UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3587
Fidelity Financial Trust
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Scott C. Goebel, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | November 30 |
|
|
Date of reporting period: | May 31, 2010 |
Item 1. Reports to Stockholders
Fidelity®
Convertible Securities
Fund
Semiannual Report
May 31, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
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 LLC or an affiliated company.
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.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
A yearlong uptrend in global equity markets came under significant pressure in May 2010 when investor sentiment turned bearish amid growing concern that Europe's debt crisis would expand and slow or derail economic recovery. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2009 to May 31, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Semiannual Report
Shareholder Expense Example - continued
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,068.10 | $ 4.80 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.29 | $ 4.68 |
Class T | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,066.20 | $ 6.18 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.95 | $ 6.04 |
Class B | 1.74% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,063.40 | $ 8.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,016.26 | $ 8.75 |
Class C | 1.74% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,063.60 | $ 8.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,016.26 | $ 8.75 |
Convertible Securities | .65% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,069.00 | $ 3.35 |
HypotheticalA |
| $ 1,000.00 | $ 1,021.69 | $ 3.28 |
Institutional Class | .67% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,069.10 | $ 3.46 |
HypotheticalA |
| $ 1,000.00 | $ 1,021.59 | $ 3.38 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Investments as of May 31, 2010 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
El Paso Corp. 4.99% | 5.1 | 4.5 |
Wells Fargo & Co. 7.50% | 4.9 | 4.5 |
Peabody Energy Corp. 4.75% 12/15/66 | 4.6 | 4.9 |
Celanese Corp. Class A | 3.7 | 0.0 |
Bank of America Corp. | 3.1 | 3.5 |
Intel Corp. 3.25% 8/1/39 | 3.0 | 0.8 |
Chesapeake Energy Corp. 2.5% 5/15/37 | 2.4 | 2.5 |
Ford Motor Co. 4.25% 11/15/16 | 2.4 | 0.0 |
Bank of America Corp. Series L, 7.25% | 1.9 | 1.7 |
Hertz Global Holdings, Inc. 5.25% 6/1/14 | 1.9 | 1.7 |
| 33.0 | |
Top Five Market Sectors as of May 31, 2010 | ||
| % of fund's | % of fund's net assets |
Energy | 19.2 | 17.9 |
Information Technology | 17.5 | 17.2 |
Financials | 16.7 | 14.2 |
Industrials | 11.8 | 9.1 |
Consumer Discretionary | 10.6 | 6.7 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2010 * | As of November 30, 2009 ** | ||||||
Convertible |
| Convertible |
| ||||
Stocks 14.0% |
| Stocks 9.5% |
| ||||
Nonconvertible |
| Nonconvertible |
| ||||
Short-Term |
| Short-Term |
| ||||
Floating Rate Loans 0.4% |
| Floating Rate Loans 0.7% |
| ||||
* Foreign investments | 3.5% |
| ** Foreign investments | 3.3% |
|
Semiannual Report
Investments May 31, 2010 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 62.8% | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - 62.4% | ||||
CONSUMER DISCRETIONARY - 6.9% | ||||
Auto Components - 0.0% | ||||
BorgWarner, Inc. 3.5% 4/15/12 | $ 910 | $ 1,166 | ||
Automobiles - 2.4% | ||||
Ford Motor Co. 4.25% 11/15/16 | 40,000 | 56,244 | ||
Diversified Consumer Services - 0.7% | ||||
Ingersoll-Rand Global Holding Co. Ltd. 4.5% 4/15/12 | 490 | 1,033 | ||
Regis Corp. 5% 7/15/14 | 4,230 | 5,687 | ||
Stewart Enterprises, Inc. 3.375% 7/15/16 (g) | 11,000 | 9,584 | ||
| 16,304 | |||
Hotels, Restaurants & Leisure - 1.3% | ||||
MGM Mirage, Inc. 4.25% 4/15/15 (g) | 6,300 | 5,808 | ||
WMS Industries, Inc.: | ||||
2.75% 7/15/10 (g) | 4,000 | 14,054 | ||
2.75% 7/15/10 | 2,800 | 9,838 | ||
| 29,700 | |||
Household Durables - 0.1% | ||||
Newell Rubbermaid, Inc. 5.5% 3/15/14 | 590 | 1,201 | ||
Media - 1.7% | ||||
Regal Entertainment Group 6.25% 3/15/11 (g) | 19,297 | 19,538 | ||
Virgin Media, Inc. 6.5% 11/15/16 | 8,000 | 9,082 | ||
