FIDELITY
CONVERTIBLE SECURITIES
FUND
ANNUAL REPORT
NOVEMBER 30, 1998
(2_FIDELITY_LOGOS)
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 25 Statements of assets and liabilities,
operations, and changes in net assets,
as well as financial highlights.
NOTES 29 Footnotes to the financial statements.
REPORT OF INDEPENDENT 33 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 34
PROXY VOTING RESULTS 35
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
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.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
The month of November proved to be a strong one for the stock and bond
markets. The Dow Jones Industrial Average reached a record high.
Merger activity, which had lulled during the summer correction, has
increased significantly. Small-cap stocks posted their third
consecutive month of positive returns, as did emerging markets. While
bond returns generally were not at the levels of their equity
counterparts, they were mostly positive nonetheless.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. 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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY CONVERTIBLE SECURITIES 8.88% 70.25% 317.48%
ML All Convertible Securities 3.92% 69.73% 237.69%
FB Convertible Securities 1.36% 55.82% 199.23%
Convertible Securities Funds Average 1.91% 63.62% 204.71%
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 All Convertible Securities Index - a market
capitalization-weighted index of domestic corporate convertible
securities and the performance of the First Boston Convertible
Securities Index - a market capitalization-weighted index of over 250
convertible bonds and preferred stocks. 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 59
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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY CONVERTIBLE SECURITIES 8.88% 11.23% 15.36%
ML All Convertible Securities 3.92% 11.16% 12.94%
FB Convertible Securities 1.36% 9.28% 11.58%
Convertible Securities Funds Average 1.91% 10.22% 11.45%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER 10 YEARS
Convertible Securities ML All Conv. Sec. Index
00308 ML014
1988/11/30 10000.00 10000.00
1988/12/31 10122.96 10169.93
1989/01/31 10555.48 10590.48
1989/02/28 10668.76 10662.06
1989/03/31 10979.36 10753.57
1989/04/30 11386.39 11033.81
1989/05/31 11647.31 11256.15
1989/06/30 11740.84 11264.31
1989/07/31 12269.23 11512.27
1989/08/31 12670.81 11786.44
1989/09/30 12681.38 11723.78
1989/10/31 12424.76 11327.54
1989/11/30 12627.92 11409.37
1989/12/31 12783.51 11437.28
1990/01/31 12309.64 10996.79
1990/02/28 12452.90 11109.95
1990/03/31 12697.41 11314.63
1990/04/30 12596.99 11112.99
1990/05/31 13099.08 11679.36
1990/06/30 13245.34 11697.58
1990/07/31 13155.01 11522.72
1990/08/31 12285.53 10771.80
1990/09/30 11679.26 10341.19
1990/10/31 11450.48 9831.59
1990/11/30 12045.31 10382.77
1990/12/31 12413.53 10637.57
1991/01/31 13182.82 11182.67
1991/02/28 14033.70 12065.73
1991/03/31 14406.82 12398.75
1991/04/30 14571.88 12596.97
1991/05/31 15067.04 12999.11
1991/06/30 14780.96 12642.54
1991/07/31 15376.96 12939.68
1991/08/31 15961.05 13369.72
1991/09/30 16227.48 13394.22
1991/10/31 16926.22 13614.65
1991/11/30 16203.39 13420.42
1991/12/31 17222.22 14082.67
1992/01/31 18091.52 14714.54
1992/02/29 18683.65 15118.00
1992/03/31 18368.56 15022.88
1992/04/30 18521.21 15228.50
1992/05/31 18877.39 15497.92
1992/06/30 18764.75 15315.46
1992/07/31 19278.50 15805.50
1992/08/31 18906.03 15765.63
1992/09/30 19356.41 16091.82
1992/10/31 19810.18 16133.59
1992/11/30 20445.45 16591.35
1992/12/31 21014.47 17097.15
1993/01/31 21717.21 17648.90
1993/02/28 21338.81 17779.34
1993/03/31 22400.69 18457.35
1993/04/30 22605.45 18350.83
1993/05/31 23165.13 18770.43
1993/06/30 23138.61 18893.47
1993/07/31 23372.89 18963.72
1993/08/31 23924.14 19497.81
1993/09/30 24202.07 19690.90
1993/10/31 24758.44 20174.68
1993/11/30 24521.98 19895.38
1993/12/31 24752.49 20198.60
1994/01/31 25369.42 20725.66
1994/02/28 24963.15 20463.46
1994/03/31 23870.43 19618.18
1994/04/30 23474.87 19233.33
1994/05/31 23383.58 19227.25
1994/06/30 23365.98 19009.85
1994/07/31 23782.13 19347.24
1994/08/31 25045.99 19847.73
1994/09/30 24889.56 19594.26
1994/10/31 25045.61 19663.37
1994/11/30 24390.21 19062.83
1994/12/31 24317.86 18986.50
1995/01/31 24317.86 19122.82
1995/02/28 24824.49 19720.52
1995/03/31 25558.10 20255.94
1995/04/30 26133.87 20678.58
1995/05/31 26421.76 21249.50
1995/06/30 27082.64 21974.79
1995/07/31 27793.22 22718.11
1995/08/31 28116.21 23050.94
1995/09/30 28649.88 23350.74
1995/10/31 27949.11 22715.83
1995/11/30 28780.25 23587.12
1995/12/31 29030.79 23674.27
1996/01/31 29621.85 24404.30
1996/02/29 30335.01 24955.48
1996/03/31 30722.86 25215.97
1996/04/30 31442.65 25684.75
1996/05/31 31951.77 26252.44
1996/06/30 31598.36 25863.60
1996/07/31 30108.88 24761.81
1996/08/31 30942.28 25716.84
1996/09/30 31617.73 26425.03
1996/10/31 31993.92 26743.63
1996/11/30 33391.19 27647.19
1996/12/31 33398.76 27444.04
1997/01/31 34482.89 28243.75
1997/02/28 33836.22 28138.37
1997/03/31 32661.78 27534.60
1997/04/30 33123.43 27784.84
1997/05/31 35046.97 29194.21
1997/06/30 36093.94 30110.12
1997/07/31 37921.97 31828.97
1997/08/31 37746.95 31656.57
1997/09/30 40265.16 33120.05
1997/10/31 38188.23 32482.11
1997/11/30 38344.98 32544.95
1997/12/31 38227.32 32813.61
1998/01/31 39125.92 32914.62
1998/02/28 42128.86 34372.02
1998/03/31 44228.30 35635.76
1998/04/30 45023.62 35859.42
1998/05/31 43830.64 35067.31
1998/06/30 44521.05 35363.50
1998/07/31 44076.29 34801.88
1998/08/31 37137.94 30803.13
1998/09/30 38361.05 31417.91
1998/10/31 39976.25 32229.39
1998/11/30 41748.49 33768.82
IMATRL PRASUN SHR__CHT 19981130 19981221 175658 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Convertible Securities Fund on November 30, 1988.
As the chart shows, by November 30, 1998, the value of the investment
would have grown to $41,748 - a 317.48% increase on the initial
investment. For comparison, look at how the Merrill Lynch All
Convertible Securities Index did over the same period. With dividends
and capital gains, if any, reinvested, the same $10,000 would have
grown to $33,769 - a 237.69% increase. Beginning with this report, the
fund will compare its performance to that of the Merrill Lynch All
Convertible Securities Index rather than the First Boston Convertible
Securities Index. Previously, the Merrill Lynch All Convertible
Securities Index did not have enough 10 year performance history and
therefore was not appropriate for this comparison. Also, the Merrill
Lynch All Convertible Securities Index contains mandatory convertible
securities and is therefore a better representation of the convertible
securities universe.
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
When the final bell of the U.S. stock
market sounded on Monday,
November 23, 1998, the Dow
Jones Industrial Average stood at a
record high of 9374.27, serving
notice that the bleak economic
outlook from just a few short
months earlier would not keep
positive investor sentiment down.
For the 12-month period ending
November 30, 1998, the Dow -
an index of 30 blue-chip stocks -
returned 18.56%. What caused the
turnaround from the doldrums of
equity performance during the
summer and early fall? A variety of
factors: The economic problems in
Russia, Brazil and other emerging
markets began to dissipate; Asian
markets began to rebound; and,
perhaps most importantly, three
interest-rate cuts late in the period
by the Federal Reserve Board
helped stem the tide of a slowing
U.S. economy. All these factors
culminated in the Dow reaching its
record high late in November, a
peak that outpaced the previous
record set in July by nearly 40 points.
Small-cap stock performance was
still a far cry behind their large-cap
brethren. For the period, the Russell
2000 Index - a popular measure
of small-cap stock performance -
returned -6.62%, significantly
trailing the large-cap weighted
Standard & Poor's 500 Index's
return of 23.66%. Despite the late
rally in the equity market, this kind
of volatility has characterized the
entire year, and when it will level
off is impossible to predict.
An interview with David Felman, Portfolio Manager of Fidelity
Convertible Securities Fund
Q. HOW DID THE FUND PERFORM, DAVID?
A. Very well, considering the difficult environment for convertible
securities. For the 12 months that ended November 30, 1998, the fund
returned 8.88%. In comparison, the Merrill Lynch All Convertible
Securities Index returned 3.92%, and the convertible securities funds
average tracked by Lipper Analytical Services returned 1.91% during
the same 12-month period.
Q. THE FUND RECENTLY ADOPTED AN INVESTMENT POLICY CHANGE. WHAT WAS THE
REASON FOR THE CHANGE?
A. Over the past few years, mandatory convertibles have become more
prevalent and represent a larger portion of the overall convertibles
market. As a result, as of December 1, 1998, we changed the fund's
investment policy to expand the definition of convertible securities
to include all mandatory securities. In addition, we asked
shareholders to approve a change in the fund's performance benchmark
used to calculate the management fee. The performance benchmark was
changed from the Merrill Lynch Convertible Securities Index - which
only covered about 85% of the convertible securities market - to the
Merrill Lynch All Convertible Securities Index - which covers all
securities listed in the previous index as well as all mandatory
convertible securities.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A. I invested heavily in the technology sector, which performed very
well until the markets started to correct in August. Also, during the
market's rally through mid-July, the portfolio generally held
convertible securities that performed more like stocks, or in line
with the underlying security - giving the fund a higher equity
sensitivity than that of the benchmark. Finally, many of the fund's
common stock holdings performed well. The second half of the year was
more challenging as the equity market became extremely volatile and
the underlying security for many convertible bonds and preferred
stocks declined. However, the fund held up fairly well because I
positioned the portfolio more defensively relative to the index.
During a difficult third quarter in 1998, I raised cash in the fund
and was able to take advantage of opportunities toward the end of the
period as the markets recovered.
Q. GIVEN THE VOLATILE ENVIRONMENT IN THE SECOND HALF OF THE YEAR, WHAT
STRATEGIES DID YOU EMPLOY?
A. I decreased certain technology holdings due to their uncertain
outlook and increased the telecommunications weighting, with further
investments in such companies as Global TeleSystems and WinStar during
the downturn in the equity markets. While these stocks can be volatile
at times, these companies represent one of the few service
alternatives to the regional Bell operating companies and exhibited
strong growth potential. Late in the period, equities rallied
dramatically, while the high-yield and corporate-bond markets remained
somewhat stagnant. As a result, I increased the fund's bond exposure
because I felt this part of the market exhibited better value. At the
same time, I decreased the fund's equity sensitivity as equity markets
rebounded.
Q. WHAT SECURITIES PERFORMED WELL FOR THE FUND AND WHICH WERE
DISAPPOINTMENTS?
A. Apple Computer helped performance, as the company's stock price
benefited from management's sound restructuring plans. I subsequently
sold off the fund's position to take advantage of its significant
price appreciation. Another strong contributor was the fund's top
holding, Global TeleSystems, a European telecommunications company
that benefited from its dominant position as a long-distance call
provider and its valuable network infrastructure. On the negative
side, World Access, a U.S.-based wireless telecommunications
manufacturer with exposure to overseas markets, hurt performance.
Another disappointment was ESC Medical Systems. The company derives a
lot of revenue from Europe and Brazil and, as the global crisis
escalated, sales dried up and the stock declined.
Q. WHAT'S YOUR OUTLOOK, DAVID?
A. I think there is a lot of uncertainty and potential pitfalls in the
global financial markets. With all the uncertainty in the world
economy, my goal is to position the fund to manage downside risk,
while concentrating on companies that have strong business
fundamentals, attractive valuations and strong free cash flow.
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.
DAVID FELMAN ON THE
CHARACTERISTICS OF
MANDATORY CONVERTIBLES:
"MANDATORY CONVERTIBLES HAVE A
NUMBER OF CHARACTERISTICS
DISTINGUISHING THEM FROM STANDARD
CONVERTIBLE SECURITIES. FIRST, THE
MANDATORY CONVERTIBLE SECURITY
TYPICALLY HAS A SHORTER MATURITY
THAN OTHER CONVERTIBLE BONDS.
SECOND, THE ISSUER DECIDES WHEN
THE CONVERSION WILL TAKE PLACE; THE
HOLDER HAS NO CHOICE IN THE MATTER.
THIRD, A MANDATORY CONVERTIBLE IS
RISKIER THAN STANDARD CONVERTIBLES
BECAUSE THERE IS NO GUARANTEE THAT
AN INVESTOR WILL RECEIVE THE VALUE
OF THE PRINCIPAL OF THE ORIGINAL
INVESTMENT. FINALLY, WHILE
MANDATORY CONVERTIBLES CAN BE
MORE VOLATILE THAN TRADITIONAL
CONVERTIBLES, THEY HAVE MORE
UPSIDE POTENTIAL BECAUSE THE
INVESTOR RECEIVES THE VALUE OF THE
COMMON STOCK ON THE CONVERSION
DATE. AT TIMES, MANDATORY
CONVERTIBLES REPRESENT A VALUABLE
OPPORTUNITY FOR THE FUND. HOWEVER,
WITH EVERY POTENTIALLY HIGHER
RETURN COMES ADDITIONAL RISK;
THEREFORE, AS WITH EVERY SECURITY IN
THE PORTFOLIO, WE CONDUCT STRINGENT
ANALYSIS BEFORE PURCHASING ANY
MANDATORY CONVERTIBLE SECURITY FOR
THE FUND."
