9%
Hexcel Corp. 7%, 8/1/03 B2 5,425 9,304
HEALTH - 3.5%
DRUGS & PHARMACEUTICALS - 2.0%
Atrix Laboratories, Inc. 7%, 12/1/04 (c) - 5,000 4,925
Integrated Process Equipment Corp.
6 1/4%, 9/15/04 (c) B- 12,500 11,328
Sepracor, Inc. 7%, 12/1/02 (c) - 1,700 3,349
19,602
MEDICAL EQUIPMENT & SUPPLIES - 1.1%
ESC Medical Systems Ltd. 6%, 9/1/02 (c) Caa 11,000 11,303
MEDICAL FACILITIES MANAGEMENT - 0.4%
Carematrix Corp. 6 1/4%, 8/15/04 (c) - 4,000 4,250
TOTAL HEALTH 35,155
HOLDING COMPANIES - 0.1%
Aker Rgi ASA 5 1/4%, 7/23/02 - 1,500 1,627
INDUSTRIAL MACHINERY & EQUIPMENT - 4.7%
ELECTRICAL EQUIPMENT - 0.5%
Alcatel Alsthom Cie Generale d'Electricite SA:
6 1/2%, 1/1/00 A1 FRF 17 2,475
2 1/2%, 1/1/04 A1 FRF 16 2,679
5,154
POLLUTION CONTROL - 4.2%
Sanifill, Inc. 5%, 3/1/06 Ba2 8,730 11,174
Thermo Instrument Systems, Inc.
4 1/2%, 10/15/03 (c) Baa2 5,000 5,450
USA Waste Services, Inc. 4%, 2/1/02 Ba2 20,000 20,550
United Waste Systems, Inc. 4 1/2%, 6/1/01 B1 3,800 4,712
41,886
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 47,040
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (E) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
MEDIA & LEISURE - 2.5%
BROADCASTING - 1.8%
Comcast Corp. 1 1/8%, 4/15/07 Ba3 $ 10,000 $ 6,400
Smartalk Teleservices, Inc.
5 3/4%, 9/15/04 (c) - 11,250 11,588
17,988
PUBLISHING - 0.7%
World Color Press, Inc. 6%, 10/1/07 BB- 7,000 6,790
TOTAL MEDIA & LEISURE 24,778
NONDURABLES - 0.7%
HOUSEHOLD PRODUCTS - 0.7%
Alberto Culver Co. 5 1/2%, 6/30/05 (c) - 4,200 7,046
RETAIL & WHOLESALE - 8.2%
APPLIANCE STORES - 0.7%
Cellstar Corp. 5%, 10/15/02 (c) - 8,500 6,906
DRUG STORES - 1.0%
Rite Aid Corp. 5 1/4%, 9/15/05 (c) Baa2 9,000 10,226
GENERAL MERCHANDISE STORES - 2.8%
Costco Companies, Inc. 0%, 8/19/17 (c) A3 4,000 2,340
Federated Department Stores, Inc. 5%, 10/1/03 Baa3 18,000 25,358
27,698
RETAIL & WHOLESALE, MISCELLANEOUS - 3.7%
Home Depot, Inc. 3 1/4%, 10/1/01 A1 7,000 9,187
Pier 1 Imports, Inc. 5 3/4%, 10/1/03 Ba3 3,080 5,883
Staples, Inc. 4 1/2%, 10/1/00 (c) Ba2 5,265 7,134
U.S. Office Products Co. 5 1/2%, 2/1/01 B3 12,500 14,844
37,048
TOTAL RETAIL & WHOLESALE 81,878