XM Satellite Radio, Inc. 7% 12/1/14 (g) | 10,000 | 9,850 | ||
| 38,470 | |||
Specialty Retail - 0.7% | ||||
Asbury Automotive Group, Inc. 3% 9/15/12 (g) | 3,000 | 2,831 | ||
Charming Shoppes, Inc. 1.125% 5/1/14 | 10,000 | 7,950 | ||
Sonic Automotive, Inc. 5% 10/1/29 | 1,180 | 1,220 | ||
United Auto Group, Inc. 3.5% 4/1/26 | 4,533 | 4,550 | ||
| 16,551 | |||
TOTAL CONSUMER DISCRETIONARY | 159,636 | |||
CONSUMER STAPLES - 4.6% | ||||
Beverages - 0.6% | ||||
Molson Coors Brewing Co. 2.5% 7/30/13 | 14,000 | 14,861 | ||
Food & Staples Retailing - 2.4% | ||||
Nash-Finch Co. 1.6314% 3/15/35 (d) | 24,480 | 10,634 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
CONSUMER STAPLES - continued | ||||
Food & Staples Retailing - continued | ||||
Rite Aid Corp. 8.5% 5/15/15 | $ 34,100 | $ 31,244 | ||
The Pantry, Inc. 3% 11/15/12 | 14,000 | 12,871 | ||
| 54,749 | |||
Food Products - 1.6% | ||||
Smithfield Foods, Inc. 4% 6/30/13 | 22,250 | 22,486 | ||
Tyson Foods, Inc. 3.25% 10/15/13 | 13,000 | 15,486 | ||
| 37,972 | |||
TOTAL CONSUMER STAPLES | 107,582 | |||
ENERGY - 13.4% | ||||
Energy Equipment & Services - 2.5% | ||||
Exterran Holdings, Inc. 4.25% 6/15/14 | 10,000 | 12,678 | ||
Global Industries Ltd. 2.75% 8/1/27 (g) | 10,000 | 6,250 | ||
Hercules Offshore, Inc. 3.375% 6/1/38 (d) | 30,000 | 22,308 | ||
Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (d)(g) | 5,000 | 3,970 | ||
Oil States International, Inc. 2.375% 7/1/25 (g) | 4,500 | 5,961 | ||
SESI LLC 1.5% 12/15/26 (d)(g) | 7,000 | 6,467 | ||
| 57,634 | |||
Oil, Gas & Consumable Fuels - 10.9% | ||||
Alpha Natural Resources, Inc. 2.375% 4/15/15 | 25,000 | 25,040 | ||
Chesapeake Energy Corp. 2.5% 5/15/37 | 70,250 | 56,404 | ||
Goodrich Petroleum Corp. 3.25% 12/1/26 | 6,000 | 5,640 | ||
International Coal Group, Inc. 4% 4/1/17 | 2,160 | 2,172 | ||
Massey Energy Co. 3.25% 8/1/15 | 5,000 | 4,128 | ||
Peabody Energy Corp. 4.75% 12/15/66 | 107,250 | 107,518 | ||
Pioneer Natural Resources Co. 2.875% 1/15/38 | 20,000 | 23,875 | ||
Quicksilver Resources, Inc. 1.875% 11/1/24 (g) | 14,500 | 14,897 | ||
Western Refining, Inc. 5.75% 6/15/14 | 17,810 | 13,641 | ||
| 253,315 | |||
TOTAL ENERGY | 310,949 | |||
FINANCIALS - 1.3% | ||||
Diversified Financial Services - 1.3% | ||||
The NASDAQ Stock Market, Inc. 2.5% 8/15/13 | 30,000 | 28,800 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
HEALTH CARE - 5.3% | ||||
Health Care Equipment & Supplies - 3.4% | ||||
Beckman Coulter, Inc. 2.5% 12/15/36 (g) | $ 8,500 | $ 9,095 | ||
Inverness Medical Innovations, Inc.: | ||||
3% 5/15/16 (g) | 21,000 | 20,790 | ||
3% 5/15/16 | 10,000 | 9,900 | ||
Kinetic Concepts, Inc. 3.25% 4/15/15 (g) | 15,000 | 15,359 | ||
Medtronic, Inc. 1.625% 4/15/13 | 16,000 | 16,290 | ||
SonoSite, Inc. 3.75% 7/15/14 | 7,000 | 7,135 | ||
| 78,569 | |||
Health Care Providers & Services - 0.2% | ||||
Omnicare, Inc. 3.25% 12/15/35 | 7,000 | 5,749 | ||
Life Sciences Tools & Services - 0.2% | ||||
Charles River Laboratories International, Inc. 2.25% 6/15/13 (g) | 4,000 | 3,809 | ||
Pharmaceuticals - 1.5% | ||||
Biovail Corp. 5.375% 8/1/14 | 10,000 | 11,891 | ||
Nektar Therapeutics 3.25% 9/28/12 | 9,000 | 8,488 | ||
Valeant Pharmaceuticals International 4% 11/15/13 | 10,000 | 15,200 | ||
| 35,579 | |||
TOTAL HEALTH CARE | 123,706 | |||
INDUSTRIALS - 11.8% | ||||
Aerospace & Defense - 0.9% | ||||
Alliant Techsystems, Inc. 2.75% 9/15/11 | 14,000 | 13,799 | ||
GenCorp, Inc. 4.0625% 12/31/39 (g) | 7,830 | 7,027 | ||
| 20,826 | |||
Airlines - 3.5% | ||||
AirTran Holdings, Inc. 7% 7/1/23 | 10,000 | 10,125 | ||
AMR Corp. 6.25% 10/15/14 | 7,990 | 8,380 | ||
Continental Airlines, Inc. 4.5% 1/15/15 | 9,280 | 11,554 | ||
U.S. Airways Group, Inc. 7.25% 5/15/14 | 11,200 | 23,449 | ||
UAL Corp.: | ||||
4.5% 6/30/21 (g) | 10,500 | 10,215 | ||
4.5% 6/30/21 | 5,000 | 4,865 | ||
6% 10/15/29 | 3,600 | 8,729 | ||
US Airways Group, Inc. 7% 9/30/20 (g) | 4,810 | 4,792 | ||
| 82,109 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INDUSTRIALS - continued | ||||
Commercial Services & Supplies - 1.0% | ||||
Metalico, Inc. 7% 4/30/28 | $ 32,500 | $ 24,050 | ||
Construction & Engineering - 0.4% | ||||