FUND FACTS
GOAL: TO PROVIDE HIGH TOTAL
RETURN THROUGH A COMBINATION
OF CURRENT INCOME AND CAPITAL
APPRECIATION BY INVESTING
MAINLY IN SECURITIES THAT ARE
CONVERTIBLE INTO COMMON STOCK
FUND NUMBER: 308
TRADING SYMBOL: FCVSX
START DATE: JANUARY 5, 1987
SIZE: AS OF NOVEMBER 30, 1998,
MORE THAN $986 MILLION
MANAGER: DAVID FELMAN, SINCE
1997; MANAGER, FIDELITY SELECT
TELECOMMUNICATIONS PORTFOLIO,
1994-1996; FIDELITY SELECT
CHEMICALS PORTFOLIO, JANUARY
1995-JULY 1995; JOINED
FIDELITY 1993
(CHECKMARK)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP TEN INVESTMENTS AS OF NOVEMBER 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
Global TeleSystems Group, Inc. 5.75% 7/1/10 3.7 0.0
Unisys Corp. 8.25% 3/15/06 3.6 1.5
Houston Industries, Inc. $3.216 ACES 3.0 2.0
Federal Mogul Financing Trust $3.50 2.6 2.8
Waste Management, Inc. 4% 2/1/02 2.4 0.0
Tosco Financing Trust $2.875 2.0 2.1
Orbital Sciences Corp. 5% 10/1/02 1.9 1.8
MediaOne Group, Inc. Class D $2.25 1.8 0.0
Sealed Air Corp. Series A, $2.00 1.8 0.0
Quantum Corp. 7% 8/1/04 1.7 0.0
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE MARKET SECTORS AS OF NOVEMBER 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
TECHNOLOGY 21.5 22.3
UTILITIES 16.7 11.2
FINANCE 10.0 14.6
MEDIA & LEISURE 7.6 2.6
AEROSPACE & DEFENSE 5.5 3.4
</TABLE>
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF NOVEMBER 30, 1998* AS OF MAY 31, 1998**
ROW: 1, COL: 1, VALUE: 1.0
ROW: 1, COL: 2, VALUE: 11.3
ROW: 1, COL: 3, VALUE: 9.9
ROW: 1, COL: 4, VALUE: 77.8
CONVERTIBLE
SECURITIES 74.6%
STOCKS 22.4%
SHORT-TERM
INVESTMENTS 3.0%
NONCONVERTIBLE
BONDS 0.0%
FOREIGN
INVESTMENTS 5.8%
CONVERTIBLE
SECURITIES 77.8%
STOCKS 9.9%
SHORT-TERM
INVESTMENTS 11.3%
NONCONVERTIBLE
BONDS 1.0%
FOREIGN
INVESTMENTS 5.8%
ROW: 1, COL: 1, VALUE: 0.0
ROW: 1, COL: 2, VALUE: 3.0
ROW: 1, COL: 3, VALUE: 22.4
ROW: 1, COL: 4, VALUE: 74.59999999999999
*
**
INVESTMENTS NOVEMBER 30, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS - 48.5%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (D) (000S) (000S)
CONVERTIBLE BONDS - 47.5%
AEROSPACE & DEFENSE - 4.2%
Kellstrom Industries, Inc.:
5.5% 6/15/03 B3 $ 8,000 $ 7,500
5.75% 10/15/02 (f) B3 2,500 2,588
5.75% 10/15/02 B3 2,350 2,432
Orbital Sciences Corp.:
5% 10/1/02 (f) B2 12,200 18,462
5% 10/1/02 B 6,870 10,396
41,378
BASIC INDUSTRIES - 0.4%
PAPER & FOREST PRODUCTS - 0.4%
Metsa-Serla Ltd. 4.375% 10/15/02 (f) - 4,000 3,665
ENERGY - 0.7%
ENERGY SERVICES - 0.2%
Diamond Offshore Drilling, Inc. 3.75% 2/15/07 Baa2 2,500 2,256
OIL & GAS - 0.5%
Pennzoil Co. 4.95% 8/15/08 Ba1 4,455 4,444
TOTAL ENERGY 6,700
FINANCE - 3.0%
CREDIT & OTHER FINANCE - 2.5%
Nestle Holdings, Inc. 3% 6/17/02 - 750 1,035
Sandoz Capital BVI Ltd. euro 2% 10/6/02 - 6,500 11,521
Siemens Capital Corp. 1% 7/17/01 Aa1 DEM 19,000 12,001
24,557
INSURANCE - 0.5%
Loews Corp. 3.125% 9/15/07 A2 6,000 4,748
TOTAL FINANCE 29,305
HEALTH - 5.2%
DRUGS & PHARMACEUTICALS - 3.8%
Alpharma, Inc. 5.75% 4/1/05 B 6,000 8,340
Athena Neurosciences, Inc.:
4.75% 11/15/04 (f) Baa3 9,000 10,868
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (D) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Athena Neurosciences, Inc.: - continued
4.75% 11/15/04 Baa3 $ 1,000 $ 1,208
Atrix Laboratories, Inc. 7% 12/1/04 (f) - 3,000 2,385
Integrated Process Equipment Corp.:
6.25% 9/15/04 (f) B- 3,000 2,149
6.25% 9/15/04 B- 6,500 4,656
Roche Holdings, Inc. liquid yield option note:
0% 4/20/10 (f) - 2,000 1,270
0% 5/6/12 (f) - 2,000 1,063
Sepracor, Inc. 6.25% 2/15/05 (f) - 2,665 5,037
36,976
MEDICAL EQUIPMENT & SUPPLIES - 1.4%
ESC Medical Systems Ltd.:
6% 9/1/02 (f) Caa1 16,500 11,963
6% 9/1/02 Caa2 3,000 2,175
14,138
TOTAL HEALTH 51,114
INDUSTRIAL MACHINERY & EQUIPMENT - 5.4%
ELECTRICAL EQUIPMENT - 1.8%
Cymer, Inc. 3.5% 8/6/04 (e) - 11,000 8,044
Oak Industries, Inc.:
4.875% 3/1/08 (f) B2 6,500 6,403
4.875% 3/1/08 B2 3,500 3,448
17,895
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ASM Lithography Holding:
2.5% 4/9/05 (f) - NLG 500 221
2.5% 4/9/05 - NLG 2,000 882
1,103
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (D) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
POLLUTION CONTROL - 3.5%
United Waste Systems, Inc. 4.5% 6/1/01 Ba2 $ 7,200 $ 10,917
Waste Management, Inc. 4% 2/1/02 Ba1 20,000 23,300
34,217
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 53,215
MEDIA & LEISURE - 0.7%
BROADCASTING - 0.1%
International Cabletel, Inc. 7% 6/15/08 Caa1 670 1,015
PUBLISHING - 0.0%
Scholastic Corp. 5% 8/15/05 (f) Baa3 500 469
RESTAURANTS - 0.6%
CKE Restaurants, Inc.:
4.25% 3/15/04 (f) B1 5,000 4,056
4.25% 3/15/04 B1 2,000 1,623
5,679
TOTAL MEDIA & LEISURE 7,163
PRECIOUS METALS - 0.6%
Stillwater Mining Co. 7% 5/1/03 - 4,500 6,233
RETAIL & WHOLESALE - 3.0%
GENERAL MERCHANDISE STORES - 1.9%
Costco Companies, Inc.:
0% 8/19/17 (f) A3 3,000 2,333
0% 8/19/17 - 21,000 16,328
18,661
GROCERY STORES - 1.0%
Koninklijke Ahold NV 3% 9/30/03 Baa1 NLG 17,000 10,150
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
Staples, Inc. 4.5% 10/1/00 (f) Baa3 140 343
TOTAL RETAIL & WHOLESALE 29,154
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (D) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
SERVICES - 0.8%
ADVERTISING - 0.2%
Interpublic Group of Companies, Inc. - $ 2,000 $ 2,089
1.8% 9/16/04
SERVICES - 0.6%
ADT Operations, Inc. liquid yield option notes Baa1 2,700 4,829
0%, 7/6/10
Premiere Technologies, Inc. 5.75% 7/1/04 - 2,000 980
5,809
TOTAL SERVICES 7,898
TECHNOLOGY - 17.0%
COMMUNICATIONS EQUIPMENT - 0.2%
Checkpoint Systems, Inc. 5.25% 11/1/05 - 2,000 1,795
COMPUTER SERVICES & SOFTWARE - 1.1%
Networks Associates, Inc. 0% 2/13/18 - 9,250 4,625
Tecnomatix Tech Ltd. 5.25% 8/15/04 (f) - 4,232 2,814
Wind River Systems, Inc. 5% 8/1/02 B- 3,000 3,450
10,889
COMPUTERS & OFFICE EQUIPMENT - 7.7%
Adaptec, Inc. 4.75% 2/1/04 B1 9,000 6,975
Comverse Technology, Inc. 4.5% 7/1/05 - 1,500 1,581
Quantum Corp. 7% 8/1/04 B2 18,000 16,425
Read-Rite Corp. 6.5% 9/1/04 Caa1 1,000 710
Unisys Corp. 8.25% 3/15/06 B 8,470 35,108
Xerox Corp. 0.57% 4/21/18 A3 24,000 14,340
75,139
ELECTRONIC INSTRUMENTS - 2.1%
Credence Systems Corp.:
5.25% 9/15/02 (f) - 16,000 12,340
5.25% 9/15/02 - 600 463
LAM Research Corp. 5% 9/1/02 B 5,000 3,900
Thermo Electron Corp. 4.25% 1/1/03 (f) Ba2 5,000 4,431
21,134
ELECTRONICS - 5.9%
Brightpoint, Inc. 0% 3/11/18 (f) B2 17,000 6,439
Candescent Technologies Corp. 7% 5/1/03 (f) - 5,500 4,840
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (D) (000S) (000S)
CONVERTIBLE BONDS - CONTINUED
TECHNOLOGY - CONTINUED
ELECTRONICS - CONTINUED
Micron Technology, Inc. 7% 7/1/04 B2 $ 12,890 $ 13,470
Photronics, Inc. 6% 6/1/04 B2 2,250 2,160
Solectron Corp. 6% 3/1/06 (f) Ba1 1,440 2,851
Taiwan Semiconductor Manufacturing Co. Ltd. Aa1 4,500 5,198
0% 7/3/02
World Access, Inc.:
4.5% 10/1/02 (f) CCC+ 12,000 9,300
4.5% 10/1/02 CCC+ 17,550 13,601
57,859
TOTAL TECHNOLOGY 166,816
TRANSPORTATION - 0.3%
TRUCKING & FREIGHT - 0.3%
SPACEHAB, Inc. 8% 10/15/07 (f) - 3,500 2,835
UTILITIES - 6.2%
CELLULAR - 0.1%
Cellular Communications International, Inc.:
6% 4/1/05 (f) Caa1 300 510
6% 4/1/05 Caa1 400 680
1,190
ELECTRIC UTILITY - 1.9%
AES Corp. 4.5% 8/15/05 Ba2 9,500 10,272
KTI, Inc. 8.75% 8/15/04 - 4,470 8,242
18,514
TELEPHONE SERVICES - 4.2%
Cam-Net Communications Network, Inc. - 2,275 0
11.5% 4/4/99 (g)
France Telecom SA 2% 1/1/04 (f) Aa1 FRF 6 5,357
Global TeleSystems Group, Inc. 5.75% 7/1/10 Caa3 36,670 35,835
41,192
TOTAL UTILITIES 60,896
TOTAL CONVERTIBLE BONDS 466,372
CORPORATE BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (B) AMOUNT (D) (000S) (000S)
NONCONVERTIBLE BONDS - 1.0%
UTILITIES - 1.0%
TELEPHONE SERVICES - 1.0%
Global TeleSystems Group, Inc. Caa2 $ 3,000 $ 2,760
9.875% 2/15/05
WinStar Communications, Inc. 10% 3/15/08 CCC 8,000 6,960
9,720
TOTAL CORPORATE BONDS 476,092
(Cost $449,712)
</TABLE>
<TABLE>
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COMMON STOCKS - 9.8%
SHARES
AEROSPACE & DEFENSE - 0.8%
Alliant Techsystems, Inc. (a) 102,400 7,802
Orbital Sciences Corp. (a) 3,100 119
7,921
BASIC INDUSTRIES - 0.7%
CHEMICALS & PLASTICS - 0.1%
Hanna (M.A.) Co. 82,800 1,164
METALS & MINING - 0.4%
Aluminum Co. of America 50,000 3,706
PACKAGING & CONTAINERS - 0.2%
Tupperware Corp. 100,000 1,744
TOTAL BASIC INDUSTRIES 6,614
DURABLES - 0.0%
AUTOS, TIRES, & ACCESSORIES - 0.0%
Breed Technologies, Inc. 15,400 104
ENERGY - 0.3%
OIL & GAS - 0.3%
Cooper Cameron Corp. (a) 45,000 1,097
Exxon Corp. 11,500 863
Weatherford International, Inc. (a) 75,000 1,369
3,329
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 0.7%
CREDIT & OTHER FINANCE - 0.2%
Associates First Capital Corp. 31,800 $ 2,476
Heller Financial, Inc. Class A 4,000 105
2,581
INSURANCE - 0.5%
Aetna, Inc. 60,000 4,639
TOTAL FINANCE 7,220
HEALTH - 0.1%
MEDICAL EQUIPMENT & SUPPLIES - 0.1%
ESC Medical Systems Ltd. (a) 85,000 893
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
ELECTRICAL EQUIPMENT - 0.1%
L 3 Communications Holdings, Inc. (a) 500 23
Siemens AG 8,100 564
587
MEDIA & LEISURE - 0.9%
BROADCASTING - 0.7%
Metromedia Fiber Network, Inc. Class A (a) 138,500 7,185
RESTAURANTS - 0.2%
Tricon Global Restaurants, Inc. (a) 30,000 1,367
TOTAL MEDIA & LEISURE 8,552
PRECIOUS METALS - 0.4%
Stillwater Mining Co. (a) 100,000 3,656
RETAIL & WHOLESALE - 0.3%
APPAREL STORES - 0.1%
Abercrombie & Fitch Co. Class A (a) 7,500 420
Baker (J.), Inc. 190,700 942
1,362
DRUG STORES - 0.0%
CVS Corp. 4,500 222
GENERAL MERCHANDISE STORES - 0.1%
Federated Department Stores, Inc. (a) 12,659 528
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
IKON Office Solutions, Inc. 6,900 $ 67
Tandy Corp. 18,300 825
892
TOTAL RETAIL & WHOLESALE 3,004
SERVICES - 0.0%
Bright Horizons Family Solutions, Inc. (a) 1,610 38
TECHNOLOGY - 3.4%
COMMUNICATIONS EQUIPMENT - 0.6%
Intermedia Communications, Inc. (a) 5,588 96
Jabil Circuit, Inc. (a) 92,300 5,353
5,449
COMPUTER SERVICES & SOFTWARE - 0.8%
Ardent Software, Inc. 150,000 2,663
CompUSA, Inc. (a) 119,100 1,764
Electronics for Imaging, Inc. (a) 4,700 126
Entrust Technologies, Inc. (a) 1,000 21
Microsoft Corp. (a) 30,000 3,660
8,234
COMPUTERS & OFFICE EQUIPMENT - 1.0%
Iomega Corp. (a) 150,000 1,134
Quantum Corp. (a) 398,645 8,820
9,954
ELECTRONIC INSTRUMENTS - 0.2%
Credence Systems Corp. (a) 110,000 2,159
ELECTRONICS - 0.8%
Micron Technology, Inc. (a) 79,400 3,280
World Access, Inc. (a) 215,900 4,385
7,665
TOTAL TECHNOLOGY 33,461
TRANSPORTATION - 0.0%
AIR TRANSPORTATION - 0.0%
Florida West Airlines, Inc. (a) 18,236 0
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - 2.1%
CELLULAR - 0.2%
Advanced Radio Telecom Corp. (a) 27,200 $ 105
SkyTel Communications, Inc. (a) 104,300 2,177
2,282
ELECTRIC UTILITY - 0.0%
KTI, Inc. (a) 10,000 211
GAS - 0.1%
Enron Corp. 20,000 1,051
TELEPHONE SERVICES - 1.8%
MCI WorldCom, Inc. (a) 93,929 5,542
Qwest Communications International, Inc. (a) 145,400 5,816
SUNCOM Telecommunications, Inc. (a) 875,935 0
SUNCOM Telecommunications, Inc. warrants 6/30/01 (a) 1,537,423 0
WinStar Communications, Inc. (a) 202,392 5,642
WinStar Communications, Inc. (a) 17,541 489
17,489
TOTAL UTILITIES 21,033
TOTAL COMMON STOCKS 96,412
(Cost $93,153)
</TABLE>
<TABLE>
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PREFERRED STOCKS - 30.4%
CONVERTIBLE PREFERRED STOCKS - 30.3%
AEROSPACE & DEFENSE - 0.5%
British Aerospace PLC 7.75% 1,228,100 5,080
BASIC INDUSTRIES - 3.4%
CHEMICALS & PLASTICS - 3.4%
Monsanto Co. $1.625 ACES (a) 350,000 15,838
Sealed Air Corp. Series A, $2.00 363,600 17,135
32,973
CONSTRUCTION & REAL ESTATE - 0.8%
REAL ESTATE INVESTMENT TRUSTS - 0.8%
Crescent Real Estate Equities Co. $1.688 180,000 3,173
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
CONSTRUCTION & REAL ESTATE - CONTINUED
REAL ESTATE INVESTMENT TRUSTS - CONTINUED
Glenborough Realty Trust, Inc. Class A, $1.9375 114,000 $ 2,138
Vornado Realty Trust Series A, $3.25 51,800 2,833
8,144
ENERGY - 3.1%
OIL & GAS - 3.1%
EVI, Inc.:
$2.50 (f) 30,000 900
$2.50 30,000 900
Tesoro Petroleum Corp. $1.1555 PIES 450,000 6,413
Tosco Financing Trust:
$2.875 (f) 409,000 20,143
$2.875 40,000 2,005
30,361
FINANCE - 6.3%
CREDIT & OTHER FINANCE - 4.8%
BTI Capital Trust $3.25 (a)(f) 120,000 2,280
Budget Group Capital Trust $3.125 TOPRS (a)(f) 25,000 888
CellNet Funding LLC $1.75 185,000 2,636
Dollar General Trust $3.3536 STRYPES 87,700 3,048
Federal Mogul Financing Trust:
$3.50 (f) 390,000 24,960
$3.50 40,000 2,560
Life Re Corp./Life Re Capital Trust II $3.96 70,000 5,171
Union Pacific Capital Trust $3.125 110,000 5,253
46,796
INSURANCE - 0.3%
Aetna, Inc. Class C, $4.7578 PRIDES 5,000 368
Philadelphia Consolidated Holding Corp. 323,000 3,069
$0.70 Income PRIDES (a)
3,437
SECURITIES INDUSTRY - 1.2%
Cincinnati Bell, Inc. $3.48 DECS 144,000 8,406
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
FINANCE - CONTINUED
SECURITIES INDUSTRY - CONTINUED
Merrill Lynch & Co., Inc.:
$1.37 STRYPES 50,000 $ 2,188
$2.39 STRYPES 38,000 960
11,554
TOTAL FINANCE 61,787
HEALTH - 0.1%
MEDICAL EQUIPMENT & SUPPLIES - 0.1%
McKesson Financing Trust:
$2.50 (f) 6,900 678
$2.50 5,000 491
1,169
MEDIA & LEISURE - 6.0%
BROADCASTING - 3.6%
Chancellor Media Corp. $3.50 (a) 20,000 2,155
CSC Holdings, Inc. $2.125 46,600 2,913
MediaOne Group, Inc.:
$1.83 DECS (a) 119,000 5,891
Class D $2.25 220,100 18,048
TCI Pacific Communications, Inc. Class A, $5.00 29,600 6,690
35,697
ENTERTAINMENT - 1.5%
Premier Parks, Inc. $4.05 PIES 268,700 14,308
PUBLISHING - 0.9%
Houghton Mifflin Co. $4.08 40,550 2,225
Tribune Co. $1.75 DECS 229,300 6,392
8,617
TOTAL MEDIA & LEISURE 58,622
NONDURABLES - 0.3%
FOODS - 0.3%
Dole Foods Co., Inc. $2.75 ACES 86,400 2,722
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
RETAIL & WHOLESALE - 0.8%
APPAREL STORES - 0.8%
AnnTaylor Finance Trust $4.25 TOPRS 94,000 $ 8,037
SERVICES - 0.4%
PRINTING - 0.3%
Big Flower Trust I $3.00 QUIPS (f) 62,500 3,148
SERVICES - 0.1%
Medpartners, Inc. $1.442 TAPS 93,700 650
TOTAL SERVICES 3,798
TECHNOLOGY - 1.0%
COMMUNICATIONS EQUIPMENT - 0.7%
Intermedia Communications, Inc.:
$1.75 (a)(f) 140,000 2,231
Series D, $1.75 depositary shares (a) 170,000 4,356
Series E, $1.75 (a) 50,000 975
7,562
COMPUTER SERVICES & SOFTWARE - 0.3%
Wang Laboratories, Inc. $3.25 51,600 2,748
TOTAL TECHNOLOGY 10,310
TRANSPORTATION - 0.2%
TRUCKING & FREIGHT - 0.2%
CNF Trust I $2.50 TECONS 33,900 1,876
UTILITIES - 7.4%
CELLULAR - 0.8%
SkyTel Communications, Inc. $2.25 240,000 7,368
ELECTRIC UTILITY - 3.0%
Houston Industries, Inc. $3.216 ACES 319,800 29,422
GAS - 0.1%
Enron Corp. Series J, $13.652 1,100 788
PREFERRED STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
CONVERTIBLE PREFERRED STOCKS - CONTINUED
UTILITIES - CONTINUED
TELEPHONE SERVICES - 3.5%
IXC Communications, Inc.:
$3.375 (f) 151,377 $ 4,494
$3.375 87,000 2,583
$7.25 59,500 7,661
NEXTLINK Communications, Inc. $3.25 53,000 2,239
WinStar Communications, Inc.:
$3.50 (a) 160,000 6,080
Series A, $1.50 pay-in-kind (a) 103,426 3,348
Series D, $3.50 (a)(f) 220,000 8,360
34,765
TOTAL UTILITIES 72,343
TOTAL CONVERTIBLE PREFERRED STOCKS 297,222
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
TECHNOLOGY - 0.1%
COMMUNICATIONS EQUIPMENT - 0.1%
Intermedia Communications, Inc. 13.5% pay-in-kind (a) 1,000 1,030
TOTAL PREFERRED STOCKS 298,252
(Cost $289,323)
CASH EQUIVALENTS - 11.3%
Taxable Central Cash Fund (c) 111,158,200 111,158
(Cost $111,158)
TOTAL INVESTMENT IN SECURITIES - 100% $ 981,914
(Cost $943,346)
</TABLE>
SECURITY TYPE ABBREVIATIONS
ACES - Automatic Common
Exchange Securities
DECS - Dividend Enhanced
Convertible Stock/Debt Exchangeable for
Common Stock
PIES - Premium Income Equity Securities
PRIDES - Preferred Redeemable Increased Dividend
Equity Securities
QUIPS - Quarterly Income
Preferred Securities
STRYPES - Structured Yield Product Exchangeable for
Common Stock
TAPS - Threshold Appreciation Price Securities
TECONS - Term Convertible Shares
TOPRS - Trust Originated
Preferred Securities
CURRENCY ABBREVIATIONS
DEM - German deutsche mark
FRF - French franc
NLG - Dutch guilder
LEGEND
(a) Non-income producing
(b) Standard & Poor's credit ratings are used in the absence of a
rating by Moody's Investors Service, Inc.