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (E) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
SERVICES - 1.9%
ADT Operations, Inc. liquid yield
option notes 0%, 7/6/10 Ba3 $ 8,960 $ 9,542
Career Horizons, Inc. 7%, 11/1/02 Ba1 2,150 5,762
Personnel Group of America, Inc.
5 3/4%, 7/1/04 (c) B2 3,000 3,623
18,927
TECHNOLOGY - 21.6%
COMMUNICATIONS EQUIPMENT - 0.8%
DSC Communications Corp.
7%, 8/1/04 (c) BB+ 9,000 8,516
COMPUTER SERVICES & SOFTWARE - 2.7%
CUC International 3%, 2/15/02 (c) Baa2 3,000 3,409
Inacom Corp. 4 1/2%, 11/1/04 B2 2,000 1,920
Systems Software Associates, Inc. 7%, 9/15/02 - 14,600 15,184
Tecnomatix Technologies Ltd.
5 1/4%, 8/15/04 (c) - 6,232 6,208
26,721
COMPUTERS & OFFICE EQUIPMENT - 10.4%
Apple Computer, Inc. 6%, 6/1/01 CCC 10,000 9,200
EMC Corp.:
3 1/4%, 3/15/02 (c) Ba3 13,000 19,240
3 1/4%, 3/15/02 Ba3 3,070 4,544
Iomega Corp. 6 3/4%, 3/15/01 - 3,100 10,540
Quantum Corp.:
5%, 3/1/03 (c) B2 8,084 19,583
7%, 8/1/04 B2 5,000 5,013
Read-Rite Corp. 6 1/2%, 9/1/04 B2 3,000 2,666
SCI Systems, Inc. 5%, 5/1/06 (c) BBB 600 1,188
Unisys Corp. 8 1/4%, 3/15/06 B3 14,470 32,449
104,423
ELECTRONIC INSTRUMENTS - 3.7%
Credence Systems Corp. 5 1/4%, 9/15/02 (c) - 18,000 14,850
Lam Research Corp. 5%, 9/1/02 (c) - 21,000 17,640
Thermo Electron Corp. 4 1/8%, 1/1/03 (c) Ba2 4,500 5,029
37,519
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (E) AMOUNT (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
ELECTRONICS - 4.0%
Altera Corp. 5 3/4%, 6/15/02 B2 $ 2,000 $ 3,770
C-Cube Microsystems, Inc. 5 7/8%, 11/1/05 B3 10,495 9,485
Micron Technology, Inc. 7%, 7/1/04 B1 17,250 15,611
World Access, Inc. 4 1/2%, 10/1/02 (c) CCC 12,000 11,010
39,876
TOTAL TECHNOLOGY 217,055
TRANSPORTATION - 0.3%
TRUCKING & FREIGHT - 0.3%
SPACEHAB, Inc. 8%, 10/15/07 (c) - 3,000 2,985
UTILITIES - 0.0%
TELEPHONE SERVICES - 0.0%
Cam-Net Communications Network, Inc.
11 1/2%, 4/4/98 (d)(f) - 2,275 -
TOTAL CONVERTIBLE BONDS 452,740
NONCONVERTIBLE BONDS - 0.2%
TRANSPORTATION - 0.2%
AIR TRANSPORTATION - 0.2%
Trans World Airlines, Inc. 12%, 4/1/02 - 2,000 1,920
TOTAL CORPORATE BONDS
(Cost $424,483) 454,660
COMMON STOCKS - 14.1%
SHARES