MasTec, Inc. 4.25% 12/15/14 (g) | 8,000 | 8,200 | ||
Electrical Equipment - 2.0% | ||||
C&D Technologies, Inc.: | ||||
5.25% 11/1/25 (g) | 4,400 | 3,306 | ||
5.25% 11/1/25 | 32,596 | 24,488 | ||
Evergreen Solar, Inc. 4% 7/15/13 | 4,000 | 1,360 | ||
General Cable Corp. 4.5% 11/15/29 (d) | 14,800 | 15,610 | ||
SunPower Corp. 4.75% 4/15/14 | 2,020 | 1,603 | ||
| 46,367 | |||
Industrial Conglomerates - 0.1% | ||||
Textron, Inc. 4.5% 5/1/13 | 1,440 | 2,437 | ||
Machinery - 1.1% | ||||
Greenbrier Companies, Inc.: | ||||
2.375% 5/15/26 (g) | 5,500 | 4,613 | ||
2.375% 5/15/26 | 8,000 | 6,710 | ||
Terex Corp. 4% 6/1/15 | 1,090 | 1,639 | ||
Trinity Industries, Inc. 3.875% 6/1/36 | 15,000 | 12,188 | ||
| 25,150 | |||
Marine - 0.9% | ||||
Excel Maritime Carriers Ltd. 1.875% 10/15/27 (g) | 34,000 | 21,080 | ||
Road & Rail - 1.9% | ||||
Hertz Global Holdings, Inc. 5.25% 6/1/14 | 28,000 | 43,067 | ||
Trading Companies & Distributors - 0.0% | ||||
United Rentals, Inc. 4% 11/15/15 | 960 | 1,205 | ||
TOTAL INDUSTRIALS | 274,491 | |||
INFORMATION TECHNOLOGY - 15.4% | ||||
Communications Equipment - 2.0% | ||||
CommScope, Inc. 3.25% 7/1/15 | 10,000 | 12,070 | ||
Finisar Corp. 5% 10/15/29 (g) | 2,500 | 3,972 | ||
JDS Uniphase Corp. 1% 5/15/26 (g) | 14,000 | 12,390 | ||
L-3 Communications Corp. 3% 8/1/35 | 3,000 | 3,034 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Communications Equipment - continued | ||||
Lucent Technologies, Inc. 2.875% 6/15/25 | $ 10,000 | $ 8,275 | ||
Symmetricom, Inc. 3.25% 6/15/25 | 5,214 | 5,214 | ||
| 44,955 | |||
Computers & Peripherals - 1.6% | ||||
EMC Corp. 1.75% 12/1/13 (g) | 17,000 | 21,664 | ||
Hutchinson Technology, Inc. 3.25% 1/15/26 | 5,000 | 4,125 | ||
SanDisk Corp. 1% 5/15/13 | 13,000 | 11,603 | ||
| 37,392 | |||
Electronic Equipment & Components - 1.1% | ||||
Anixter International, Inc. 1% 2/15/13 (g) | 4,540 | 4,344 | ||
Itron, Inc. 2.5% 8/1/26 | 5,000 | 5,713 | ||
Newport Corp. 2.5% 2/15/12 (g) | 3,750 | 3,506 | ||
SYNNEX Corp. 4% 5/15/18 (g) | 10,000 | 11,123 | ||
| 24,686 | |||
Internet Software & Services - 0.4% | ||||
VeriSign, Inc. 3.25% 8/15/37 | 10,000 | 9,375 | ||
IT Services - 1.7% | ||||
Alliance Data Systems Corp. 4.75% 5/15/14 (g) | 10,200 | 16,448 | ||
BearingPoint, Inc. 3.1% 12/15/24 (c)(g) | 8,000 | 0 | ||
CACI International, Inc. 2.125% 5/1/14 | 6,000 | 6,008 | ||
DST Systems, Inc. 4.125% 8/15/23 | 8,100 | 7,877 | ||
Telvent GIT SA 5.5% 4/15/15 (g) | 10,000 | 9,700 | ||
| 40,033 | |||
Semiconductors & Semiconductor Equipment - 8.2% | ||||
Advanced Micro Devices, Inc. 6% 5/1/15 | 25,000 | 24,158 | ||
Amkor Technology, Inc. 6% 4/15/14 | 10,890 | 26,157 | ||
Intel Corp. 3.25% 8/1/39 (g) | 58,000 | 69,533 | ||
Micron Technology, Inc. 4.25% 10/15/13 | 6,130 | 11,731 | ||
ON Semiconductor Corp.: | ||||
1.875% 12/15/25 (g) | 3,750 | 4,495 | ||
2.625% 12/15/26 | 35,330 | 34,888 | ||
PMC-Sierra, Inc. 2.25% 10/15/25 | 10,000 | 11,219 | ||
Xilinx, Inc. 3.125% 3/15/37 | 10,000 | 8,838 | ||
| 191,019 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Software - 0.4% | ||||
Nuance Communications, Inc. 2.75% 8/15/27 | $ 9,085 | $ 9,925 | ||
TOTAL INFORMATION TECHNOLOGY | 357,385 | |||
MATERIALS - 1.7% | ||||
Chemicals - 0.8% | ||||
Ferro Corp. 6.5% 8/15/13 | 20,000 | 19,350 | ||
Containers & Packaging - 0.2% | ||||
Owens-Brockway Glass Container, Inc. 3% 6/1/15 (g) | 5,010 | 4,834 | ||
Metals & Mining - 0.7% | ||||
ArcelorMittal SA 5% 5/15/14 | 2,170 | 2,684 | ||
Goldcorp, Inc. 2% 8/1/14 (g) | 5,000 | 5,863 | ||
Newmont Mining Corp. 1.625% 7/15/17 | 5,000 | 6,542 | ||
Steel Dynamics, Inc. 5.125% 6/15/14 | 860 | 965 | ||
| 16,054 | |||
TOTAL MATERIALS | 40,238 | |||
TELECOMMUNICATION SERVICES - 2.0% | ||||
Diversified Telecommunication Services - 0.8% | ||||
Level 3 Communications, Inc. 7% 3/15/15 | 10,000 | 10,688 | ||
Time Warner Telecom, Inc. 2.375% 4/1/26 | 6,000 | 6,593 | ||
| 17,281 | |||
Wireless Telecommunication Services - 1.2% | ||||
Leap Wireless International, Inc. 4.5% 7/15/14 | 33,000 | 27,720 | ||
TOTAL TELECOMMUNICATION SERVICES | 45,001 | |||
TOTAL CONVERTIBLE BONDS | 1,447,788 | |||
Nonconvertible Bonds - 0.4% | ||||
CONSUMER DISCRETIONARY - 0.1% | ||||
Hotels, Restaurants & Leisure - 0.1% | ||||