(c) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(d) Principal amount is stated in United States dollars unless
otherwise noted.
(e) 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.
(f) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers.
At the period end, the value of these securities amounted to
$193,074,000 or 19.6% of net assets.
(g) 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:
SECURITY ACQUISTION DATE ACQUISITION COST
Cam-Net 4/12/96 $ 1,838
Communicatios
Network, Inc.
11.5% 4/4/99
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 4.5% AAA, AA, A 3.7%
Baa 3.1% BBB 5.1%
Ba 5.7% BB 1.9%
B 9.4% B 18.4%
Caa 5.7% CCC 6.8%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 10.2%. FMR has
determined that unrated debt securities that are lower quality account
for 10.2% of the total value of investment in securities.
INCOME TAX INFORMATION
At November 30, 1998, the aggregate cost of investment securities for
income tax purposes was $950,827,000. Net unrealized appreciation
aggregated $31,087,000, of which $101,383,000 related to appreciated
investment securities and $70,296,000 related to depreciated
investment securities.
The fund hereby designates approximately $52,274,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) NOVEMBER 30, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $943,346) - $ 981,914
SEE ACCOMPANYING SCHEDULE
CASH 1,846
FOREIGN CURRENCY HELD AT VALUE (COST $919) 898
RECEIVABLE FOR INVESTMENTS SOLD 23,922
RECEIVABLE FOR FUND SHARES SOLD 1,191
DIVIDENDS RECEIVABLE 792
INTEREST RECEIVABLE 5,968
OTHER RECEIVABLES 211
TOTAL ASSETS 1,016,742
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 16,914
PAYABLE FOR FUND SHARES REDEEMED 5,069
ACCRUED MANAGEMENT FEE 494
OTHER PAYABLES AND ACCRUED EXPENSES 301
COLLATERAL ON SECURITIES LOANED, AT VALUE 7,127
TOTAL LIABILITIES 29,905
NET ASSETS $ 986,837
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 860,576
UNDISTRIBUTED NET INVESTMENT INCOME 6,817
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 80,897
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 38,547
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 53,032 SHARES OUTSTANDING $ 986,837
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $18.61
PER SHARE ($986,837 (DIVIDED BY) 53,032 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1998
INVESTMENT INCOME $ 18,067
DIVIDENDS
INTEREST (INCLUDING INCOME ON SECURITIES LOANED OF $325) 23,341
TOTAL INCOME 41,408
EXPENSES
MANAGEMENT FEE $ 5,102
BASIC FEE
PERFORMANCE ADJUSTMENT 288
TRANSFER AGENT FEES 2,049
ACCOUNTING AND SECURITY LENDING FEES 477
NON-INTERESTED TRUSTEES' COMPENSATION 4
CUSTODIAN FEES AND EXPENSES 64
REGISTRATION FEES 80
AUDIT 50
LEGAL 6
INTEREST 5
REPORTS TO SHAREHOLDERS 56
MISCELLANEOUS 4
TOTAL EXPENSES BEFORE REDUCTIONS 8,185
EXPENSE REDUCTIONS (154) 8,031
NET INVESTMENT INCOME 33,377
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 90,235
FOREIGN CURRENCY TRANSACTIONS (74) 90,161
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES (39,454)
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES (21) (39,475)
NET GAIN (LOSS) 50,686
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 84,063
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 33,377 $ 37,422
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 90,161 112,126
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) (39,475) (3,229)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 84,063 146,319
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (31,437) (47,359)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (95,599) (49,453)
TOTAL DISTRIBUTIONS (127,036) (96,812)
SHARE TRANSACTIONS 458,888 457,041
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 119,172 88,795
COST OF SHARES REDEEMED (577,708) (713,412)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 352 (167,576)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (42,621) (118,069)
NET ASSETS
BEGINNING OF PERIOD 1,029,458 1,147,527
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 986,837 $ 1,029,458
INCOME OF $6,817 AND $8,396, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 24,071 24,408
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 6,962 5,058
REDEEMED (30,607) (38,427)
NET INCREASE (DECREASE) 426 (8,961)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED NOVEMBER 30,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 19.57 $ 18.64 $ 17.66 $ 15.63 $ 17.63
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .60 B .64 B .83 .79 .78
NET REALIZED AND UNREALIZED .86 1.90 1.79 1.94 (.86)
GAIN (LOSS)
TOTAL FROM INVESTMENT 1.46 2.54 2.62 2.73 (.08)
OPERATIONS
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.58) (.80) (.74) (.70) (.91)
FROM NET REALIZED GAIN (1.84) (.81) (.90) - (1.01)
TOTAL DISTRIBUTIONS (2.42) (1.61) (1.64) (.70) (1.92)
NET ASSET VALUE, END OF PERIOD $ 18.61 $ 19.57 $ 18.64 $ 17.66 $ 15.63
TOTAL RETURN A 8.88% 14.84% 16.02% 18.00% (.54)%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 987 $ 1,029 $ 1,148 $ 1,049 $ 903
(IN MILLIONS)
RATIO OF EXPENSES TO AVERAGE .79% .74% .85% .70% .86%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE .77% C .73% C .83% C .70% .85% C
NET ASSETS AFTER EXPENSE
REDUCTIONS
RATIO OF NET INVESTMENT INCOME 3.21% 3.46% 4.48% 4.59% 4.61%
TO AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 223% 212% 175% 203% 318%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 8 OF NOTES TO
FINANCIAL STATEMENTS).
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C 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 8 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Convertible Securities Fund (the fund) is a fund of Fidelity
Financial Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company
organized as a Massachusetts business trust. The financial statements
have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. 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. 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. Securities (including restricted
securities) for which market quotations are not readily available are
valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the
Board of Trustees. Short-term securities with remaining maturities of
sixty days or less for which quotations are not readily available are
valued at amortized cost or original cost plus accrued interest, both
of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the fund is
informed of the ex-dividend date. Non-cash dividends included in
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
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
income is recorded net of foreign taxes withheld where recovery of
such taxes is uncertain.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions,
passive foreign investment companies (PFIC), market discount and
losses deferred due to wash sales. The fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part
of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained 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.
2. OPERATING POLICIES - CONTINUED
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income by investing in U.S. Treasury securities
and repurchase agreements for these securities. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the fund are recorded
as interest income in the accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $0 or 0.0% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,170,448,000 and $2,319,006,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly basic fee that is calculated on the basis of a group fee rate
plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a
series of rates and is based on the monthly average net assets of all
the mutual funds advised by FMR. The rates ranged from .2500% to
.5200% for the period. The annual individual fund fee rate is .20%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. The basic fee
is subject to a performance adjustment (up to a maximum of
(plus/minus).15% of the fund's average net assets over the performance
period) based on the fund's investment performance as compared to the
appropriate index over a specified period of time. For the period, the
management fee was equivalent to an annual rate of .52% of average net
assets after the performance adjustment.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .20% of average net assets.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the fund's
accounting records and administers the security
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
ACCOUNTING AND SECURITY LENDING
FEES - CONTINUED
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 $86,000 for the
period.
5. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a lender.
The maximum loan and the average daily loan balance during the period
for which the loan was outstanding amounted to $21,834,000. The
weighted average interest rate was 5.87%. Interest earned from the
interfund lending program amounted to $4,000 and is included in
interest income on the Statement of Operations.
6. SECURITY LENDING.
The fund loaned securities to certain brokers who paid the fund
negotiated lenders' fees. These fees are included in interest income.
The fund receives U.S. Treasury obligations and/or cash as collateral
against the loaned securities, in an amount at least equal to 102% of
the market value of the loaned securities at the inception of each
loan. This collateral must be maintained at not less than 100% of the
market value of the loaned securities during the period of the loan.
At period end, the value of the securities loaned and the value of
collateral amounted to $6,607,000 and $7,127,000, respectively.
7. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balances during the period for which loans were outstanding amounted
to $7,271,000 and $5,776,000, respectively. The weighted average
interest rate was 5.64%.
8. 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 $134,000 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 $8,000, respectively.
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, 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, 1998, and the results of its operations, 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 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, 1998 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 8, 1999
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 12/29/97 1/5/98 12/21/98 1/11/99
RECORD DATE 12/26/97 1/2/98 12/18/98 1/8/99
DIVIDENDS $.15 - $.19 -
SHORT-TERM
CAPITAL GAINS $1.15 $.05 $.38 -
LONG-TERM
CAPITAL GAINS $.62 $.02 $.71 $.05
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 62.31% - - -
20% rate 37.69% 100% 100% 100%
A total of 1.09% 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 19% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of these percentages
for use in preparing 1998 income tax returns.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on November 18,
1998. The results of votes taken among shareholders on proposals
before them are reported below. Each vote reported represents one
dollar of net asset value held on the record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
AFFIRMATIVE 483,300,629.51 96.943
AGAINST 0.00 0.000
WITHHELD 15,239,212.77 3.057
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
PHYLLIS BURKE DAVIS
AFFIRMATIVE 482,782,921.68 96.839
AGAINST 0.00 0.000
WITHHELD 15,756,920.60 3.161
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
ROBERT M. GATES
AFFIRMATIVE 482,780,703.27 96.839
AGAINST 0.00 0.000
WITHHELD 15,759,139.01 3.161
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
EDWARD C. JOHNSON 3D
AFFIRMATIVE 483,231,474.02 96.929
AGAINST 0.00 0.000
WITHHELD 15,308,368.26 3.071
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
E. BRADLEY JONES
AFFIRMATIVE 481,167,041.86 96.515
AGAINST 0.00 0.000
WITHHELD 17,372,800.42 3.485
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
# OF % OF
VOTES CAST VOTES CAST
DONALD J. KIRK
AFFIRMATIVE 483,032,185.93 96.889
AGAINST 0.00 0.000
WITHHELD 15,507,656.35 3.111
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
PETER S. LYNCH
AFFIRMATIVE 483,423,487.96 96.968
AGAINST 0.00 0.000
WITHHELD 15,116,354.32 3.032
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
WILLIAM O. MCCOY
AFFIRMATIVE 483,226,029.26 96.928
AGAINST 0.00 0.000
WITHHELD 15,313,813.02 3.072
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
GERALD C. MCDONOUGH
AFFIRMATIVE 481,426,705.32 96.567
AGAINST 0.00 0.000
WITHHELD 17,113,136.96 3.433
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
MARVIN L. MANN
AFFIRMATIVE 483,450,083.32 96.973
AGAINST 0.00 0.000
WITHHELD 15,089,758.96 3.027
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
PROPOSAL 1 - CONTINUED
# OF % OF
VOTES CAST VOTES CAST
ROBERT C. POZEN
AFFIRMATIVE 483,354,095.00 96.954
AGAINST 0.00 0.000
WITHHELD 15,185,747.28 3.046
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
THOMAS R. WILLIAMS
AFFIRMATIVE 481,569,448.34 96.596
AGAINST 0.00 0.000
WITHHELD 16,970,393.94 3.404
ABSTAIN 0.00 0.000
TOTAL 498,539,842.28 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the fund.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 474,387,522.89 95.155
AGAINST 8,279,512.54 1.661
WITHHELD 0.00 0.00
ABSTAIN 15,872,806.85 3.184
TOTAL 498,539,842.28 100.000
PROPOSAL 3
To authorize the Trustees to adopt an Amended and Restated Declaration
of Trust.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 430,480,264.96 88.214
AGAINST 28,241,588.33 5.788
WITHHELD 0.00 0.00
ABSTAIN 29,270,812.35 5.998
TOTAL 487,992,665.64 100.000
BROKER 10,547,176.64
NON-VOTES
PROPOSAL 4
To adopt a new fundamental investment policy for the fund permitting
the fund to invest all of its assets in another open-end investment
company managed by FMR or an affiliate with substantially the same
investment objective and policies.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 406,267,565.54 83.305
AGAINST 50,967,231.63 10.451
WITHHELD 0.00 0.000
ABSTAIN 30,453,068.43 6.244
TOTAL 487,687,865.60 100.000
BROKER 10,851,976.68
NON-VOTES
PROPOSAL 5
To approve an amended management contract for the fund.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 422,210,613.94 86.574
AGAINST 30,367,486.64 6.227
WITHHELD 0.00 0.000
ABSTAIN 35,109,782.35 7.199
TOTAL 487,687,882.93 100.000
BROKER 10,851,959.35
NON-VOTES
PROPOSAL 6
To amend the fund's fundamental investment limitation concerning
diversification.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 413,269,731.93 84.741
AGAINST 41,616,934.84 8.533
WITHHELD 0.00 0.000
ABSTAIN 32,801,216.16 6.726
TOTAL 487,687,882.93 100.000
BROKER 10,851,959.35
NON-VOTES
PROPOSAL 7
To amend the fund's fundamental investment limitation concerning
underwriting.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 413,275,671.62 84.689
AGAINST 38,785,837.05 7.948
WITHHELD 0.00 0.000
ABSTAIN 35,931,156.97 7.363
TOTAL 487,992,665.64 100.000
BROKER 10,547,176.64
NON-VOTES
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpress(registered trademark) provides a single
toll-free number to access account balances, positions, quotes and
trading. It's easy to navigate the service, and on your first call,
the system will help you create a personal identification number (PIN)
for security.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
MARKET FUNDS WILL BE ABLE TO
MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
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
David Felman, 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
CVS-ANN-0199 69055
1.539184.101
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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THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
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FIDELITY
EQUITY-INCOME II
FUND
ANNUAL REPORT
NOVEMBER 30, 1998
(2_FIDELITY_LOGOS)
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 Footnotes to the financial statements.