AEROSPACE & DEFENSE - 0.4%
Alliant Techsystems, Inc. (a) 60,000 3,566
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
BASIC INDUSTRIES - 0.6%
CHEMICALS & PLASTICS - 0.5%
W.R. Grace & Co. 70,000 $ 5,093
METALS & MINING - 0.1%
Superior Telecom, Inc. (a) 24,900 953
TOTAL BASIC INDUSTRIES 6,046
DURABLES - 1.6%
AUTOS, TIRES, & ACCESSORIES - 1.6%
Eaton Corp. 60,300 5,695
Navistar International Corp. (a) 462,500 10,175
15,870
ENERGY - 0.8%
OIL & GAS - 0.8%
Cooper Cameron Corp. (a) 51,400 3,132
Tosco Corp. 145,500 4,738
7,870
FINANCE - 0.0%
INSURANCE - 0.0%
Frontier Insurance Group, Inc. 5,100 123
HEALTH - 0.3%
DRUGS & PHARMACEUTICALS - 0.3%
Integrated Process Equipment Corp. (a) 149,200 3,208
MEDICAL EQUIPMENT & SUPPLIES - 0.0%
Schick Technologies, Inc. 900 24
TOTAL HEALTH 3,232
INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%
ELECTRICAL EQUIPMENT - 0.3%
Alcatel Alsthom Compagnie Generale d'Electricite SA
sponsored ADR 136,600 3,381
INDUSTRIAL MACHINERY & EQUIPMENT - 0.4%
ASM Lithography Holding NV (a) 62,000 3,875
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - 0.5%
USA Waste Services, Inc. (a) 138,600 $ 4,582
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 11,838
MEDIA & LEISURE - 1.1%
ENTERTAINMENT - 0.4%
Viacom, Inc. (a):
Class A 42,000 1,460
Class B (non-vtg.) 82,800 2,898
4,358
LODGING & GAMING - 0.7%
HFS, Inc. (a) 100,424 6,891
TOTAL MEDIA & LEISURE 11,249
PRECIOUS METALS - 0.1%
Centaur Mining & Exploration Ltd. (a) 1,000,000 450
Great Central Mines NL 507,692 518
968
RETAIL & WHOLESALE - 1.1%
APPAREL STORES - 0.4%
AnnTaylor Stores Corp. (a) 270,500 3,855
RETAIL & WHOLESALE, MISCELLANEOUS - 0.7%
IKON Office Solutions, Inc. 250,900 7,636
TOTAL RETAIL & WHOLESALE 11,491
SERVICES - 0.0%
Bright Horizons, Inc. 1,400 22
TECHNOLOGY - 5.3%
COMMUNICATIONS EQUIPMENT - 0.2%
Andrew Corp. 72,500 1,922
Intermedia Communications, Inc. (a) 7,300 362
2,284
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - 2.2%
CompUSA, Inc. 439,100 $ 16,055
PRT Group, Inc. 4,200 56
Systems Software Associates, Inc. (a) 476,000 6,307
22,418
COMPUTERS & OFFICE EQUIPMENT - 0.9%
Advanced Digital Information Corp. (a) 61,800 1,159
Apple Computer, Inc. (a) 100,000 1,775
CHS Electronics, Inc. (a) 310,500 5,861
Quantum Corp. (a) 15,200 404
9,199
ELECTRONIC INSTRUMENTS - 1.0%
Credence Systems Corp. (a) 180,000 4,826
Novellus Systems, Inc. (a) 71,600 2,694
Teradyne, Inc. (a) 60,900 1,998
9,518
ELECTRONICS - 1.0%
Altera Corp. (a) 50,000 2,341
C-Cube Microsystems, Inc. (a) 46,900 994
Micron Technology, Inc. (a) 253,600 6,308
9,643
TOTAL TECHNOLOGY 53,062
TRANSPORTATION - 1.1%
AIR TRANSPORTATION - 0.1%
Florida West Airlines, Inc. (a) 18,236 -
Trans World Airlines, Inc. warrants 4/1/02 (a)(c) 2,000 520
520
RAILROADS - 1.0%
Wisconsin Central Transportation Corp. (a) 340,700 10,264
TOTAL TRANSPORTATION 10,784
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 0.5%
ELECTRIC UTILITY - 0.0%
KTI, Inc. 10,000 $ 162