Ambassadors International, Inc. 10% 1/15/12 pay-in-kind (g) | 2,278 | 2,278 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Nonconvertible Bonds - continued | ||||
FINANCIALS - 0.3% | ||||
Consumer Finance - 0.3% | ||||
GMAC LLC: | ||||
7.5% 12/31/13 | $ 4,264 | $ 4,168 | ||
8% 12/31/18 | 3,812 | 3,621 | ||
| 7,789 | |||
TOTAL NONCONVERTIBLE BONDS | 10,067 | |||
TOTAL CORPORATE BONDS (Cost $1,446,680) | 1,457,855 |
Common Stocks - 14.0% | |||
Shares |
| ||
CONSUMER DISCRETIONARY - 1.4% | |||
Auto Components - 0.4% | |||
Johnson Controls, Inc. | 344,134 | 9,818 | |
Diversified Consumer Services - 0.4% | |||
Service Corp. International | 1,143,000 | 9,761 | |
Hotels, Restaurants & Leisure - 0.6% | |||
Ambassadors International, Inc. (a)(f) | 1,843,012 | 922 | |
Las Vegas Sands Corp. (a)(e) | 558,200 | 13,107 | |
| 14,029 | ||
Media - 0.0% | |||
HMH Holdings, Inc. (a)(j) | 52,880 | 370 | |
HMH Holdings, Inc. warrants 3/9/17 (a) | 164,823 | 165 | |
| 535 | ||
TOTAL CONSUMER DISCRETIONARY | 34,143 | ||
ENERGY - 0.2% | |||
Oil, Gas & Consumable Fuels - 0.2% | |||
McMoRan Exploration Co. (a)(e) | 450,000 | 4,838 | |
FINANCIALS - 6.4% | |||
Commercial Banks - 3.3% | |||
Huntington Bancshares, Inc. | 5,820,500 | 35,854 | |
KeyCorp | 5,214,100 | 41,817 | |
| 77,671 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Diversified Financial Services - 3.1% | |||
Bank of America Corp. | 4,481,985 | $ 70,546 | |
TOTAL FINANCIALS | 148,217 | ||
INFORMATION TECHNOLOGY - 2.1% | |||
Communications Equipment - 0.8% | |||
Finisar Corp. (a)(e) | 1,174,120 | 17,847 | |
Electronic Equipment & Components - 0.4% | |||
Viasystems Group, Inc. (a) | 366,429 | 6,786 | |
Viasystems Group, Inc. (a)(g) | 183,214 | 3,054 | |
| 9,840 | ||
Semiconductors & Semiconductor Equipment - 0.9% | |||
Amkor Technology, Inc. (a) | 843,200 | 5,742 | |
ON Semiconductor Corp. (a) | 2,169,500 | 15,859 | |
| 21,601 | ||
TOTAL INFORMATION TECHNOLOGY | 49,288 | ||
MATERIALS - 3.7% | |||
Chemicals - 3.7% | |||
Celanese Corp. Class A | 2,961,930 | 84,919 | |
UTILITIES - 0.2% | |||
Independent Power Producers & Energy Traders - 0.2% | |||
NRG Energy, Inc. (a) | 167,000 | 3,899 | |
TOTAL COMMON STOCKS (Cost $272,357) | 325,304 | ||
Convertible Preferred Stocks - 19.7% | |||
|
|
|
|
CONSUMER DISCRETIONARY - 2.2% | |||
Automobiles - 0.9% | |||
Ford Motor Co. Capital Trust II 6.50% | 450,000 | 20,493 | |
Leisure Equipment & Products - 0.6% | |||
Callaway Golf Co. 7.50% (g) | 100,000 | 13,363 | |
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Media - 0.7% | |||
Interpublic Group of Companies, Inc. 5.25% | 10,000 | $ 8,304 | |
LodgeNet Entertainment Corp. 10.00% (g) | 4,997 | 7,754 | |
| 16,058 | ||
TOTAL CONSUMER DISCRETIONARY | 49,914 | ||
CONSUMER STAPLES - 1.9% | |||
Food Products - 1.9% | |||
Archer Daniels Midland Co. 6.25% | 600,000 | 21,552 | |
Bunge Ltd.: | |||
4.875% | 237,000 | 18,456 | |
5.125% | 10,000 | 4,823 | |
| 44,831 | ||
ENERGY - 5.6% | |||
Oil, Gas & Consumable Fuels - 5.6% | |||
El Paso Corp.: | |||
4.99% (g) | 119,290 | 117,712 | |
4.99% | 10,000 | 9,868 | |
Goodrich Petroleum Corp. 5.375% | 100,000 | 2,692 | |
| 130,272 | ||
FINANCIALS - 8.3% | |||
Commercial Banks - 5.0% | |||
Huntington Bancshares, Inc. 8.50% | 2,100 | 2,058 | |
Wells Fargo & Co. 7.50% | 120,550 | 113,076 | |
| 115,134 | ||
Diversified Financial Services - 3.0% | |||
Bank of America Corp. Series L, 7.25% | 47,085 | 43,554 | |
Citigroup, Inc. 7.50% | 215,400 | 25,770 | |
| 69,324 | ||
Insurance - 0.3% | |||
Assured Guaranty Ltd. 8.50% | 100,000 | 7,014 | |
TOTAL FINANCIALS | 191,472 | ||
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - 1.7% | |||
Health Care Providers & Services - 1.7% | |||
Tenet Healthcare Corp. 7.00% | 40,000 | $ 40,418 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $487,748) | 456,907 |
Floating Rate Loans - 0.4% | ||||
| Principal Amount (000s) |
| ||
FINANCIALS - 0.4% | ||||
Diversified Financial Services - 0.4% | ||||
CCO Holdings, LLC Tranche 3LN, term loan 2.7556% 9/6/14 (h) (Cost $8,052) | $ 9,000 | 8,100 |
Money Market Funds - 3.9% | |||
Shares |
| ||
Fidelity® Cash Central Fund, 0.23% (i) | 59,103,633 | 59,104 | |