REPORT OF INDEPENDENT 27 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 28
PROXY VOTING RESULTS 29
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
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.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
The month of November proved to be a strong one for the stock and bond
markets. The Dow Jones Industrial Average reached a record high.
Merger activity, which had lulled during the summer correction, has
increased significantly. Small-cap stocks posted their third
consecutive month of positive returns, as did emerging markets. While
bond returns generally were not at the levels of their equity
counterparts, they were mostly positive nonetheless.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. 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, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY EQUITY-INCOME II 20.05% 134.68% 397.62%
S&P 500 (registered trademark) 23.66% 181.25% 346.94%
Equity Income Funds Average 10.66% 114.51% 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 market
capitalization-weighted 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
219 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, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
FIDELITY EQUITY-INCOME II 20.05% 18.60% 21.38%
S&P 500 23.66% 22.98% 19.82%
Equity Income Funds Average 10.66% 16.40% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER LIFE OF FUND
Equity-Income II S&P 500
00319 SP001
1990/08/21 10000.00 10000.00
1990/08/31 10090.00 10035.72
1990/09/30 9790.00 9546.98
1990/10/31 9790.00 9505.93
1990/11/30 10180.00 10120.01
1990/12/31 10451.06 10402.36
1991/01/31 10954.00 10855.90
1991/02/28 11929.70 11632.10
1991/03/31 12424.99 11913.60
1991/04/30 12770.41 11942.19
1991/05/31 13420.62 12458.09
1991/06/30 13105.67 11887.51
1991/07/31 13833.74 12441.47
1991/08/31 14361.43 12736.33
1991/09/30 14456.53 12523.64
1991/10/31 14904.71 12691.45
1991/11/30 14456.53 12179.99
1991/12/31 15320.99 13573.38
1992/01/31 15754.68 13320.91
1992/02/29 16262.56 13494.08
1992/03/31 16199.86 13230.95
1992/04/30 16550.87 13619.94
1992/05/31 16731.70 13686.68
1992/06/30 16626.27 13482.75
1992/07/31 17139.50 14034.19
1992/08/31 16786.65 13746.49
1992/09/30 17001.04 13908.70
1992/10/31 17140.75 13957.38
1992/11/30 17807.03 14433.32
1992/12/31 18240.51 14610.85
1993/01/31 18739.36 14733.59
1993/02/28 19071.82 14933.96
1993/03/31 19793.85 15249.07
1993/04/30 19849.55 14880.04
1993/05/31 20150.30 15278.83
1993/06/30 20341.51 15323.14
1993/07/31 20543.02 15261.84
1993/08/31 21214.73 15840.27
1993/09/30 21136.47 15718.30
1993/10/31 21530.18 16043.67
1993/11/30 21203.96 15891.25
1993/12/31 21685.43 16083.53
1994/01/31 22723.07 16630.37
1994/02/28 22286.55 16179.69
1994/03/31 21374.40 15474.26
1994/04/30 21955.29 15672.33
1994/05/31 22216.10 15929.35
1994/06/30 22047.50 15539.08
1994/07/31 22643.38 16048.77
1994/08/31 23418.02 16706.77
1994/09/30 22879.58 16297.45
1994/10/31 23274.88 16664.14
1994/11/30 22244.70 16057.23
1994/12/31 22370.95 16295.36
1995/01/31 22345.60 16717.90
1995/02/28 23154.03 17369.40
1995/03/31 23916.45 17881.97
1995/04/30 24475.31 18408.59
1995/05/31 25046.86 19144.39
1995/06/30 25390.89 19589.11
1995/07/31 26386.61 20238.68
1995/08/31 26527.03 20289.48
1995/09/30 27125.59 21145.70
1995/10/31 26317.59 21070.21
1995/11/30 27612.95 21995.19
1995/12/31 28274.79 22418.82
1996/01/31 29056.25 23181.96
1996/02/29 29427.41 23396.85
1996/03/31 30226.90 23622.16
1996/04/30 30706.27 23970.35
1996/05/31 30999.21 24588.55
1996/06/30 30759.08 24682.23
1996/07/31 29714.58 23591.77
1996/08/31 30397.52 24089.32
1996/09/30 31443.22 25445.07
1996/10/31 32022.26 26146.84
1996/11/30 33894.04 28123.28
1996/12/31 33564.33 27566.16
1997/01/31 34714.35 29288.50
1997/02/28 35041.04 29518.12
1997/03/31 33624.26 28305.22
1997/04/30 35208.43 29995.04
1997/05/31 37220.75 31821.14
1997/06/30 38981.23 33246.72
1997/07/31 41547.49 35892.17
1997/08/31 39153.27 33881.49
1997/09/30 41322.15 35737.18
1997/10/31 40012.85 34543.55
1997/11/30 41451.65 36142.58
1997/12/31 42684.77 36763.14
1998/01/31 42875.18 37169.74
1998/02/28 45524.77 39850.43
1998/03/31 48002.14 41891.17
1998/04/30 48114.83 42312.59
1998/05/31 47921.66 41585.24
1998/06/30 49500.82 43274.43
1998/07/31 49226.35 42813.56
1998/08/31 41718.89 36623.57
1998/09/30 43543.72 38969.68
1998/10/31 47300.56 42139.47
1998/11/30 49761.93 44693.55
IMATRL PRASUN SHR__CHT 19981130 19981222 090053 R00000000000103
$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, 1998, the value
of the investment would have grown to $49,762 - a 397.62% increase on
the initial investment. For comparison, look at how the Standard &
Poor's 500 Index did over the same period. With dividends and capital
gains, if any, reinvested, the same $10,000 would have grown to
$44,694 - a 346.94% 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
When the final bell of the U.S. stock
market sounded on Monday,
November 23, 1998, the Dow
Jones Industrial Average stood at a
record high of 9374.27, serving
notice that the bleak economic
outlook from just a few short
months earlier would not keep
positive investor sentiment down.
For the 12-month period ending
November 30, 1998, the Dow -
an index of 30 blue-chip stocks -
returned 18.56%. What caused the
turnaround from the doldrums of
equity performance during the
summer and early fall? A variety of
factors: The economic problems in
Russia, Brazil and other emerging
markets began to dissipate; Asian
markets began to rebound; and,
perhaps most importantly, three
interest-rate cuts late in the period
by the Federal Reserve Board
helped stem the tide of a slowing
U.S. economy. All these factors
culminated in the Dow reaching its
record high late in November, a
peak that outpaced the previous
record set in July by nearly 40 points.
Small-cap stock performance was
still a far cry behind their large-cap
brethren. For the period, the Russell
2000 - a popular measure of
small-cap stock performance -
returned -6.62%, significantly
trailing the large-cap weighted
Standard & Poor's 500 Index's
return of 23.66%. Despite the late
rally in the equity market, this kind
of volatility has characterized the
entire year, and when it will level
off is impossible to predict.
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, 1998, the fund's total
return was 20.05%. This compared favorably to the equity income funds
average, which returned 10.66% in that time span according to Lipper
Analytical Services, but lagged the Standard & Poor's 500 Index return
of 23.66%.
Q. WHY DID THE FUND OUTPERFORM ITS LIPPER PEER GROUP, BUT LAG THE S&P
500?
A. The fund benefited from its focus on industry-leading companies
that had growing market share and improving financial returns. Over
the past year, the valuation gap continued to widen between the
"haves" and the "have-nots" due to an overall flight to quality. The
"haves" were those stocks characterized by larger market
capitalizations and business franchises able to consistently deliver
relatively good earnings growth despite slower global economic growth.
This description contrasted sharply with the "have-nots,"
characterized as generally more illiquid, less predictable growers, or
economically sensitive companies. From a sector perspective, stock
selection was strong among media and leisure holdings, with Time
Warner being a noteworthy example. While the fund performed well
relative to its peers, however, it lagged the S&P 500. This was due in
large part to the fund's underweighting in such large-cap growth
stocks as Microsoft, Dell Computer and Lucent Technologies. Given the
fund's equity-income focus, it was difficult to have higher exposures
to these low-yielding, high price-to-earnings ratio stocks.
Q. HOW DID THE FUND WEATHER THE MARKET VOLATILITY WE'VE SEEN OVER THE
PAST 12 MONTHS?
A. I tried to keep the fund's stock selection focused on companies
with solid earnings growth and its industry weightings fairly
diversified. I also increased the fund's stake in the
slow-but-steadily-growing utilities sector by adding selectively to
positions in regional Bell operating companies such as BellSouth. In
addition, I added defensive positions in electric utilities such as
Duke Energy. Overall, I continued to focus the fund's stock selection
on companies that offered both fair valuations and reasonable dividend
yields, in an effort to keep the fund's relative volatility consistent
with its equity-income objectives.
Q. AT THE END OF THE PERIOD, FINANCE STOCKS ACCOUNTED FOR OVER 22% OF
THE FUND'S INVESTMENTS. HOW DID THESE STOCKS PERFORM?
A. During the spring and early summer months, the fund benefited from
strong gains in several of its finance holdings that were involved in
pending mergers as well as those that were positioned to benefit from
a good domestic economy. Fund holdings American Express, Chase
Manhattan and Citicorp all had strong gains during the first six
months of the period. However, during the second half of the period,
finance holdings detracted from the fund's relative performance amidst
concerns over these companies' trading losses, emerging markets'
exposure and the subsequent tightening of global credit. Consequently,
for the entire 12-month period ending November 30, 1998, the fund's
overweighting in finance detracted from returns relative to the S&P
500. Within this sector, however, some individual stocks outperformed.
Declining interest rates and an increase in home financing activity,
for example, fueled a sharp price increase for Fannie Mae.
Q. WHICH INDIVIDUAL STOCKS OR SECTORS TURNED OUT TO BE DISAPPOINTING
DURING THE PERIOD?
A. Retail-store chain J.C. Penney experienced disappointing results as
several aspects of the company's internal business plan were not as
successful as had been originally hoped. France-based
telecommunications company Alcatel also struggled during the period,
due mostly to a more competitive marketplace and a challenging
economic atmosphere. Lastly, the fund's lower exposure - relative to
the S&P 500 - to technology stocks hurt performance. Given the fund's
equity-income objective, tech stocks do not typically play a
significant role in the portfolio.
Q. WHAT'S YOUR OUTLOOK?
A. As was the case during the past year, I believe the next year will
continue to reward those companies with solid earnings growth and
improving financial returns, and will swiftly punish those companies
that encounter earnings disappointments. During the past few months,
the Federal Reserve Board eased its monetary policies in an attempt to
help sustain domestic economic growth. Nevertheless, I believe
heightened levels of market volatility will persist due to the
uncertain market reaction to news flow and to global economic
developments.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
BETTINA DOULTON ON
DEFLATION AND MARKET
VOLATILITY:
"From 1991 to 1997, much of the
U.S. market strength was
attributable to a favorable backdrop
of benign interest rates, low
inflation, rising corporate profits
and a high demand for stocks. Until
July 1998, the market had been
priced with the assumption that
these near-perfect conditions would
continue. Over the past summer,
though, investors came to realize
that there were flaws in this
scenario. Concerns began to mount
that the domestic economy was
entering a deflationary period
during which not only interest rates
but also corporate earnings would
decline. The ongoing economic
weakness in Asia, the recent
economic slowdown in Latin
America and other emerging
markets and a lack of pricing power
across almost all industry groups
continued to contribute to these
newborn deflationary fears - and
for good reason. When set in motion,
these deflationary forces have been
swift and devastating in their quest
to correct excess capacity by quickly
shifting global capital to those
markets and industries with the
best perceived growth prospects.
Due to the degree of excess global
capacity that still exists, I believe
the market will continue to be
greatly affected by the specter of
deflation during the next year.
Consequently, stock selection will
become increasingly critical over
the next 12 months, just as it has
been during the past 12 months. I
will continue to focus
Equity-Income II's stock selection
on industry-leading companies that
can improve their financial returns
in today's challenging environment
of anemic pricing power."
FUND FACTS
GOAL: reasonable income; the
fund also considers the
potential for capital
appreciation
FUND NUMBER: 319
TRADING SYMBOL: FEQTX
START DATE: August 21, 1990
SIZE: as of November 30,
1998, more than $18.6 billion
MANAGER: Bettina Doulton,
since 1996; manager, Fidelity
Puritan Fund, since 1996;
joined Fidelity in 1986
(checkmark)
INVESTMENT CHANGES
TOP TEN STOCKS AS OF NOVEMBER 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
General Electric Co. 5.0 4.5
American Express Co. 3.7 3.4
Citigroup, Inc. 3.4 5.8
Time Warner, Inc. 2.9 2.1
Merck & Co., Inc. 2.8 2.1
Philip Morris Companies, Inc. 2.6 1.9
Fannie Mae 2.6 1.7
AT&T Corp. 2.4 2.0
International Business Machines Corp. 2.1 1.4
British Petroleum Co. PLC ADR 2.0 2.0
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE MARKET SECTORS AS OF NOVEMBER 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
FINANCE 22.7 27.3
UTILITIES 10.5 8.1
HEALTH 10.1 11.0
NONDURABLES 9.3 8.3
INDUSTRIAL MACHINERY & EQUIPMENT 8.4 8.7
</TABLE>
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF NOVEMBER 30, 1998 * AS OF MAY 31, 1998 **
ROW: 1, COL: 1, VALUE: 92.3
ROW: 1, COL: 2, VALUE: 0.0
ROW: 1, COL: 3, VALUE: 2.4
ROW: 1, COL: 4, VALUE: 5.3
STOCKS 96.0%
BONDS 0.2%
CONVERTIBLE
SECURITIES 1.4%
SHORT-TERM
INVESTMENTS 2.4%
FOREIGN
INVESTMENTS 8.7%
STOCKS 93.3%
BONDS 0.0%
CONVERTIBLE
SECURITIES 1.4%
SHORT-TERM
INVESTMENTS 5.3%
FOREIGN
INVESTMENTS 6.5%
ROW: 1, COL: 1, VALUE: 93.0
ROW: 1, COL: 2, VALUE: 1.2
ROW: 1, COL: 3, VALUE: 2.4
ROW: 1, COL: 4, VALUE: 3.4
*
**
INVESTMENTS NOVEMBER 30, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMMON STOCKS - 93.3%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 1.9%
AEROSPACE & DEFENSE - 1.6%
AlliedSignal, Inc. 1,536,100 $ 67,588
Gulfstream Aerospace Corp. (a) 576,500 29,618
Textron, Inc. 1,854,000 144,033
United Technologies Corp. 437,200 46,862
288,101
SHIP BUILDING & REPAIR - 0.3%
General Dynamics Corp. 1,010,430 58,668
TOTAL AEROSPACE & DEFENSE 346,769
BASIC INDUSTRIES - 2.1%
CHEMICALS & PLASTICS - 1.1%
Avery Dennison Corp. 320,500 15,364
du Pont (E.I.) de Nemours & Co. 2,369,800 139,226
Praxair, Inc. 1,386,500 52,947
207,537
METALS & MINING - 1.0%
Aluminum Co. of America 2,488,200 184,438
TOTAL BASIC INDUSTRIES 391,975
CONSTRUCTION & REAL ESTATE - 1.2%
BUILDING MATERIALS - 1.0%
Masco Corp. 5,658,600 163,392
Sherwin-Williams Co. 745,300 21,148
184,540
REAL ESTATE INVESTMENT TRUSTS - 0.2%
Apartment Investment & Management Co. Class A 77,900 2,668
Boston Properties, Inc. 106,400 3,358
Equity Residential Properties Trust (SBI) 487,300 20,619