TELEPHONE SERVICES - 0.5%
Cam-Net Communications Network, Inc. (a)(d) 875,935 -
MCI Communications Corp. 108,000 4,745
4,745
TOTAL UTILITIES 4,907
TOTAL COMMON STOCKS
(Cost $142,596) 141,028
CONVERTIBLE PREFERRED STOCKS - 37.8%
BASIC INDUSTRIES - 0.4%
PAPER & FOREST PRODUCTS - 0.4%
Fort James Corp. 79,100 4,459
CONSTRUCTION & REAL ESTATE - 0.9%
REAL ESTATE INVESTMENT TRUSTS - 0.9%
Felcor Suite Hotels, Inc., Series A, $1.95 130,000 3,721
Vornado Realty Trust, Series A, $3.25 72,300 4,840
8,561
ENERGY - 3.1%
OIL & GAS - 3.1%
EVI, Inc. $2.50 (c) 55,000 2,448
Tosco Financing Trust $2.875 TOPRS (c) 429,000 25,471
Ultramar Diamond Shamrock Corp. $2.50 (c) 61,800 3,654
31,573
FINANCE - 10.3%
CREDIT & OTHER FINANCE - 4.3%
AES Trust II 5 1/2% TECONS (c) 30,000 1,390
Big Flower Trust I $3.00 QUIPS (c) 147,500 7,209
Calenergy Capital Trust III $3.25 TOPRS (c) 65,000 3,128
Continental Airlines Finance Trust $4.25 TOPRS (c) 44,000 4,329
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
CREDIT & OTHER FINANCE - CONTINUED
Mandatory Common Exchange Trust $3.543 TIMES 255,800 $ 10,488
Nextel Trust $1.05 STRYPES 638,400 15,122
Nuevo Financing I, Series A, $2.875 27,750 1,381
43,047
INSURANCE - 1.1%
Aetna, Inc. Class C 6.25% PRIDES 66,000 4,938
American Bankers Insurance Group, Inc., Series B, $3.125 72,500
6,180
11,118
SAVINGS & LOANS - 2.5%
Ahmanson (H.F.) & Co., Series D, $3.00 75,000 9,272
Golden State Bancorp, Inc., Series A 195,000 15,990
25,262
SECURITIES INDUSTRY - 2.4%
Merrill Lynch and Co., Inc. $3.12 STRYPES 87,000 8,526
Salomon, Inc. $3.484 272,800 15,550
24,076
TOTAL FINANCE 103,503
HEALTH - 1.3%
MEDICAL EQUIPMENT & SUPPLIES - 1.3%
McKesson Financing Trust $2.50 TOPRS (c) 162,200 12,814
INDUSTRIAL MACHINERY & EQUIPMENT - 3.5%
ELECTRICAL EQUIPMENT - 2.3%
Echostar Communications Corp., Series C, $3.375 100,000 4,950
Loral Space & Communications Ltd., Series C:
$3.00 (c) 160,000 10,120
$3.00 50,000 3,113
Qualcomm Financial Trust I $2.875 TOPRS 80,000 4,480
22,663
INDUSTRIAL MACHINERY & EQUIPMENT - 1.2%
Case Corp., Series A, $4.50 82,500 12,230
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 34,893
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - 4.1%
BROADCASTING - 2.0%
Chancellor Media Corp. $3.50 (c) 160,000 $ 13,700
TCI Pacific Communications, Inc. Class A $5.00 43,500 6,025
19,725
LODGING & GAMING - 1.7%
Host Marriott Financial Trust $3.375 QUIPS (c) 270,000 17,111
PUBLISHING - 0.0%
Houghton Mifflin Co. $4.08 15,000 383
RESTAURANTS - 0.4%
Wendys Financing I $2.50 TECONS 70,000 3,570
TOTAL MEDIA & LEISURE 40,789
RETAIL & WHOLESALE - 2.0%
APPAREL STORES - 1.5%
AnnTaylor Finance Trust $4.25 TOPRS 249,000 11,952
TJX Companies, Inc., Series E, $7.00 7,900 2,844
14,796
RETAIL & WHOLESALE, MISCELLANEOUS - 0.5%
IKON Office Solutions, Inc. $5.04 ACES 74,000 5,347
TOTAL RETAIL & WHOLESALE 20,143
TECHNOLOGY - 3.5%
COMMUNICATIONS EQUIPMENT - 2.7%
Globalstar Telecommunications Ltd. $3.25 84,800 7,292