Fidelity Securities Lending Cash Central Fund, 0.24% (b)(i) | 30,112,100 | 30,112 | |
TOTAL MONEY MARKET FUNDS (Cost $89,216) | 89,216 | ||
TOTAL INVESTMENT PORTFOLIO - 100.8% (Cost $2,304,053) | 2,337,382 | ||
NET OTHER ASSETS - (0.8)% | (17,448) | ||
NET ASSETS - 100% | $ 2,319,934 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Non-income producing - Issuer is in default. |
(d) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(e) Security or a portion of the security is on loan at period end. |
(f) Affiliated company |
(g) 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 end of the period, the value of these securities amounted to $519,529,000 or 22.4% of net assets. |
(h) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(i) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(j) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $370,000 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Cost |
HMH Holdings, Inc. | 8/1/08 - 12/31/09 | $ 6,902 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 116 |
Fidelity Securities Lending Cash Central Fund | 29 |
Total | $ 145 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
Ambassadors International, Inc. | $ 758 | $ - | $ - | $ - | $ 922 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 84,057 | $ 33,608 | $ 50,284 | $ 165 |
Consumer Staples | 44,831 | - | 44,831 | - |
Energy | 135,110 | 4,838 | 130,272 | - |
Financials | 339,689 | 217,541 | 122,148 | - |
Health Care | 40,418 | - | 40,418 | - |
Information Technology | 49,288 | 46,234 | 3,054 | - |
Materials | 84,919 | 84,919 | - | - |
Utilities | 3,899 | 3,899 | - | - |
Corporate Bonds | 1,457,855 | - | 1,455,577 | 2,278 |
Floating Rate Loans | 8,100 | - | 8,100 | - |
Money Market Funds | 89,216 | 89,216 | - | - |
Total Investments in Securities: | $ 2,337,382 | $ 480,255 | $ 1,854,684 | $ 2,443 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
(Amounts in thousands) |
|
Investments in Securities: | |
Beginning Balance | $ 3,577 |
Total Realized Gain (Loss) | 6,233 |
Total Unrealized Gain (Loss) | 1,260 |
Cost of Purchases | 140 |
Proceeds of Sales | (9,558) |
Amortization/Accretion | 791 |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 2,443 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at May 31, 2010 | $ 117 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 4.6% |
BBB | 3.2% |
BB | 13.4% |
B | 16.3% |
CCC,CC,C | 10.9% |
Not Rated | 14.8% |
Equities | 33.7% |
Short-Term Investments and Net Other Assets | 3.1% |
| 100.0% |
We have used ratings from Moody's Investors Service, Inc. Where Moody's ratings are not available, we have used S&P ratings. All ratings are as of the report date and do not reflect subsequent downgrades. |
Income Tax Information |
At November 30, 2009, the fund had a capital loss carryforward of approximately $373,212,000 of which $52,524,000 and $320,688,000 will expire on November 30, 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
The fund intends to elect to defer to its fiscal year ending November 30, 2010 approximately $499,000 of losses recognized during the period November 1, 2009 to November 30, 2009. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $29,021) - See accompanying schedule: Unaffiliated issuers (cost $2,210,197) | $ 2,247,244 |
|
Fidelity Central Funds (cost $89,216) | 89,216 |
|
Other affiliated issuers (cost $4,640) | 922 |
|
Total Investments (cost $2,304,053) |
| $ 2,337,382 |
Receivable for fund shares sold | 1,480 | |
Dividends receivable | 3,559 | |
Interest receivable | 14,425 | |
Distributions receivable from Fidelity Central Funds | 20 | |
Prepaid expenses | 2 | |
Total assets | 2,356,868 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,194 | |
Payable for fund shares redeemed | 1,254 | |
Accrued management fee | 667 | |
Distribution fees payable | 8 | |
Other affiliated payables | 658 | |
Other payables and accrued expenses | 41 | |
Collateral on securities loaned, at value | 30,112 | |
Total liabilities | 36,934 | |
|
|
|
Net Assets | $ 2,319,934 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,586,263 | |
Undistributed net investment income | 22,482 | |