Simon Property Group, Inc. 171,200 5,072
31,717
TOTAL CONSTRUCTION & REAL ESTATE 216,257
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 1.8%
AUTOS, TIRES, & ACCESSORIES - 1.2%
Danaher Corp. 359,000 $ 16,379
Eaton Corp. 261,500 17,864
Federal-Mogul Corp. 196,400 11,146
Ford Motor Co. 3,148,300 173,944
219,333
CONSUMER DURABLES - 0.1%
Minnesota Mining & Manufacturing Co. 333,600 26,792
CONSUMER ELECTRONICS - 0.5%
Black & Decker Corp. 1,692,140 91,693
TOTAL DURABLES 337,818
ENERGY - 6.8%
ENERGY SERVICES - 0.5%
Halliburton Co. 1,550,500 45,546
Schlumberger Ltd. 1,133,100 50,635
96,181
OIL & GAS - 6.3%
British Petroleum Co. PLC 2 -
British Petroleum Co. PLC ADR 4,120,943 379,642
Burlington Resources, Inc. 1,849,200 65,878
Chevron Corp. 306,700 25,648
Exxon Corp. 2,155,900 161,827
Royal Dutch Petroleum Co. (NY Registry Gilder 1.25) 450,900 21,192
Texaco, Inc. 2,556,700 147,170
Total SA:
Class B 2,067,649 252,770
sponsored ADR 98,400 6,015
USX-Marathon Group 3,705,300 105,138
1,165,280
TOTAL ENERGY 1,261,461
FINANCE - 22.7%
BANKS - 5.0%
Bank of New York Co., Inc. 9,581,156 328,155
Bank One Corp. 516,600 26,508
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
BankBoston Corp. 1,095,700 $ 45,609
Chase Manhattan Corp. 5,841,800 370,589
U.S. Bancorp 4,361,900 160,572
931,433
CREDIT & OTHER FINANCE - 9.2%
American Express Co. 6,837,712 684,199
Associates First Capital Corp. 3,240,631 252,364
Citigroup, Inc. 12,629,121 633,824
Equitable Companies (The), Inc. 13,800 762
Household International, Inc. 3,550,386 138,909
1,710,058
FEDERAL SPONSORED CREDIT - 4.5%
Fannie Mae 6,563,900 477,524
Freddie Mac 5,770,500 349,115
826,639
INSURANCE - 3.6%
Allstate Corp. 2,385,400 97,205
American International Group, Inc. 2,265,100 212,919
Aon Corp. 578,700 33,348
Chubb Corp. (The) 538,700 37,743
Hartford Financial Services Group, Inc. 4,066,700 224,431
MBIA, Inc. 927,000 60,023
665,669
SECURITIES INDUSTRY - 0.4%
Morgan Stanley, Dean Witter & Co. 1,096,400 76,474
TOTAL FINANCE 4,210,273
HEALTH - 10.1%
DRUGS & PHARMACEUTICALS - 8.5%
American Home Products Corp. 2,216,100 118,007
Bristol-Myers Squibb Co. 2,416,200 296,136
Lilly (Eli) & Co. 2,950,600 264,632
Merck & Co., Inc. 3,382,300 523,834
Schering-Plough Corp. 1,879,150 199,895
Warner-Lambert Co. 2,175,100 164,220
1,566,724
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
MEDICAL EQUIPMENT & SUPPLIES - 1.5%
Baxter International, Inc. 1,045,800 $ 66,474
Becton, Dickinson & Co. 2,362,300 100,398
Johnson & Johnson 1,431,600 116,318
283,190
MEDICAL FACILITIES MANAGEMENT - 0.1%
Tenet Healthcare Corp. (a) 805,100 23,801
TOTAL HEALTH 1,873,715
INDUSTRIAL MACHINERY & EQUIPMENT - 8.4%
ELECTRICAL EQUIPMENT - 6.0%
Emerson Electric Co. 2,395,100 155,682
General Electric Co. 10,358,200 937,407
Honeywell, Inc. 351,300 28,082
1,121,171
INDUSTRIAL MACHINERY & EQUIPMENT - 2.3%
Cooper Industries, Inc. 878,038 43,134
Dover Corp. 288,800 10,289
Illinois Tool Works, Inc. 645,300 41,017
Ingersoll-Rand Co. 1,434,500 67,153
Tyco International Ltd. 4,038,938 265,813
427,406
POLLUTION CONTROL - 0.1%
Waste Management, Inc. 351,330 15,063
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,563,640
MEDIA & LEISURE - 4.9%
BROADCASTING - 3.6%
CBS Corp. 3,921,100 116,898
Fox Entertainment Group, Inc. (a) 416,000 9,828
Time Warner, Inc. 5,074,282 536,605
663,331
ENTERTAINMENT - 0.2%
Viacom, Inc. Class B (non-vtg.) (a) 704,400 46,887
PUBLISHING - 0.2%
McGraw-Hill Companies, Inc. 398,100 35,630
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
MEDIA & LEISURE - CONTINUED
RESTAURANTS - 0.9%
McDonald's Corp. 2,369,600 $ 166,020
TOTAL MEDIA & LEISURE 911,868
NONDURABLES - 9.3%
BEVERAGES - 0.5%
Anheuser-Busch Companies, Inc. 1,203,500 72,962
PepsiCo, Inc. 706,800 27,344
100,306
FOODS - 1.8%
Bestfoods 640,000 37,200
ConAgra, Inc. 1,030,200 32,387
Dean Foods Co. 1,061,000 48,276
Flowers Industries, Inc. 938,000 21,398
Heinz (H.J.) Co. 1,694,800 98,828
Sara Lee Corp. 1,457,000 85,052
323,141
HOUSEHOLD PRODUCTS - 4.4%
Avon Products, Inc. 3,277,300 133,140
Clorox Co. 291,500 32,375
Colgate-Palmolive Co. 24,900 2,132
First Brands Corp. 377,400 14,129
Gillette Co. 276,700 12,711
Procter & Gamble Co. 1,795,100 157,296
Unilever NV (NY shares) 4,097,100 316,757
Unilever PLC 13,809,900 145,005
813,545
TOBACCO - 2.6%
Philip Morris Companies, Inc. 8,689,800 486,086
TOTAL NONDURABLES 1,723,078
RETAIL & WHOLESALE - 5.3%
DRUG STORES - 0.6%
Rite Aid Corp. 2,169,900 100,629
GENERAL MERCHANDISE STORES - 3.3%
Dayton Hudson Corp. 2,612,900 117,581
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GENERAL MERCHANDISE STORES - CONTINUED
Federated Department Stores, Inc. (a) 2,756,077 $ 114,894
Nordstrom, Inc. 1,908,300 71,084
Saks Holdings, Inc. (a) 1,461,572 40,193
Wal-Mart Stores, Inc. 3,575,400 269,272
613,024
GROCERY STORES - 1.1%
Albertson's, Inc. 155,800 8,890
Kroger Co. (a) 954,900 50,669
Meyer (Fred), Inc. (a) 2,876,800 146,357
205,916
RETAIL & WHOLESALE, MISCELLANEOUS - 0.3%
Home Depot, Inc. 1,173,200 58,367
TOTAL RETAIL & WHOLESALE 977,936
SERVICES - 0.7%
PRINTING - 0.5%
Donnelley (R.R.) & Sons Co. 2,398,800 101,799
SERVICES - 0.2%
ServiceMaster Co. 1,665,050 35,799
TOTAL SERVICES 137,598
TECHNOLOGY - 6.9%
COMPUTERS & OFFICE EQUIPMENT - 5.8%
Compaq Computer Corp. 1,600,000 52,000
International Business Machines Corp. 2,388,500 394,103
Pitney Bowes, Inc. 5,444,100 304,870
Xerox Corp. 2,967,100 318,963
1,069,936
ELECTRONICS - 1.1%
Motorola, Inc. 1,480,700 91,803
Texas Instruments, Inc. 1,482,500 113,226
205,029
TOTAL TECHNOLOGY 1,274,965
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TRANSPORTATION - 0.7%
RAILROADS - 0.7%
Burlington Northern Santa Fe Corp. 3,301,300 $ 112,244
Union Pacific Corp. 530,800 25,810
138,054
UTILITIES - 10.5%
ELECTRIC UTILITY - 1.7%
CMS Energy Corp. 1,632,300 79,575
Duke Energy Corp. 1,818,300 113,757
Entergy Corp. 432,300 12,672
FPL Group, Inc. 818,400 50,127
PG&E Corp. 1,704,600 52,736
308,867
GAS - 0.3%
Enron Corp. 843,300 44,326
Williams Companies, Inc. 309,300 8,912
53,238
TELEPHONE SERVICES - 8.5%
ALLTEL Corp. 2,388,500 126,591
Ameritech Corp. 2,749,500 148,817
AT&T Corp. 7,058,500 439,833
BellSouth Corp. 1,800,500 157,094
GTE Corp. 2,163,800 134,156
MCI WorldCom, Inc. (a) 4,501,894 265,612
SBC Communications, Inc. 3,967,700 190,202
Sprint Corp. (FON Group) 1,178,000 85,700
Sprint Corp. (PCS Group)(a) 1,000 16
Tele Danmark AS Class B 372,600 41,665
1,589,686
TOTAL UTILITIES 1,951,791
TOTAL COMMON STOCKS 17,317,198
(Cost $11,815,819)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CONVERTIBLE PREFERRED STOCKS - 0.2%
SHARES VALUE (NOTE 1)
(000S)
FINANCE - 0.0%
CREDIT & OTHER FINANCE - 0.0%
Federal Mogul Financing Trust $3.50 113,000 $ 7,232
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
Ingersoll Rand Co./Ingersoll Rand Finance $1.68 Income 22,400 538
PRIDES
MEDIA & LEISURE - 0.2%
BROADCASTING - 0.2%
MediaOne Group, Inc. $3.63 PIES 575,500 32,300
TOTAL CONVERTIBLE PREFERRED STOCKS 40,070
(Cost $41,255)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CONVERTIBLE BONDS - 1.2%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
MEDIA & LEISURE - 0.2%
PUBLISHING - 0.2%
News America Holdings, Inc. liquid yield option Baa3 $ 58,010 34,806
notes 0% 3/11/13
RETAIL & WHOLESALE - 0.1%
DRUG STORES - 0.1%
Rite Aid Corp. 5.25% 9/15/02 - 16,710 24,595
SERVICES - 0.9%
ADT Operations, Inc. liquid yield option notes Baa1 87,940 157,281
0%, 7/6/10
TOTAL CONVERTIBLE BONDS 216,682
(Cost $110,642)
CASH EQUIVALENTS - 5.3%
SHARES
Taxable Central Cash Fund (b) 992,605,630 992,606
(Cost $992,606)
TOTAL INVESTMENT IN SECURITIES - 100% $ 18,566,556
(Cost $12,960,322)
</TABLE>
SECURITY TYPE ABBREVIATIONS
PREFERRED STOCK ABBREVIATIONS
PIES - Premium Income Equity
Securities
PRIDES - Preferred Redeemable
Increased Dividend Equity
Securities
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
INCOME TAX INFORMATION
At November 30, 1998, the aggregate cost of investment securities for
income tax purposes was $13,031,816,000. Net unrealized appreciation
aggregated $5,534,740,000, of which $5,662,444,000 related to
appreciated investment securities and $127,704,000 related to
depreciated investment securities.
The fund hereby designates $1,553,109,000 as a capital gain dividend
for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) NOVEMBER 30, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $12,960,322) - $ 18,566,556
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 78,450
RECEIVABLE FOR FUND SHARES SOLD 19,235
DIVIDENDS RECEIVABLE 24,362
INTEREST RECEIVABLE 4,300
OTHER RECEIVABLES 298
TOTAL ASSETS 18,693,201
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 49,325
PAYABLE FOR FUND SHARES REDEEMED 27,288
ACCRUED MANAGEMENT FEE 7,412
OTHER PAYABLES AND ACCRUED EXPENSES 2,823
TOTAL LIABILITIES 86,848
NET ASSETS $ 18,606,353
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 11,392,081
UNDISTRIBUTED NET INVESTMENT INCOME 38,414
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 1,569,532
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 5,606,326
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 605,418 SHARES OUTSTANDING $ 18,606,353
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $30.73
PER SHARE ($18,606,353 (DIVIDED BY) 605,418 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1998
INVESTMENT INCOME $ 287,079
DIVIDENDS
INTEREST 46,008
TOTAL INCOME 333,087
EXPENSES
MANAGEMENT FEE $ 87,667
TRANSFER AGENT FEES 30,979
ACCOUNTING FEES AND EXPENSES 845
NON-INTERESTED TRUSTEES' COMPENSATION 76
CUSTODIAN FEES AND EXPENSES 445
REGISTRATION FEES 144
AUDIT 107
LEGAL 81
INTEREST 6
REPORTS TO SHAREHOLDERS 667
MISCELLANEOUS 57
TOTAL EXPENSES BEFORE REDUCTIONS 121,074
EXPENSE REDUCTIONS (3,269) 117,805
NET INVESTMENT INCOME 215,282
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES 1,578,506
FOREIGN CURRENCY TRANSACTIONS (315) 1,578,191
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON:
INVESTMENT SECURITIES 1,388,829
ASSETS AND LIABILITIES IN FOREIGN CURRENCIES 113 1,388,942
NET GAIN (LOSS) 2,967,133
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 3,182,415
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 215,282 $ 251,924
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 1,578,191 1,914,279
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 1,388,942 1,038,158
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 3,182,415 3,204,361
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (200,602) (297,983)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (1,714,025) (715,007)
TOTAL DISTRIBUTIONS (1,914,627) (1,012,990)
SHARE TRANSACTIONS 2,699,403 2,859,865
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 1,855,162 980,564
COST OF SHARES REDEEMED (3,866,382) (4,977,444)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 688,183 (1,137,015)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,955,971 1,054,356
NET ASSETS
BEGINNING OF PERIOD 16,650,382 15,596,026
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 18,606,353 $ 16,650,382
INCOME OF $38,414 AND $25,479, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 93,193 110,027
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 69,690 40,102
REDEEMED (135,365) (191,956)
NET INCREASE (DECREASE) 27,518 (41,827)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED NOVEMBER 30,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 28.81 $ 25.17 $ 21.53 $ 18.57 $ 18.85
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .35 B .42 B .48 .42 .37
NET REALIZED AND 4.84 4.87 4.23 3.80 .53
UNREALIZED GAIN (LOSS)
TOTAL FROM INVESTMENT 5.19 5.29 4.71 4.22 .90
OPERATIONS
LESS DISTRIBUTIONS
FROM NET (.33) (.49) (.43) (.40) (.47)
INVESTMENT INCOME
FROM NET REALIZED GAIN (2.94) (1.16) (.64) (.86) (.71)
TOTAL DISTRIBUTIONS (3.27) (1.65) (1.07) (1.26) (1.18)
NET ASSET VALUE, $ 30.73 $ 28.81 $ 25.17 $ 21.53 $ 18.57
END OF PERIOD
TOTAL RETURN A 20.05% 22.30% 22.75% 24.13% 4.91%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 18,606 $ 16,650 $ 15,596 $ 11,553 $ 7,605
(IN MILLIONS)
RATIO OF EXPENSES TO .68% .70% .73% .76% .83%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO .66% C .68% C .72% C .75% C .81% C
AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT 1.20% 1.58% 2.13% 2.37% 2.36%
INCOME TO AVERAGE
NET ASSETS
PORTFOLIO TURNOVER RATE 62% 77% 46% 45% 75%
</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 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).
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Equity-Income II Fund (the fund) is a fund of Fidelity
Financial Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company
organized as a Massachusetts business trust. The financial statements
have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities for which exchange
quotations are not readily available (and in certain cases debt
securities which trade on an exchange) are valued primarily using
dealer-supplied valuations or at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date may have passed, are recorded as soon as the funds
are informed of the ex-dividend date. 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Plan.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, market discount, non-taxable
dividends, and losses deferred due to wash sales. The fund also
utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for
income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
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
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
amount of the repurchase agreement (including accrued interest). FMR,
the fund's investment adviser, is responsible for determining that the
value of the underlying securities remains in accordance with the
market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income by investing in U.S. Treasury securities
and repurchase agreements for these securities. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the fund are recorded
as interest income in the accompanying financial statements.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $10,646,895,000 and $11,519,003,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
the fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .2500% to .5200% for the
period. The annual individual fund fee rate is .20%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annual rate of .49% of average net assets.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .17% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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 $2,160,000 for the
period.
5. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a borrower.
The maximum loan and the average daily loan balance during the period
for which the loan was outstanding amounted to $38,011,000. The
weighted average interest rate was 5.66%.
6. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $3,258,000 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 $5,000 and $6,000, respectively, under these arrangements.