Intermedia Communications, Inc., Series D, $1.75 (c) 580,000 20,083
27,375
COMPUTERS & OFFICE EQUIPMENT - 0.8%
Wang Laboratories, Inc. $3.25 154,100 8,052
TOTAL TECHNOLOGY 35,427
TRANSPORTATION - 1.3%
TRUCKING & FREIGHT - 1.3%
CNF Trust I $2.50 TECONS 205,000 12,709
CONVERTIBLE PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 7.4%
CELLULAR - 0.5%
AirTouch Communications, Inc. Class B $1.74 DECS 111,800 $ 3,920
Mobile Telecommunication Technologies Corp. $2.25 (c) 28,000 802
4,722
ELECTRIC UTILITY - 1.9%
Houston Industries, Inc. $3.215 ACES 253,500 14,069
KTI, Inc., Series B $2.1875 (c) 141,000 5,270
19,339
TELEPHONE SERVICES - 5.0%
Enhance Financial Services Group, Inc. $7.625 DECS 281,400 13,648
US West, Inc., Series D $2.25 163,000 9,454
Worldcom, Inc. 8% depositary shares DECS 244,900 27,490
50,592
TOTAL UTILITIES 74,653
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $330,111) 379,524
CASH EQUIVALENTS - 2.8%
Taxable Central Cash Fund (b)
(Cost $27,795) 27,795,071 27,795
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $924,985) $ 1,003,007
CURRENCY ABBREVIATIONS
FRF - French franc
SECURITY TYPE ABBREVIATIONS
ACES - Automatic Common Exchange
Securities
DECS - Dividend Enhanced Convertible
Stock/Debt Exhangeable for
Common Stock
PRIDES - Preferred Redeemable
Increased Dividend
Equity Securities
QUIPS - Quarterly Income Preferred
Securities
STRYPES - Structured Yield Product
Exchangeable for Common
Stock
TECONS- Term Convertible Shares
TIMES - Trust Issued Mandatory
Exchangeable Securities
TOPRS - Trust Originated Preferred
Securities
LEGEND
Non-income producing
At period end, the seven-day yield on the Taxable Central Cash Fund
was 5.69%. The yield refers to the income earned by investing in the
fund over the seven-day period, expressed as an annual percentage.
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 $334,120,000 or
32.5% of net assets.
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
Standard & Poor's credit ratings are used in the absence of a rating
by Moody's Investors Service, Inc.
Non-income producing - issuer filed for protection under the 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 (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 1.3% AAA, AA, A 2.0%
Baa 4.4% BBB 6.4%
Ba 9.5% BB 8.8%
B 12.3% B 13.6%
Caa 1.1% CCC 3.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 10.9%. FMR has
determined that unrated debt securities that are lower quality account
for 10.9% of the total value of investment in securities.
INCOME TAX INFORMATION
At November 30, 1997, the aggregate cost of investment securities for
income tax purposes was $930,075,000. Net unrealized appreciation
aggregated $72,932,000, of which $114,654,000 related to appreciated
investment securities and $41,722,000 related to depreciated
investment securities.
The fund hereby designates approximately $25,666,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) NOVEMBER 30, 1997