Accumulated undistributed net realized gain (loss) on investments | (322,140) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 33,329 | |
Net Assets | $ 2,319,934 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Calculation of Maximum Offering Price | $ 22.26 | |
|
|
|
Maximum offering price per share (100/94.25 of $22.26) | $ 23.62 | |
Class T: | $ 22.25 | |
|
|
|
Maximum offering price per share (100/96.50 of $22.25) | $ 23.06 | |
Class B: | $ 22.20 | |
|
|
|
Class C: | $ 22.19 | |
|
|
|
Convertible Securities: | $ 22.31 | |
|
|
|
Institutional Class: | $ 22.30 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Operations
Amounts in thousands | Six months ended May 31, 2010 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 18,124 |
Interest |
| 32,101 |
Income from Fidelity Central Funds |
| 145 |
Total income |
| 50,370 |
|
|
|
Expenses | ||
Management fee | $ 5,613 | |
Performance adjustment | (554) | |
Transfer agent fees | 2,415 | |
Distribution fees | 36 | |
Accounting and security lending fees | 377 | |
Custodian fees and expenses | 20 | |
Independent trustees' compensation | 7 | |
Registration fees | 117 | |
Audit | 41 | |
Legal | 15 | |
Miscellaneous | 18 | |
Total expenses before reductions | 8,105 | |
Expense reductions | (46) | 8,059 |
Net investment income (loss) | 42,311 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 56,858 | |
Capital gain distribution from Fidelity Central Funds | 1 | |
Total net realized gain (loss) |
| 56,859 |
Change in net unrealized appreciation (depreciation) on investment securities | 62,252 | |
Net gain (loss) | 119,111 | |
Net increase (decrease) in net assets resulting from operations | $ 161,422 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Amounts in thousands | Six months ended May 31, 2010 (Unaudited) | Year ended November 30, 2009 |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 42,311 | $ 101,950 |
Net realized gain (loss) | 56,859 | (232,140) |
Change in net unrealized appreciation (depreciation) | 62,252 | 1,040,568 |
Net increase (decrease) in net assets resulting | 161,422 | 910,378 |
Distributions to shareholders from net investment income | (49,664) | (103,307) |
Share transactions - net increase (decrease) | (144,502) | 106,423 |
Total increase (decrease) in net assets | (32,744) | 913,494 |
|
|
|
Net Assets | ||
Beginning of period | 2,352,678 | 1,439,184 |
End of period (including undistributed net investment income of $22,482 and undistributed net investment income of $29,835, respectively) | $ 2,319,934 | $ 2,352,678 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.25 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .36 | .58 |
Net realized and unrealized gain (loss) | 1.08 | 8.53 |
Total from investment operations | 1.44 | 9.11 |
Distributions from net investment income | (.43) | (.65) |
Net asset value, end of period | $ 22.26 | $ 21.25 |
Total Return B, C, D | 6.81% | 72.83% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | .93% A | 1.04% A |
Expenses net of fee waivers, if any | .93% A | 1.04% A |
Expenses net of all reductions | .93% A | 1.04% A |
Net investment income (loss) | 3.18% A | 3.70% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 10 | $ 6 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class T
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.25 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .33 | .57 |
Net realized and unrealized gain (loss) | 1.07 | 8.52 |
Total from investment operations | 1.40 | 9.09 |
Distributions from net investment income | (.40) | (.63) |
Net asset value, end of period | $ 22.25 | $ 21.25 |
Total Return B, C, D | 6.62% | 72.60% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.20% A | 1.25% A |
Expenses net of fee waivers, if any | 1.20% A | 1.25% A |
Expenses net of all reductions | 1.20% A | 1.25% A |
Net investment income (loss) | 2.91% A | 3.83% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 3 | $ 2 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class B
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.22 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .27 | .50 |
Net realized and unrealized gain (loss) | 1.07 | 8.51 |