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, and the related statement 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, 1998, and the results of its operations, 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, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 8, 1999
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 12/22/97 1/5/98 12/21/98 1/11/99
RECORD DATE 12/19/97 1/2/98 12/18/98 1/8/99
DIVIDENDS $.09 - $.09 -
SHORT-TERM
CAPITAL GAINS $.51 $.07 - $.04
LONG-TERM
CAPITAL GAINS $2.00 $.36 $2.22 $.16
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 42.43% - - -
20% rate 57.57% 100% 100% 100%
A total of 1.49% 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 42% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on November 18,
1998. The results of votes taken among shareholders on proposals
before them are reported below. Each vote reported represents one
dollar of net asset value held on the record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
AFFIRMATIVE 10,160,483,188.00 92.738
WITHHELD 795,586,320.46 7.262
TOTAL 10,956,069,508.46 100.000
PHYLLIS BURKE DAVIS
AFFIRMATIVE 10,157,507,017.22 92.711
WITHHELD 798,562,491.24 7.289
TOTAL 10,956,069,508.46 100.000
ROBERT M. GATES
AFFIRMATIVE 10,154,023,194.57 92.679
WITHHELD 802,046,313.89 7.321
TOTAL 10,956,069,508.46 100.000
EDWARD C. JOHNSON 3D
AFFIRMATIVE 10,157,453,192.12 92.711
WITHHELD 798,616,316.34 7.289
TOTAL 10,956,069,508.46 100.000
E. BRADLEY JONES
AFFIRMATIVE 10,145,954,432.96 92.606
WITHHELD 810,115,075.50 7.394
TOTAL 10,956,069,508.46 100.000
DONALD J. KIRK
AFFIRMATIVE 10,162,316,426.53 92.755
WITHHELD 793,753,081.93 7.245
TOTAL 10,956,069,508.46 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
AFFIRMATIVE 10,164,051,742.00 92.771
WITHHELD 792,017,766.46 7.229
TOTAL 10,956,069,508.46 100.000
WILLIAM O. MCCOY
AFFIRMATIVE 10,163,493,850.17 92.766
WITHHELD 792,575,658.30 7.234
TOTAL 10,956,069,508.47 100.000
GERALD C. MCDONOUGH
AFFIRMATIVE 10,150,319,867.48 92.646
WITHHELD 805,749,640.98 7.354
TOTAL 10,956,069,508.46 100.000
MARVIN L. MANN
AFFIRMATIVE 10,163,561,352.65 92.766
WITHHELD 792,508,155.81 7.234
TOTAL 10,956,069,508.46 100.000
ROBERT C. POZEN
AFFIRMATIVE 10,162,866,733.25 92.760
WITHHELD 793,202,775.21 7.240
TOTAL 10,956,069,508.46 100.000
THOMAS R. WILLIAMS
AFFIRMATIVE 10,151,567,980.59 92.657
WITHHELD 804,501,527.87 7.343
TOTAL 10,956,069,508.46 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the fund.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 7,562,931,428.42 90.590
AGAINST 88,561,129.73 1.060
ABSTAIN 697,068,416.76 8.350
TOTAL 8,348,560,974.91 100.000
PROPOSAL 3
To adopt an Amended and Restated Declaration of Trust.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 9,042,472,684.65 82.613
AGAINST 441,479,298.39 4.034
ABSTAIN 1,461,570,348.78 13.353
TOTAL 10,945,522,331.82 100.000
BROKER 10,547,176.65
NON-VOTES
PROPOSAL 4
To adopt a new fundamental investment policy for the fund that would
permit it to invest all of its assets in another open-end investment
company managed by FMR or an affiliate with substantially the same
investment objective and policies.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 6,464,812,067.08 77.436
AGAINST 680,582,880.23 8.152
ABSTAIN 1,203,166,027.60 14.412
TOTAL 8,348,560,974.91 100.000
PROPOSAL 5
To approve an amended management contract for the fund.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 6,697,626,453.52 80.225
AGAINST 387,383,468.13 4.640
ABSTAIN 1,263,551,053.26 15.135
TOTAL 8,348,560,974.91 100.000
PROPOSAL 6
To amend the fund's fundamental investment limitation concerning
diversification.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 6,594,496,792.55 78.990
AGAINST 520,459,473.02 6.234
ABSTAIN 1,233,604,709.34 14.776
TOTAL 8,348,560,974.91 100.000
PROPOSAL 7
To amend the fund's fundamental investment limitation concerning
borrowing.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 6,464,112,015.93 77.428
AGAINST 612,828,511.88 7.340
ABSTAIN 1,271,620,447.10 15.232
TOTAL 8,348,560,974.91 100.000
PROPOSAL 8
To amend the fund's fundamental investment limitation concerning the
concentration of its investments in a single industry.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 6,540,127,620.74 78.338
AGAINST 559,371,527.73 6.701
ABSTAIN 1,249,061,826.44 14.961
TOTAL 8,348,560,974.91 100.000
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpress(registered trademark) provides a single
toll-free number to access account balances, positions, quotes and
trading. It's easy to navigate the service, and on your first call,
the system will help you create a personal identification number (PIN)
for security.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
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.
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
EII-ANN-0199 68714
1.539196.101
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 (registered trademark) Fund
Global Balanced Fund
Growth & Income Portfolio
Growth & Income II Portfolio
Puritan(registered trademark) Fund
Real Estate Investment Portfolio
Utilities Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(FIDELITY_LOGO_GRAPHIC(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
FIDELITY
RETIREMENT GROWTH
FUND
ANNUAL REPORT
NOVEMBER 30, 1998
(2_FIDELITY_LOGOS)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 9 A summary of major shifts in the fund's
investments over the past six months.
INVESTMENTS 10 A complete list of the fund's investments
with their market values.
FINANCIAL STATEMENTS 21 Statements of assets and liabilities,
operations, and changes in net assets,
as well as financial highlights.
NOTES 25 Footnotes to the financial statements.
REPORT OF INDEPENDENT 30 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 31
PROXY VOTING RESULTS 32
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
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.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
The month of November proved to be a strong one for the stock and bond
markets. The Dow Jones Industrial Average reached a record high.
Merger activity, which had lulled during the summer correction, has
increased significantly. Small-cap stocks posted their third
consecutive month of positive returns, as did emerging markets. While
bond returns generally were not at the levels of their equity
counterparts, they were mostly positive nonetheless.
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. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. 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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY RETIREMENT GROWTH 27.16% 111.44% 366.30%
S&P 500 (registered trademark) 23.66% 181.25% 457.74%
Capital Appreciation Funds Average 8.48% 100.86% 296.44%
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 market capitalization-weighted 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 237 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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY RETIREMENT GROWTH 27.16% 16.15% 16.65%
S&P 500 23.66% 22.98% 18.75%
Capital Appreciation Funds Average 8.48% 13.91% 13.51%
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 different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER 10 YEARS
Retirement Growth S&P 500
00073 SP001
1988/11/30 10000.00 10000.00
1988/12/31 9978.44 10175.00
1989/01/31 10748.51 10919.81
1989/02/28 10529.64 10647.91
1989/03/31 10805.25 10896.00
1989/04/30 11315.92 11461.51
1989/05/31 11534.78 11925.70
1989/06/30 11372.66 11857.72
1989/07/31 12442.65 12928.47
1989/08/31 12588.56 13181.87
1989/09/30 12775.00 13127.82
1989/10/31 12329.17 12823.26
1989/11/30 12661.51 13084.85
1989/12/31 13012.96 13398.89
1990/01/31 12371.85 12499.82
1990/02/28 12501.18 12661.07
1990/03/31 12604.63 12996.59
1990/04/30 12242.53 12671.68
1990/05/31 13389.19 13907.16
1990/06/30 13690.94 13812.60
1990/07/31 13639.21 13768.40
1990/08/31 12242.53 12523.73
1990/09/30 10940.68 11913.83
1990/10/31 10587.20 11862.60
1990/11/30 11320.03 12628.92
1990/12/31 11691.47 12981.27
1991/01/31 12230.40 13547.25
1991/02/28 13238.74 14515.88
1991/03/31 13586.44 14867.16
1991/04/30 13673.37 14902.84
1991/05/31 14125.38 15546.65
1991/06/30 13221.35 14834.61
1991/07/31 14081.91 15525.90
1991/08/31 14681.70 15893.87
1991/09/30 14864.24 15628.44
1991/10/31 15394.49 15837.86
1991/11/30 14959.86 15199.60
1991/12/31 17021.02 16938.43
1992/01/31 17058.36 16623.37
1992/02/29 17301.12 16839.48
1992/03/31 16768.92 16511.11
1992/04/30 16955.66 16996.54
1992/05/31 17273.11 17079.82
1992/06/30 16638.21 16825.33
1992/07/31 17207.75 17513.49
1992/08/31 16740.91 17154.46
1992/09/30 16936.99 17356.88
1992/10/31 17469.18 17417.63
1992/11/30 18458.89 18011.57
1992/12/31 18824.60 18233.11
1993/01/31 19294.07 18386.27
1993/02/28 18687.20 18636.33
1993/03/31 19213.92 19029.55
1993/04/30 19065.06 18569.04
1993/05/31 20072.71 19066.69
1993/06/30 20336.07 19121.98
1993/07/31 20473.47 19045.49
1993/08/31 21618.52 19767.32
1993/09/30 21698.68 19615.11
1993/10/31 22339.90 20021.14
1993/11/30 22053.64 19830.94
1993/12/31 22990.38 20070.89
1994/01/31 23640.01 20753.30
1994/02/28 23397.49 20190.89
1994/03/31 22325.26 19310.57
1994/04/30 22529.49 19557.74
1994/05/31 22682.67 19878.49
1994/06/30 22184.85 19391.47
1994/07/31 22746.49 20027.51
1994/08/31 23844.25 20848.63
1994/09/30 23576.19 20337.84
1994/10/31 23678.31 20795.44
1994/11/30 22989.02 20038.07
1994/12/31 23004.43 20335.24
1995/01/31 23104.93 20862.53
1995/02/28 23634.60 21675.54
1995/03/31 24135.64 22315.19
1995/04/30 24765.51 22972.37
1995/05/31 25080.45 23890.58
1995/06/30 25595.80 24445.56
1995/07/31 26841.23 25256.17
1995/08/31 27041.65 25319.56
1995/09/30 27628.58 26388.05
1995/10/31 27027.33 26293.84
1995/11/30 27914.88 27448.14
1995/12/31 28589.92 27976.80
1996/01/31 29015.32 28929.13
1996/02/29 29315.59 29197.30
1996/03/31 29410.41 29478.47
1996/04/30 30342.82 29912.98
1996/05/31 30611.48 30684.44
1996/06/30 29947.73 30801.34
1996/07/31 28256.75 29440.54
1996/08/31 28746.66 30061.44
1996/09/30 30058.36 31753.30
1996/10/31 29821.30 32629.06
1996/11/30 31670.32 35095.49
1996/12/31 30972.85 34400.24
1997/01/31 32459.69 36549.57
1997/02/28 32334.30 36836.12
1997/03/31 30381.70 35322.52
1997/04/30 31384.87 37431.28
1997/05/31 33283.72 39710.10
1997/06/30 35021.36 41489.11
1997/07/31 38192.09 44790.40
1997/08/31 36866.47 42281.24
1997/09/30 38801.15 44596.98
1997/10/31 36024.53 43107.44
1997/11/30 36669.42 45102.89
1997/12/31 36716.04 45877.30
1998/01/31 37958.07 46384.71
1998/02/28 42141.74 49729.97
1998/03/31 43536.29 52276.64
1998/04/30 44211.78 52802.54
1998/05/31 42817.23 51894.87
1998/06/30 45279.49 54002.84
1998/07/31 45170.54 53427.71
1998/08/31 37500.48 45703.13
1998/09/30 40965.08 48630.87
1998/10/31 43449.13 52586.51
1998/11/30 46630.47 55773.78
IMATRL PRASUN SHR__CHT 19981130 19981209 161816 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Fidelity Retirement Growth Fund on November 30, 1988. As
the chart shows, by November 30, 1998, the value of the investment
would have grown to $46,630 - a 366.30% increase on the initial
investment. For comparison, look at how the Standard & Poor's 500
Index did over the same period. With dividends and capital gains, if
any, reinvested, the same $10,000 would have grown to $55,774 - a
457.74% 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
When the final bell of the U.S. stock
market sounded on Monday,
November 23, 1998, the Dow
Jones Industrial Average stood at a
record high of 9374.27, serving
notice that the bleak economic
outlook from just a few short
months earlier would not keep
positive investor sentiment down.
For the 12-month period ending
November 30, 1998, the Dow -
an index of 30 blue-chip stocks -
returned 18.56%. What caused the
turnaround from the doldrums of
equity performance during the
summer and early fall? A variety of
factors: The economic problems in
Russia, Brazil and other emerging
markets began to dissipate; Asian
markets began to rebound; and,
perhaps most importantly, three
interest-rate cuts late in the period
by the Federal Reserve Board
helped stem the tide of a slowing
U.S. economy. All these factors
culminated in the Dow reaching its
record high late in November, a
peak that outpaced the previous
record set in July by nearly 40 points.
Small-cap stock performance was
still a far cry behind their large-cap
brethren. For the period, the Russell
2000 Index - a popular measure
of small-cap stock performance -
returned -6.62%, significantly
trailing the large-cap weighted
Standard & Poor's 500 Index's
return of 23.66%. Despite the late
rally in the equity market, this kind
of volatility has characterized the
entire year, and when it will level
off is impossible to predict.
An interview with Fergus Shiel, Portfolio Manager of Fidelity
Retirement Growth Fund
Q. HOW DID THE FUND PERFORM, FERGUS?
A. I'm pleased with the performance of the fund. For the 12 months
that ended November 30, 1998, the fund returned 27.16%. In comparison,
the Standard & Poor's 500 Index returned 23.66% and the capital
appreciation funds average, according to Lipper Analytical Services,
had a total return of 8.48% during the same period.
Q. WHY DID THE FUND OUTPERFORM THE INDEX?
A. As the capital appreciation funds average indicates, it was a
somewhat difficult year for active fund management. This was due in
part to the very rotational nature of the market - where investors
would favor one industry sector for a period of time and then abandon
it in favor of another. It was a volatile year and managers had to be
quick on their feet when making investment and strategy changes.
Fortunately, our analysis anticipated many of these trends, and
performance benefited from solid stock picking based on that analysis.
The fund also benefited from its underweighted position relative to
the index in the struggling finance sector. Finally, I committed
significant assets to technology, health care and consumer
non-durables stocks. These sectors provided a further boost to
performance.
Q. WHAT STOCKS PERFORMED BEST FOR THE FUND?
A. Wal-Mart and Philip Morris worked out well. Wal-Mart management
refocused its efforts on the company's return on assets; this resulted
in reduced inventory levels, which freed up capital for stock
buy-backs and allowed it to reduce prices to increase sales. Philip
Morris' stock rallied during the period because it looked like the
company's legal difficulties were being worked out and the worst may
be over. Prior to this occurrence, the fund took advantage of
significant price weakness to purchase more of the stock, which looked
drastically undervalued given its fundamental business outlook.
Internet stocks such as America Online and Yahoo! also performed very
well. Volatility of these stocks was a classic example of how
extremely important it was to closely monitor every investment and be
ready to rotate out of certain holdings when it seemed they had
appreciated significantly or exhibited increased risk to the fund.
Q. WHICH STOCKS HURT PERFORMANCE?
A. Mirage Resorts was a disappointment for the fund and was a case
where I miscalculated the company's growth potential. Frankly, the
number of new hotels and casinos that opened in Las Vegas outstripped
demand, and I did not anticipate this scenario. Financial stocks also
detracted from fund performance. Household International, for example,
was hurt when bad news surfaced regarding financial companies'
exposure to emerging markets and troubled hedge funds. While Household
International's business was sound, and it did not have direct
exposure to these troubled assets, the stock went down along with the
rest of the financial sector.
Q. YOU MENTIONED THE ROTATIONAL AND VOLATILE NATURE OF THE MARKET
DURING THE PERIOD. CAN YOU EXPAND A BIT MORE ON THIS?
A. Clearly, there was a lot of risk in the market over the past year.
In hindsight, everything looks pretty good right now, but back in
September and early October, there was a financial market meltdown.
When stock prices collapse, all the traditional ways of measuring the
value of a stock can become obsolete very quickly, and the market can
drop dramatically and rapidly. It turned out later that the Federal
Reserve Board was willing to step in to restore liquidity and
confidence to the markets, but at the time, there was no telling if
the Fed would intervene. As a result, it was important to become
somewhat more defensive in my investment strategy.
Q. WHAT'S YOUR OUTLOOK, FERGUS?
A. Generally, I'm bullish. You can come to work thinking it's 1929 and
once in awhile you'll be right. People will always ask, when will the
bear market come? Well, we saw one back in September and October, and
I never discount that risk. However, if I'm constantly on the
defensive and thinking about what can I sell to position the fund more
defensively, then the fund will miss out on the great companies and
investment opportunities. At times, you have to give credibility to
and put some faith in the people who run their businesses. In general,
companies want to do the best things for their shareholders. Finally,
I believe there are some major trends that bode well for the markets.
First, the global financial markets are awash in liquidity and
capital. Next, the economy, at least in the U.S., looks solid for the
next several years. Third, people are more aware of the need for
financial planning and saving for retirement.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FERGUS SHIEL ON THE
DOMINANCE OF LARGE-CAP
STOCKS:
"There has been a lot of talk about
the extended rally of large-cap
stocks, and I think it will be
interesting to see if this trend will
switch over to mid-cap stocks. Of
course, it's impossible to say for sure
if this will happen. However, the
fund has a mixture of large- and
mid-cap stocks, and I would like to
own more mid-cap stocks because
I think they offer great opportunities
to drive performance. For example,
mid-cap companies can often acquire
a competitor or buy a division of a
competitor, and it can have a
meaningful impact on its business.
Large-cap companies, on the other
hand, often encounter barriers, such
as anti-trust laws, and many times it
is difficult to find a merger or
acquisition that makes sound
business sense. While I believe the
mid-cap arena offers a lot of
potential, the market has chosen to
focus on large-cap stocks because of
what's happening in the global
economy. More specifically,
economies of scale available to
larger companies can provide a
competitive advantage because it
gives them the ability to cut prices.
Big businesses have been very good at
this. On the other hand, the market
has valued these large-cap stocks
accordingly, and their prices are
high. The big question is, will the
market start to take notice of
mid-cap companies as alternatives?
Many are strong competitors and
their stock prices do not fully reflect
their potential. It's a situation I will
monitor closely."