329.ASSETS 330. 331.

332.INVESTMENT IN SECURITIES, AT VALUE (COST $924,985) - 333. $ 1,003,007
SEE ACCOMPANYING SCHEDULE

334.CASH 335. 1,049

336.RECEIVABLE FOR INVESTMENTS SOLD 337. 22,993

338.RECEIVABLE FOR FUND SHARES SOLD 339. 385

340.DIVIDENDS RECEIVABLE 341. 907

342.INTEREST RECEIVABLE 343. 5,305

344.OTHER RECEIVABLES 345. 168

346. 347.TOTAL ASSETS 348. 1,033,814

349.LIABILITIES 350. 351.

352.PAYABLE FOR INVESTMENTS PURCHASED $ 2,351 353.

354.PAYABLE FOR FUND SHARES REDEEMED 1,418 355.

356.ACCRUED MANAGEMENT FEE 299 357.

358.OTHER PAYABLES AND ACCRUED EXPENSES 288 359.

360. 361.TOTAL LIABILITIES 362. 4,356

363.364.NET ASSETS 365. $ 1,029,458

366.NET ASSETS CONSIST OF: 367. 368.

369.PAID IN CAPITAL 370. $ 834,539

371.UNDISTRIBUTED NET INVESTMENT INCOME 372. 8,396

373.ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 374. 108,501
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS

375.NET UNREALIZED APPRECIATION (DEPRECIATION) ON 376. 78,022
INVESTMENTS AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES

377.378.NET ASSETS, FOR 52,606 SHARES OUTSTANDING 379. $ 1,029,458

380.381.NET ASSET VALUE, OFFERING PRICE AND REDEMPTION 382. $19.57
PRICE PER SHARE ($1,029,458 (DIVIDED BY) 52,606 SHARES)

</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1997

383.INVESTMENT INCOME 385. $ 20,380
384.DIVIDENDS

386.INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $32) 387. 24,915

388. 389.TOTAL INCOME 390. 45,295

391.EXPENSES 392. 393.

394.MANAGEMENT FEE $ 5,383 395.
BASIC FEE

396. PERFORMANCE ADJUSTMENT (390) 397.

398.TRANSFER AGENT FEES 2,258 399.

400.ACCOUNTING AND SECURITY LENDING FEES 478 401.

402.NON-INTERESTED TRUSTEES' COMPENSATION 8 403.

404.CUSTODIAN FEES AND EXPENSES 58 405.

406.REGISTRATION FEES 72 407.

408.AUDIT 50 409.

410.LEGAL 34 411.

412.INTEREST 10 413.

414.MISCELLANEOUS 16 415.

416. TOTAL EXPENSES BEFORE REDUCTIONS 7,977 417.

418. EXPENSE REDUCTIONS (104) 7,873

419.420.NET INVESTMENT INCOME 421. 37,422

422.REALIZED AND UNREALIZED GAIN (LOSS) 424. 425.
423.NET REALIZED GAIN (LOSS) ON:

426. INVESTMENT SECURITIES 112,114 427.

428. FOREIGN CURRENCY TRANSACTIONS 12 112,126

429.CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 430. 431.
ON:

432. INVESTMENT SECURITIES (3,194) 433.

434. ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (35) (3,229)

435.436.NET GAIN (LOSS) 437. 108,897

438.439.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 440. $ 146,319
FROM OPERATIONS

</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1997 1996

441.INCREASE (DECREASE) IN NET ASSETS

442.OPERATIONS $ 37,422 $ 49,676
NET INVESTMENT INCOME

443. NET REALIZED GAIN (LOSS) 112,126 70,841

444. CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (3,229) 41,980

445. 146,319 162,497
446.NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS

447.DISTRIBUTIONS TO SHAREHOLDERS (47,359) (46,048)
FROM NET INVESTMENT INCOME

448. FROM NET REALIZED GAIN (49,453) (53,549)

449. 450.TOTAL DISTRIBUTIONS (96,812) (99,597)

451.SHARE TRANSACTIONS 457,041 445,945
NET PROCEEDS FROM SALES OF SHARES

452. REINVESTMENT OF DISTRIBUTIONS 88,795 92,396

453. COST OF SHARES REDEEMED (713,412) (503,046)

454.455. (167,576) 35,295
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS

456. (118,069) 98,195
457.TOTAL INCREASE (DECREASE) IN NET ASSETS

458.NET ASSETS 459. 460.

461. BEGINNING OF PERIOD 1,147,527 1,049,332

462. $ 1,029,458 $ 1,147,527
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $8,396 AND $15,316, RESPECTIVELY)

463.OTHER INFORMATION 465. 466.
464.SHARES

467. SOLD 24,408 25,384

468. ISSUED IN REINVESTMENT OF DISTRIBUTIONS 5,058 5,440

469. REDEEMED (38,427) (28,688)

470. NET INCREASE (DECREASE) (8,961) 2,136

</TABLE>

FINANCIAL HIGHLIGHTS

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

472. 1997 1996 1995 1994 1993

473.SELECTED PER-SHARE DATA

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

475.INCOME FROM INVESTMENT
OPERATIONS

476. NET INVESTMENT INCOME .64 B .83 .79 .78 .75

477. NET REALIZED AND UNREALIZED 1.90 1.79 1.94 (.86) 2.24

GAIN (LOSS)

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

479.