Total from investment operations | 1.34 | 9.01 |
Distributions from net investment income | (.36) | (.58) |
Net asset value, end of period | $ 22.20 | $ 21.22 |
Total Return B, C, D | 6.34% | 71.85% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.74% A | 1.78% A |
Expenses net of fee waivers, if any | 1.74% A | 1.78% A |
Expenses net of all reductions | 1.74% A | 1.78% A |
Net investment income (loss) | 2.37% A | 3.41% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 1 | $ 1 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class C
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.20 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .27 | .47 |
Net realized and unrealized gain (loss) | 1.07 | 8.53 |
Total from investment operations | 1.34 | 9.00 |
Distributions from net investment income | (.35) | (.59) |
Net asset value, end of period | $ 22.19 | $ 21.20 |
Total Return B, C, D | 6.36% | 71.81% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.74% A | 1.80% A |
Expenses net of fee waivers, if any | 1.74% A | 1.80% A |
Expenses net of all reductions | 1.74% A | 1.80% A |
Net investment income (loss) | 2.37% A | 3.17% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 4 | $ 2 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Convertible Securities
| Six months ended May 31, 2010 | Years ended November 30, | ||||
| (Unaudited) | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 21.30 | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 | $ 21.06 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .39 | .96 | .76 | .59 | .49 | .41 |
Net realized and unrealized gain (loss) | 1.07 | 7.78 | (14.43) | 3.43 | 3.09 | 1.03 |
Total from investment operations | 1.46 | 8.74 | (13.67) | 4.02 | 3.58 | 1.44 |
Distributions from net investment income | (.45) | (.99) | (.64) | (.50) | (.50) | (.34) |
Distributions from net realized gain | - | - | (.85) | (.02) | (.01) | (.02) |
Total distributions | (.45) | (.99) | (1.49) | (.52) | (.51) | (.36) |
Net asset value, end of period | $ 22.31 | $ 21.30 | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 |
Total Return B, C | 6.90% | 67.65% | (50.09)% | 16.02% | 16.38% | 6.91% |
Ratios to Average Net Assets E, G |
|
|
|
|
| |
Expenses before reductions | .66% A | .70% | .78% | .79% | .83% | .70% |
Expenses net of fee waivers, if any | .65% A | .69% | .78% | .79% | .83% | .70% |
Expenses net of all reductions | .65% A | .69% | .78% | .79% | .83% | .69% |
Net investment income (loss) | 3.46% A | 5.59% | 3.06% | 2.11% | 2.09% | 1.95% |
Supplemental Data |
|
|
|
|
| |
Net assets, end of period (in millions) | $ 2,294 | $ 2,340 | $ 1,439 | $ 2,919 | $ 2,083 | $ 1,754 |
Portfolio turnover rate F | 36% A | 31% | 39% | 24% | 35% | 81% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Institutional Class
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.29 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .38 | .63 |
Net realized and unrealized gain (loss) | 1.09 | 8.54 |
Total from investment operations | 1.47 | 9.17 |
Distributions from net investment income | (.46) | (.67) |
Total distributions | (.46) | (.67) |
Net asset value, end of period | $ 22.30 | $ 21.29 |
Total Return B, C | 6.91% | 73.31% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .67% A | .73% A |
Expenses net of fee waivers, if any | .67% A | .73% A |
Expenses net of all reductions | .67% A | .73% A |
Net investment income (loss) | 3.44% A | 4.19% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 9 | $ 3 |
Portfolio turnover rate F | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2010 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Convertible Securities Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, Convertible Securities and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
(ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds and floating rate loans, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds,including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
gain distributions. The change in estimate has no impact on total net asset or total return of the fund. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 217,040 |