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,
1998, more than $4.6 billion
MANAGER: 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, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE STOCKS
6 MONTHS AGO
Philip Morris Companies, Inc. 4.3 2.6
Warner-Lambert Co. 3.3 1.3
Microsoft Corp. 2.6 1.4
Quaker Oats Co. 2.1 0.0
MCI WorldCom, Inc. 2.1 2.5
Schering-Plough Corp. 2.1 1.2
Safeway, Inc. 2.1 1.4
Household International, Inc. 2.0 1.9
Merck & Co., Inc. 2.0 1.7
Kinnevik Investment AB Series B 1.9 0.9
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TOP FIVE MARKET SECTORS AS OF NOVEMBER 30, 1998
% OF FUND'S % OF FUND'S INVESTMENTS
INVESTMENTS IN THESE MARKET SECTORS
6 MONTHS AGO
HEALTH 18.2 9.4
TECHNOLOGY 18.0 22.9
NONDURABLES 12.9 8.1
FINANCE 9.2 16.1
UTILITIES 8.1 4.9
</TABLE>
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF NOVEMBER 30, 1998* AS OF MAY 31, 1998**
ROW: 1, COL: 1, VALUE: 2.4
ROW: 1, COL: 2, VALUE: 1.2
ROW: 1, COL: 3, VALUE: 96.40000000000001
ROW: 1, COL: 1, VALUE: 3.2
ROW: 1, COL: 2, VALUE: 0.0
ROW: 1, COL: 3, VALUE: 96.8
STOCKS 97.4%
BONDS 0.2%
SHORT-TERM
INVESTMENTS 2.4%
FOREIGN
INVESTMENTS 11.5%
STOCKS 96.8%
BONDS 0.0%
SHORT-TERM
INVESTMENTS 3.2%
FOREIGN
INVESTMENTS 15.6%
*
**
INVESTMENTS NOVEMBER 30, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
<TABLE>
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COMMON STOCKS - 97.4%
SHARES VALUE (NOTE 1)
(000S)
AEROSPACE & DEFENSE - 0.1%
Orbital Sciences Corp. (a) 119,200 $ 4,559
BASIC INDUSTRIES - 2.7%
CHEMICALS & PLASTICS - 1.2%
Dow Chemical Co. 90,000 8,764
du Pont (E.I.) de Nemours & Co. 480,000 28,200
Hanna (M.A.) Co. 390,100 5,486
PPG Industries, Inc. 160,000 9,790
52,240
IRON & STEEL - 0.7%
Bethlehem Steel Corp. (a) 1,470,800 12,134
Nucor Corp. 86,500 3,633
USX-U.S. Steel Group 725,300 17,725
33,492
METALS & MINING - 0.4%
Aluminum Co. of America 146,600 10,867
Phelps Dodge Corp. 161,100 9,132
19,999
PACKAGING & CONTAINERS - 0.2%
Tupperware Corp. 505,700 8,818
PAPER & FOREST PRODUCTS - 0.2%
Weyerhaeuser Co. 130,000 6,516
TOTAL BASIC INDUSTRIES 121,065
CONSTRUCTION & REAL ESTATE - 0.2%
BUILDING MATERIALS - 0.2%
Armstrong World Industries, Inc. 24,800 1,652
Sherwin-Williams Co. 233,200 6,617
8,269
ENGINEERING - 0.0%
EG & G, Inc. 28,300 791
TOTAL CONSTRUCTION & REAL ESTATE 9,060
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
DURABLES - 0.9%
AUTOS, TIRES, & ACCESSORIES - 0.8%
Ford Motor Co. 400,000 $ 22,100
TRW, Inc. 277,100 15,258
37,358
CONSUMER ELECTRONICS - 0.1%
Whirlpool Corp. 40,200 2,251
HOME FURNISHINGS - 0.0%
Leggett & Platt, Inc. 35,800 812
TOTAL DURABLES 40,421
ENERGY - 6.7%
ENERGY SERVICES - 0.5%
Baker Hughes, Inc. 510,000 9,339
Halliburton Co. 490,000 14,394
23,733
OIL & GAS - 6.2%
Amoco Corp. 400,000 23,575
Atlantic Richfield Co. 380,000 25,270
Chevron Corp. 480,000 40,140
Elf Aquitaine 195,000 24,278
Exxon Corp. 680,000 51,043
Mobil Corp. 480,000 41,370
Royal Dutch Petroleum Co. (NY Registry Gilder 1.25) 620,000 29,140
Texaco, Inc. 430,000 24,752
Total SA Class B 200,000 24,450
284,018
TOTAL ENERGY 307,751
FINANCE - 9.2%
BANKS - 2.3%
Allied Irish Banks PLC 119,597 1,848
Bank of Ireland, Inc. 1,381,560 28,652
Bank One Corp. 487,966 25,039
BankAmerica Corp. 300,000 19,556
Chase Manhattan Corp. 20,000 1,269
Christiania Bank Og Kreditkasse 825,000 3,022
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
FINANCE - CONTINUED
BANKS - CONTINUED
Morgan (JP) & Co., Inc. 100,000 $ 10,688
Skandinaviska Enskilda Banken Class A 455,000 5,167
U.S. Bancorp 256,400 9,439
104,680
CREDIT & OTHER FINANCE - 3.6%
Associates First Capital Corp. 515,821 40,170
Equitable Companies (The), Inc. 59,300 3,276
Household International, Inc. 2,347,000 91,826
Providian Financial Corp. 298,400 27,397
162,669
FEDERAL SPONSORED CREDIT - 1.2%
Fannie Mae 390,000 28,373
Freddie Mac 440,000 26,620
54,993
INSURANCE - 1.8%
ACE Ltd. 500,000 16,000
Aon Corp. 224,900 12,960
CIGNA Corp. 70,000 5,447
EXEL Ltd. 50,000 3,756
Marsh & McLennan Companies, Inc. 420,000 24,439
Progressive Corp. 149,100 22,123
84,725
SECURITIES INDUSTRY - 0.3%
Hambrecht & Quist Group (a) 303,400 7,357
Lehman Brothers Holdings, Inc. 150,000 7,491
14,848
TOTAL FINANCE 421,915
HEALTH - 18.2%
DRUGS & PHARMACEUTICALS - 12.1%
Allergan, Inc. 316,700 19,279
Alpharma, Inc. Class A 125,000 4,500
Amgen, Inc. (a) 510,000 38,378
Bristol-Myers Squibb Co. 46,700 5,724
Cambrex Corp. 13,200 370
Chirex, Inc. (a) 30,000 544
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
HEALTH - CONTINUED
DRUGS & PHARMACEUTICALS - CONTINUED
Elan Corp. PLC ADR (a) 960,600 $ 65,441
Lilly (Eli) & Co. 824,600 73,956
Merck & Co., Inc. 584,600 90,540
Schering-Plough Corp. 891,900 94,876
Sepracor, Inc. (a) 100,000 8,300
Warner-Lambert Co. 2,015,900 152,200
554,108
MEDICAL EQUIPMENT & SUPPLIES - 4.8%
Abbott Laboratories 301,400 14,467
AmeriSource Health Corp. Class A (a) 421,500 26,976
Arterial Vascular Engineering, Inc. (a) 550,000 26,881
Baxter International, Inc. 180,000 11,441
Boston Scientific Corp. (a) 600,000 29,700
Guidant Corp. 312,100 26,782
Johnson & Johnson 130,000 10,563
McKesson Corp. 563,300 40,100
Medtronic, Inc. 379,500 25,687
Omnicare, Inc. 236,000 6,756
219,353
MEDICAL FACILITIES MANAGEMENT - 1.3%
Columbia/HCA Healthcare Corp. 200,000 4,925
Lincare Holdings, Inc. (a) 771,800 26,627
Oxford Health Plans, Inc. (a) 140,000 1,549
Universal Health Services, Inc. Class B (a) 444,800 23,852
56,953
TOTAL HEALTH 830,414
HOLDING COMPANIES - 1.9%
Kinnevik Investment AB Series B (d) 3,034,500 86,054
INDUSTRIAL MACHINERY & EQUIPMENT - 2.8%
ELECTRICAL EQUIPMENT - 2.7%
Alcatel Alsthom Compagnie Generale d'Electricite SA (RFD) 50,000 6,469
American Power Conversion Corp. (a) 175,000 7,241
Emerson Electric Co. 325,200 21,138
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
ELECTRICAL EQUIPMENT - CONTINUED
General Electric Co. 945,000 $ 85,523
Glenayre Technologies, Inc. (a) 305,000 1,887
122,258
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
Cooper Industries, Inc. 100,000 4,913
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 127,171
MEDIA & LEISURE - 5.1%
BROADCASTING - 0.5%
Metromedia Fiber Network, Inc. Class A (a) 37,500 1,945
Nielsen Media Research, Inc. (a) 1,398,800 20,982
22,927
ENTERTAINMENT - 0.6%
Viacom, Inc. Class B (non-vtg.) (a) 396,600 26,399
LEISURE DURABLES & TOYS - 0.4%
Harley-Davidson, Inc. 184,500 7,714
Mattel, Inc. 327,800 11,330
19,044
LODGING & GAMING - 0.3%
Jurys Hotel Group PLC 1,812,200 13,678
PUBLISHING - 2.2%
American Greetings Corp. Class A 1,143,000 48,363
Harte Hanks Communications, Inc. 961,300 22,711
Houghton Mifflin Co. 356,500 14,928
Independent Newspapers PLC 4,075,246 15,111
101,113
RESTAURANTS - 1.1%
Starbucks Corp. (a) 1,071,000 49,400
TOTAL MEDIA & LEISURE 232,561
NONDURABLES - 12.9%
AGRICULTURE - 0.3%
IAWS Group PLC 3,278,275 13,949
IAWS Group PLC Class A (UK Reg.) 107,600 426
14,375
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
NONDURABLES - CONTINUED
BEVERAGES - 0.9%
Coca-Cola Co. (The) 400,000 $ 28,025
PepsiCo, Inc. 376,800 14,577
42,602
FOODS - 2.8%
Heinz (H.J.) Co. 334,700 19,517
Hershey Foods Corp. 84,800 5,703
Quaker Oats Co. 1,587,700 97,445
Smithfield Foods, Inc. (a) 265,000 7,006
129,671
HOUSEHOLD PRODUCTS - 2.9%
Clorox Co. 358,600 39,827
Colgate-Palmolive Co. 180,000 15,413
Gillette Co. 740,000 33,994
International Flavors & Fragrances, Inc. 124,200 5,201
Procter & Gamble Co. 404,000 35,401
129,836
TOBACCO - 6.0%
Philip Morris Companies, Inc. 3,453,000 193,141
RJR Nabisco Holdings Corp. 1,782,600 51,361
UST, Inc. 777,000 27,001
271,503
TOTAL NONDURABLES 587,987
PRECIOUS METALS - 0.1%
Newmont Mining Corp. 300,000 5,963
RETAIL & WHOLESALE - 5.9%
APPAREL STORES - 0.1%
Stage Stores, Inc. (a) 537,800 6,185
DRUG STORES - 0.6%
Walgreen Co. 473,600 25,426
GENERAL MERCHANDISE STORES - 1.5%
Arnotts PLC (d) 1,667,488 12,722
Kohls Corp. (a) 325,400 16,006
Wal-Mart Stores, Inc. 528,200 39,780
68,508
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
RETAIL & WHOLESALE - CONTINUED
GROCERY STORES - 2.1%
Safeway, Inc. (a) 1,774,200 $ 93,700
RETAIL & WHOLESALE, MISCELLANEOUS - 1.6%
Amazon.com, Inc. (a) 139,300 26,746
Bed Bath & Beyond, Inc. (a) 534,200 16,660
Home Depot, Inc. 59,700 2,970
PETsMART, Inc. (a) 2,410,000 20,636
Williams-Sonoma, Inc. (a) 263,000 7,775
74,787
TOTAL RETAIL & WHOLESALE 268,606
SERVICES - 4.1%
ADVERTISING - 1.7%
ADVO, Inc. (a)(d) 1,728,500 44,725
Omnicom Group, Inc. 643,800 34,403
79,128
PRINTING - 1.2%
Bowne & Co., Inc. 869,900 14,571
Reynolds & Reynolds Co. Class A 662,300 13,991
Valassis Communications, Inc. (a) 570,400 24,456
53,018
SERVICES - 1.2%
Cendant Corp. (a) 1,000,000 19,000
Day Runner, Inc. (a) 394,000 8,668
Ecolab, Inc. 946,000 29,267
56,935
TOTAL SERVICES 189,081
TECHNOLOGY - 18.0%
COMMUNICATIONS EQUIPMENT - 3.9%
Ascend Communications, Inc. (a) 795,000 44,669
Cisco Systems, Inc. (a) 648,700 48,896
Intermedia Communications, Inc. (a) 356,700 6,153
OY Nokia AB sponsored ADR 781,600 76,597
176,315
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
COMPUTER SERVICES & SOFTWARE - 8.2%
Affiliated Computer Services, Inc. Class A (a) 630,800 $ 24,168
America Online, Inc. 303,900 26,610
Autodesk, Inc. 446,700 16,249
Automatic Data Processing, Inc. 150,000 11,550
Computer Associates International, Inc. 531,200 23,506
Electronic Data Systems Corp. 590,000 23,010
Equifax, Inc. 259,600 10,773
Intuit, Inc. (a) 70,000 4,051
Legato Systems, Inc. (a) 102,500 4,901
Lycos, Inc. (a) 50,000 2,950
Microsoft Corp. (a) 965,000 117,730
Novell, Inc. (a) 650,000 10,766
Paychex, Inc. 150,000 7,463
Policy Management Systems Corp. (a) 106,300 5,435
Rational Software Corp. (a) 100,000 2,269
Saville Systems PLC sponsored ADR (a) 572,133 11,192
Segue Software, Inc. (a) 125,000 2,742
Siebel Systems, Inc. (a) 1,660,121 40,258
SunGard Data Systems, Inc. (a) 516,400 16,525
Visio Corp. (a) 300,000 10,613
Yahoo!, Inc. (a) 15,400 2,957
375,718
COMPUTERS & OFFICE EQUIPMENT - 4.2%
Bell & Howell Co. (a) 10,000 338
Dell Computer Corp. (a) 750,000 45,609
EMC Corp. (a) 730,000 52,925
International Business Machines Corp. 305,000 50,325
Network Appliance, Inc. 137,100 10,300
Quantum Corp. (a) 145,000 3,208
Seagate Technology, Inc. (a) 300,000 8,850
Sequent Computer Systems, Inc. (a) 100,000 1,275
Xerox Corp. 160,400 17,243
190,073
ELECTRONIC INSTRUMENTS - 0.8%
Applied Materials, Inc. (a) 600,000 23,250
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
TECHNOLOGY - CONTINUED
ELECTRONIC INSTRUMENTS - CONTINUED
JDS Fitel, Inc. (a) 500,000 $ 9,801
Tektronix, Inc. 225,000 6,033
39,084
ELECTRONICS - 0.9%
Altera Corp. (a) 90,300 4,430
Atmel Corp. (a) 150,000 1,819
Plexus Corp. (a) 17,500 525
Texas Instruments, Inc. 420,000 32,078
Xilinx, Inc. (a) 79,100 4,014
42,866
TOTAL TECHNOLOGY 824,056
TRANSPORTATION - 0.7%
AIR TRANSPORTATION - 0.2%
Atlantic Coast Airlines Holdings, Inc. (a) 97,200 2,466
SkyWest, Inc. 173,400 4,693
7,159
SHIPPING - 0.5%
Irish Continental Group PLC (d) 2,058,000 24,458
TOTAL TRANSPORTATION 31,617
UTILITIES - 7.9%
CELLULAR - 1.3%
Millicom International Cellular SA (a) 580,500 19,374
NetCom Systems AB Series B (a) 279,800 10,786
QUALCOMM, Inc. 120,000 6,585
SkyTel Communications, Inc. (a) 1,090,700 22,768
59,513
ELECTRIC UTILITY - 0.5%
AES Corp. (a) 520,000 23,790
TELEPHONE SERVICES - 6.1%
Ameritech Corp. 170,400 9,223
AT&T Corp. 1,200,000 74,775
BellSouth Corp. 300,000 26,175
e.spire Communications, Inc. (a) 197,900 1,596
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
UTILITIES - CONTINUED
TELEPHONE SERVICES - CONTINUED
ESAT Telecom Group PLC sponsored ADR (a) 466,500 $ 16,094
GST Telecommunications, Inc. (a) 50,000 325
MCI WorldCom, Inc. (a) 1,649,618 97,327
McLeodUSA, Inc. Class A (a) 113,400 3,508
NEXTLINK Communications, Inc. Class A (a) 275,000 8,319
RCN Corp. (a) 207,800 3,533
SBC Communications, Inc. 300,000 14,381
Societe Europeene de Communication SA (a):
Class A 115,340 524
Class B (non-vtg.) 1,658,160 7,939
Sprint Corp.:
(FON Group) 146,200 10,636
(PCS Group) (a) 73,100 1,170
WinStar Communications, Inc. (a) 14,700 410
275,935
TOTAL UTILITIES 359,238
TOTAL COMMON STOCKS 4,447,519
(Cost $3,609,161)
</TABLE>
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NONCONVERTIBLE BONDS - 0.2%
MOODY'S RATINGS PRINCIPAL
(UNAUDITED) AMOUNT (000S)
UTILITIES - 0.2%
CELLULAR - 0.2%
Millicom International Cellular SA 0% 6/1/06 (c) Caa1 $ 14,696 10,324
(Cost $9,438)
CASH EQUIVALENTS - 2.4%
SHARES
Taxable Central Cash Fund (b) 110,082,157 110,082
(Cost $110,082)
TOTAL INVESTMENT IN SECURITIES - 100% $ 4,567,925
(Cost $3,728,681)
</TABLE>
LEGEND
(a) Non-income producing
(b) At period end, the seven-day yield on the Taxable Central Cash
Fund was 4.81%. The yield refers to the income earned by investing in
the fund over the seven-day period, expressed as an annual percentage.