480.LESS DISTRIBUTIONS

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

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

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

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

485.TOTAL RETURN A 14.84% 16.02% 18.00% (.54)% 19.94%

486.RATIOS AND SUPPLEMENTAL
DATA

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

488.RATIO OF EXPENSES TO AVERAGE .74% .85% .70% .86% .92%

NET ASSETS

489.RATIO OF EXPENSES TO AVERAGE .73% .83% .70% .85% .92%
NET ASSETS AFTER EXPENSE C C C
REDUCTIONS

490.RATIO OF NET INVESTMENT 3.46% 4.48% 4.59% 4.61% 4.62%
INCOME TO AVERAGE NET ASSETS

491.PORTFOLIO TURNOVER RATE 212% 175% 203% 318% 312%

492.AVERAGE COMMISSION RATE D $ .0447 $ .0436

</TABLE>

J 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).
K NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
L 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).
M 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 November 30, 1997

15. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Convertible Securities Fund (the fund) is a fund of Fidelity
Financial Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Equity securities for which quotations are readily
available are valued at the last sale price, or if no sale price, at
the closing bid price. Debt securities for which quotations are
readily available are valued by a pricing service at their market
values as determined by their most recent bid prices in the principal
market (sales prices if the principal market is an exchange) in which
such securities are normally traded. Securities (including restricted
securities) for which market quotations are not readily available are
valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Income
receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at
the contractual currency exchange rates established at the time of
each trade.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the
U.S. dollar amount actually received. The effects of changes in
foreign currency exchange rates on investments in securities are
included with the net realized and unrealized gain or loss on
investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
dividend income, if any, are recorded at the fair market value of the
securities received. Interest income, which includes accretion of
original issue discount, is accrued as earned. Investment income is
recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
between the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for foreign currency transactions, 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.
16. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade. The cost of the foreign currency contracts is
included in the cost basis of the associated investment.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
of the fund, or to the Joint Trading Account, at a bank custodian. The
securities are marked-to-market daily and maintained at a value at
least equal to the principal amount of the repurchase agreement
(including accrued interest). FMR, the fund's investment adviser, is
responsible for determining that the value of the underlying
securities remains in accordance with the market value requirements
stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by FMR 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
received by the fund are recorded as interest income in the
accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $0 or 0.0% of net assets.
17. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,084,396,000 and $2,290,505,000.
18. 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 annual 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 annual rate of .21% 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 $130,000 for the
period.
19. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund
negotiated lenders' fees. These fees are included in interest income.
The fund receives U.S. Treasury obligations and/or cash as collateral
against the loaned securities, in an amount at least equal to 102% of
the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan.
At period end, there were no loans outstanding.
20. 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 $11,882,000 and $5,210,000, respectively. The weighted average
interest rate was 5.90%.
21. 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 $85,000 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 $9,000 and $10,000, respectively, under these arrangements.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees of Fidelity Financial Trust and the Shareholders of
Fidelity Convertible Securities Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments (except for Moody's and Standard
& Poor's ratings), and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in
all material respects, the financial position of Fidelity Convertible
Securities Fund (a fund of Fidelity Financial Trust) at November 30,
1997, the results of its operations for the year then ended, and the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of Fidelity Convertible Securities Fund's management;
our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at November 30, 1997 by
correspondence with the custodian and the application of alternative
auditing procedures where securities purchased were not yet received
by the custodian, provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
January 6, 1998
DISTRIBUTIONS

The Board of Trustees of Fidelity Convertible Securities Fund voted to
pay to shareholders of record at the opening of business on record
date, the following distributions derived from capital gains realized
from sales of portfolio securities, and dividends derived from net
investment income:
PAY DATE RECORD DATE DIVIDENDS CAPITAL GAINS
12/29/97 12/26/97 $.15 $1.77
1/5/98 1/2/98 - $.07
A total of 20% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
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
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Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Spartan(registered trademark) Market Index Fund
Puritan(registered trademark) Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
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(8 a.m. - 9 p.m.)
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(9 a.m. - 9 p.m. Eastern time)
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