(c) Debt obligation initially issued in zero coupon form which
converts to coupon form at a specified rate and date. The rate shown
is the rate at period end.
(d) Affiliated company (see Note 8 of Notes to Financial Statements).
OTHER INFORMATION
Distribution of investments by country of issue, as a percentage of
total value of investments in securities, is as follows:
United States of America 88.5%
Ireland 4.4
Sweden 2.4
Finland 1.7
France 1.1
(Others individually less than 1%) 1.9
TOTAL 100.0%
INCOME TAX INFORMATION
At November 30, 1998, the aggregate cost of investment securities for
income tax purposes was $3,805,067,000. Net unrealized appreciation
aggregated $762,858,000, of which $834,060,000 related to appreciated
investment securities and $71,202,000 related to depreciated
investment securities.
The fund hereby designates approximately $197,217,000 as a capital
gain dividend for the purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) NOVEMBER 30, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (COST $3,728,681) - $ 4,567,925
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 142,758
RECEIVABLE FOR FUND SHARES SOLD 14,715
DIVIDENDS RECEIVABLE 4,859
INTEREST RECEIVABLE 579
OTHER RECEIVABLES 1,916
TOTAL ASSETS 4,732,752
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 1,486
PAYABLE FOR INVESTMENTS PURCHASED 71,470
PAYABLE FOR FUND SHARES REDEEMED 13,223
ACCRUED MANAGEMENT FEE 1,510
OTHER PAYABLES AND ACCRUED EXPENSES 780
TOTAL LIABILITIES 88,469
NET ASSETS $ 4,644,283
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 3,233,811
UNDISTRIBUTED NET INVESTMENT INCOME 29,344
ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON 541,896
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 839,232
AND ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
NET ASSETS, FOR 217,000 SHARES OUTSTANDING $ 4,644,283
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $21.40
PER SHARE ($4,644,283 (DIVIDED BY) 217,000 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1998
INVESTMENT INCOME $ 41,014
DIVIDENDS (INCLUDING $275 RECEIVED FROM AFFILIATED ISSUERS)
SPECIAL DIVIDEND FROM KINNEVIK INVESTMENT AB SERIES B 7,030
INTEREST 6,746
TOTAL INCOME 54,790
EXPENSES
MANAGEMENT FEE $ 25,818
BASIC FEE
PERFORMANCE ADJUSTMENT (8,160)
TRANSFER AGENT FEES 7,758
ACCOUNTING FEES AND EXPENSES 811
NON-INTERESTED TRUSTEES' COMPENSATION 24
CUSTODIAN FEES AND EXPENSES 343
REGISTRATION FEES 52
AUDIT 75
LEGAL 28
INTEREST 75
REPORTS TO SHAREHOLDERS 163
MISCELLANEOUS 13
TOTAL EXPENSES BEFORE REDUCTIONS 27,000
EXPENSE REDUCTIONS (1,993) 25,007
NET INVESTMENT INCOME 29,783
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENT SECURITIES (INCLUDING REALIZED LOSS OF 582,098
$457 ON SALES OF INVESTMENTS IN AFFILIATED ISSUERS)
FOREIGN CURRENCY TRANSACTIONS (403) 581,695
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON 405,091
INVESTMENT SECURITIES
NET GAIN (LOSS) 986,786
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 1,016,569
FROM OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 29,783 $ 26,600
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS) 581,695 646,367
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) 405,091 (88,783)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,016,569 584,184
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS (25,385) (53,940)
FROM NET INVESTMENT INCOME
FROM NET REALIZED GAIN (665,849) (425,251)
TOTAL DISTRIBUTIONS (691,234) (479,191)
SHARE TRANSACTIONS 1,008,952 466,641
NET PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 690,187 478,301
COST OF SHARES REDEEMED (1,393,869) (1,241,607)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 305,270 (296,665)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 630,605 (191,672)
NET ASSETS
BEGINNING OF PERIOD 4,013,678 4,205,350
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT $ 4,644,283 $ 4,013,678
INCOME OF $29,344 AND $25,339, RESPECTIVELY)
OTHER INFORMATION
SHARES
SOLD 51,663 24,402
ISSUED IN REINVESTMENT OF DISTRIBUTIONS 42,187 27,647
REDEEMED (72,941) (65,810)
NET INCREASE (DECREASE) 20,909 (13,761)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED NOVEMBER 30,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 20.47 $ 20.04 $ 19.50 $ 18.01 $ 19.26
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .13 B, D .13 B .26 .34 .19
NET REALIZED AND UNREALIZED 4.34 2.61 2.14 3.09 .58
GAIN (LOSS)
TOTAL FROM INVESTMENT OPERATIONS 4.47 2.74 2.40 3.43 .77
LESS DISTRIBUTIONS
FROM NET INVESTMENT INCOME (.13) (.26) (.34) (.20) (.14)
FROM NET REALIZED GAIN (3.41) (2.05) (1.52) (1.74) (1.88)
TOTAL DISTRIBUTIONS (3.54) (2.31) (1.86) (1.94) (2.02)
NET ASSET VALUE, END OF PERIOD $ 21.40 $ 20.47 $ 20.04 $ 19.50 $ 18.01
TOTAL RETURN A 27.16% 15.78% 13.45% 21.43% 4.24%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 4,644 $ 4,014 $ 4,205 $ 3,970 $ 3,163
(IN MILLIONS)
RATIO OF EXPENSES TO AVERAGE .62% .64% .74% .99% 1.07%
NET ASSETS
RATIO OF EXPENSES TO AVERAGE NET .57% C .59% C .70% C .99% 1.07%
ASSETS AFTER EXPENSE REDUCTIONS
RATIO OF NET INVESTMENT INCOME TO .68% .66% 1.26% 1.92% 1.13%
AVERAGE NET ASSETS
PORTFOLIO TURNOVER RATE 266% 205% 230% 108% 72%
</TABLE>
A 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).
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
C 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).
D INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM
KINNEVIK INVESTMENT AB SERIES B WHICH AMOUNTED TO $0.03 PER SHARE.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1998
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, as an open-end management investment company
organized as a Massachusetts business trust. The financial statements
have been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are
readily available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities (including restricted
securities) for which exchange quotations are not readily available
(and in certain cases debt securities which trade on an exchange) are
valued primarily using dealer-supplied valuations or at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which quotations are not readily available are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
FOREIGN CURRENCY TRANSLATION. The accounting records of the fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases
and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the
respective dates of the transactions.
Net realized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of foreign
currency contracts, disposition of foreign currencies, the difference
between the amount of net investment income accrued and the U.S.
dollar amount actually received, and gains and losses between trade
and settlement date on purchases and sales of securities. The effects
of changes in foreign currency exchange rates on investments in
securities are included with the net realized and unrealized gain or
loss on investment securities.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend
date, except certain dividends from foreign securities where the
ex-dividend date
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
INVESTMENT INCOME - CONTINUED
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
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity funds. Deferred amounts remain in the
fund until distributed in accordance with the Plan.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for litigation proceeds, foreign currency transactions,
passive foreign investment companies (PFIC) and losses deferred due to
wash sales.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments and foreign currency transactions
may include temporary book and tax basis differences which will
reverse in a subsequent period. Any taxable income or gain remaining
at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FOREIGN CURRENCY CONTRACTS. The fund generally uses foreign currency
contracts to facilitate transactions in foreign-denominated
securities. Losses may arise from changes in the value of the foreign
currency or if the counterparties do not perform under the contracts'
terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at
the time of each trade.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
accounts. These balances are invested in one or more repurchase
agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
TAXABLE CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the SEC, the fund may invest in the Taxable Central Cash Fund (the
Cash Fund) managed by Fidelity Investments Money Management, Inc., an
affiliate of FMR. The Cash Fund is an open-end money market fund
available only to investment companies and other accounts managed by
FMR and its affiliates. The Cash Fund seeks preservation of capital,
liquidity, and current income by investing in U.S. Treasury securities
and repurchase agreements for these securities. Income distributions
from the Cash Fund are declared daily and paid monthly from net
interest income. Income distributions earned by the fund are recorded
as interest income in the accompanying financial statements.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by
the SEC, the fund, along with other registered investment companies
having management contracts with FMR, may participate in an interfund
lending program. This program provides an alternative credit facility
allowing the fund to borrow from, or lend money to, other
participating funds.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, the fund had no investments in restricted
securities.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $11,192,854,000 and $11,630,975,000, 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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
.40% of average net assets after the performance adjustment.
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annual rate of .18% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $2,316,000 for the
period.
5. INTERFUND LENDING PROGRAM.
The fund participated in the interfund lending program as a borrower.
The maximum loan and the average daily loan balances during the period
for which loans were outstanding amounted to $126,310,000 and
$121,781,000, respectively. The weighted average interest rate was
5.47%. Interest expense includes $74,000 paid under the interfund
lending program.
6. BANK BORROWINGS.
The fund is permitted to have bank borrowings for temporary or
emergency purposes to fund shareholder redemptions. The fund has
established borrowing arrangements with certain banks. Under the most
restrictive arrangement, the fund must pledge to the bank securities
having a market value in excess of 220% of the total bank borrowings.
The interest rate on the borrowings is the bank's base rate, as
revised from time to time. The maximum loan and the average daily loan
balance during the period for which the loan was outstanding amounted
to $5,350,000. The weighted average interest rate was 5.85%. Interest
expense includes $1,000 paid under the bank borrowing program.
7. EXPENSE REDUCTIONS.
FMR has directed certain portfolio trades to brokers who paid a
portion of the fund's expenses. For the period, the fund's expenses
were reduced by $1,841,000 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 $7,000 and $145,000, respectively, under these
arrangements.
8. TRANSACTIONS WITH AFFILIATED COMPANIES.
An affiliated company is a company in which the fund has ownership of
at least 5% of the voting securities. Transactions during the period
with companies which are or were affiliates are as follows:
SUMMARY OF TRANSACTIONS WITH AFFILIATED COMPANIES
AMOUNT IN THOUSANDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PURCHASE SALES DIVIDEND VALUE
AFFILIATE COST COST INCOME
ADVO, Inc. $ 12,358 $ 3,944 $ - $ 44,725
Arnotts PLC 5,880 - 275 12,722
Irish Continental Group PLC 11,053 - - 24,458
Kinnevik Investment AB Series B 1,220 - - 86,054
TOTALS $ 30,511 $ 3,944 $ 275 $ 167,959
</TABLE>
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, 1998, and the results of its operations, 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, 1998 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 8, 1999
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 12/22/97 12/21/98 1/11/99
RECORD DATE 12/19/97 12/18/98 1/8/99
DIVIDENDS $.13 $.14 $ -
SHORT-TERM
CAPITAL GAINS $2.40 $.37 $.46
LONG-TERM
CAPITAL GAINS $1.01 $1.76 $.15
LONG-TERM
CAPITAL GAIN PERCENTAGES:
28% rate 69.78% - -
20% rate 30.22% 100% 100%
A total of .19% 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 6% of the dividends distributed during the fiscal year
qualifies for the dividends-received deduction for corporate
shareholders.
The fund will notify shareholders in January 1999 of the applicable
percentages for use in preparing 1998 income tax returns.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on November 18,
1998. The results of votes taken among shareholders on proposals
before them are reported below. Each vote reported represents one
dollar of net asset value held on the record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
AFFIRMATIVE 10,160,483,188.00 92.738
WITHHELD 795,586,320.46 7.262
TOTAL 10,956,069,508.46 100.000
PHYLLIS BURKE DAVIS
AFFIRMATIVE 10,157,507,017.22 92.711
WITHHELD 798,562,491.24 7.289
TOTAL 10,956,069,508.46 100.000
ROBERT M. GATES
AFFIRMATIVE 10,154,023,194.57 92.679
WITHHELD 802,046,313.89 7.321
TOTAL 10,956,069,508.46 100.000
EDWARD C. JOHNSON 3D
AFFIRMATIVE 10,157,453,192.12 92.711
WITHHELD 798,616,316.34 7.289
TOTAL 10,956,069,508.46 100.000
E. BRADLEY JONES
AFFIRMATIVE 10,145,954,432.96 92.606
WITHHELD 810,115,075.50 7.394
TOTAL 10,956,069,508.46 100.000
DONALD J. KIRK
AFFIRMATIVE 10,162,316,426.53 92.755
WITHHELD 793,753,081.93 7.245
TOTAL 10,956,069,508.46 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
AFFIRMATIVE 10,164,051,742.00 92.771
WITHHELD 792,017,766.46 7.229
TOTAL 10,956,069,508.46 100.000
WILLIAM O. MCCOY
AFFIRMATIVE 10,163,493,850.16 92.766
WITHHELD 792,575,658.30 7.234
TOTAL 10,956,069,508.46 100.000
GERALD C. MCDONOUGH
AFFIRMATIVE 10,150,319,867.48 92.646
WITHHELD 805,749,640.98 7.354
TOTAL 10,956,069,508.46 100.000
MARVIN L. MANN
AFFIRMATIVE 10,163,561,352.65 92.766
WITHHELD 792,508,155.81 7.234
TOTAL 10,956,069,508.46 100.000
ROBERT C. POZEN
AFFIRMATIVE 10,162,866,733.25 92.760
WITHHELD 793,202,775.21 7.240
TOTAL 10,956,069,508.46 100.000
THOMAS R. WILLIAMS
AFFIRMATIVE 10,151,567,980.59 92.657
WITHHELD 804,501,527.87 7.343
TOTAL 10,956,069,508.46 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the fund.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 1,886,025,879.03 89.429
AGAINST 35,084,877.92 1.663
ABSTAIN 187,857,934.32 8.908
TOTAL 2,108,968,691.27 100.000
PROPOSAL 3
To adopt an Amended and Restated Declaration of Trust.
# OF % OF
VOTES CAST VOTES CAST
TRUST
AFFIRMATIVE 9,042,472,684.65 82.613
AGAINST 441,479,298.39 4.034
ABSTAIN 1,461,570,348.78 13.353
TOTAL 10,945,522,331.82 100.000
BROKER 10,547,176.64
NON-VOTES
# OF % OF
VOTES CAST VOTES CAST
RETIREMENT GROWTH
AFFIRMATIVE 1,757,443,797.24 83.332
AGAINST 91,215,877.87 4.325
ABSTAIN 260,309,016.16 12.343
TOTAL 2,108,968,691.27 100.000
PROPOSAL 4
To adopt a new fundamental investment policy for the fund that would
permit it to invest all of its assets in another open-end investment
company managed by FMR or an affiliate with substantially the same
investment objective and policies.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 1,453,618,245.26 68.926
AGAINST 389,192,918.79 18.454
ABSTAIN 266,157,527.22 12.620
TOTAL 2,108,968,691.27 100.000
PROPOSAL 5
To approve an amended management contract for the fund.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 1,722,882,554.62 81.693
AGAINST 105,599,469.83 5.007
ABSTAIN 280,486,666.82 13.300
TOTAL 2,108,968,691.27 100.000
PROPOSAL 6
To eliminate certain fundamental policies of the fund..
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 1,451,842,627.88 68.841
AGAINST 363,937,861.79 17.257
ABSTAIN 293,188,201.60 13.902
TOTAL 2,108,968,691.27 100.000
PROPOSAL 7
To replace the fund's fundamental investment policy concerning
investment for temporary defensive purposes with a non-fundamental
investment policy.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 1,470,682,603.67 69.735
AGAINST 355,353,922.48 16.849
ABSTAIN 282,932,165.12 13.416
TOTAL 2,108,968,691.27 100.000
PROPOSAL 8
To amend the fund's fundamental investment limitation concerning
diversification.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 1,700,133,599.36 80.614
AGAINST 135,230,137.98 6.413
ABSTAIN 273,604,953.93 12.973
TOTAL 2,108,968,691.27 100.000
PROPOSAL 9
To amend the fund's fundamental investment limitation concerning the
concentration of its investments in a single industry.
# OF % OF
VOTES CAST VOTES CAST
AFFIRMATIVE 1,474,674,414.30 69.924
AGAINST 357,985,858.32 16.974
ABSTAIN 276,308,418.65 13.102
TOTAL 2,108,968,691.27 100.000
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpress(registered trademark) provides a single
toll-free number to access account balances, positions, quotes and
trading. It's easy to navigate the service, and on your first call,
the system will help you create a personal identification number (PIN)
for security.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
MARKET FUNDS WILL BE ABLE TO
MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
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
FRE-ANN-0199 68690
1.539094.101
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY'S GROWTH FUNDS
Aggressive Growth Fund
Blue Chip Growth Fund
Capital Appreciation Fund
ContrafundSM
ContrafundSM II
Disciplined Equity Fund
Dividend Growth Fund
Export and Multinational Fund
Fidelity FiftySM
Growth Company Fund
Large Cap Stock Fund
Low-Priced Stock Fund
Magellan(registered trademark) Fund
Mid-Cap Stock Fund
New Millennium(registered trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Selector
Small Cap Stock Fund
Stock Selector
TechnoQuantSM Growth Fund
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(FIDELITY_LOGO_GRAPHIC(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