Gross unrealized depreciation | (177,080) |
Net unrealized appreciation (depreciation) | $ 39,960 |
|
|
Tax cost | $ 2,297,422 |
Semiannual Report
4. Operating Policies.
Restricted Securities. The Fund may 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. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short sales and short-term securities, aggregated $407,796 and $452,345, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .15% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Convertible Securities as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .41% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 11 | $ 1 |
Class T | .25% | .25% | 7 | - |
Class B | .75% | .25% | 5 | 4 |
Class C | .75% | .25% | 13 | 8 |
|
|
| $ 36 | $ 13 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 13 |
Class T | 1 |
Class B* | 1 |
Class C* | - |
| $ 15 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
| Amount | % of |
Class A | $ 10 | .22 |
Class T | 3 | .23 |
Class B | 1 | .28 |
Class C | 4 | .28 |
Convertible Securities | 2,392 | .20 |
Institutional Class | 5 | .21 |
| $ 2,415 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $1 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $5 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
8. Security Lending - continued
determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $29.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Convertible Securities operating expenses. During the period, this reimbursement reduced the Class' expenses by $45. Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $1 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income |
|
|
Class A | $ 170 | $ 62 |
Class T | 42 | 28 |
Class B | 14 | 9 |
Class C | 37 | 24 |
Convertible Securities | 49,322 | 103,134 |
Institutional Class | 79 | 50 |
Total | $ 49,664 | $ 103,307 |
A Distributions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
Semiannual Report
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Six months ended May 31, | Year ended November 30, | Six months ended May 31, | Year ended | |
Class A |
|
|
|
|
Shares sold | 423 | 306 | $ 9,565 | $ 5,806 |
Reinvestment of distributions | 7 | 3 | 155 | 54 |
Shares redeemed | (251) | (39) | (5,839) | (801) |
Net increase (decrease) | 179 | 270 | $ 3,881 | $ 5,059 |
Class T |
|
|
|
|
Shares sold | 192 | 95 | $ 4,469 | $ 1,656 |
Reinvestment of distributions | 2 | 2 | 41 | 27 |
Shares redeemed | (155) | (6) | (3,432) | (110) |
Net increase (decrease) | 39 | 91 | $ 1,078 | $ 1,573 |
Class B |
|
|
|
|
Shares sold | 34 | 30 | $ 773 | $ 491 |
Reinvestment of distributions | - | - | 10 | 8 |
Shares redeemed | (12) | - | (278) | (5) |
Net increase (decrease) | 22 | 30 | $ 505 | $ 494 |
Class C |
|
|
|
|
Shares sold | 98 | 91 | $ 2,187 | $ 1,573 |
Reinvestment of distributions | 1 | 1 | 33 | 23 |
Shares redeemed | (16) | (13) | (356) | (248) |
Net increase (decrease) | 83 | 79 | $ 1,864 | $ 1,348 |
Convertible Securities |
|
|
|
|
Shares sold | 11,644 | 36,051 | $ 262,941 | $ 630,445 |
Reinvestment of distributions | 2,014 | 6,070 | 44,619 | 92,808 |
Shares redeemed | (20,710) | (38,505) | (464,975) | (627,813) |
Net increase (decrease) | (7,052) | 3,616 | $ (157,415) | $ 95,440 |
Institutional Class |
|
|
|
|
Shares sold | 282 | 173 | $ 6,453 | $ 3,107 |
Reinvestment of distributions | 3 | 2 | 70 | 44 |
Shares redeemed | (41) | (30) | (938) | (642) |
Net increase (decrease) | 244 | 145 | $ 5,585 | $ 2,509 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
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 Automated Service Telephone 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)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
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
* 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.
Semiannual Report
To Visit Fidelity
For directions and hours,
please call 1-800-544-9797.
Arizona
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11943 El Camino Real
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3793 State Street
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Delaware
400 Delaware Avenue
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2948 N. Federal Highway
Ft. Lauderdale, FL
4671 Town Center Parkway
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8880 Tamiami Trail, North
Naples, FL
230 Royal Palm Way
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3501 PGA Boulevard
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1502 N. Westshore Blvd.
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2465 State Road 7
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3242 Peachtree Road
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1000 Abernathy Road
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Illinois
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401 North Michigan Avenue
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200 Endicott Street
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Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Semiannual Report
405 Cochituate Road
Framingham, MA
551 Boston Turnpike
Shrewsbury, MA
Michigan
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Ann Arbor, MI
280 N. Old Woodward Ave.
Birmingham, MI
30200 Northwestern Hwy.
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43420 Grand River Avenue
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3480 28th Street
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2425 S. Linden Road STE E
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Minnesota
7740 France Avenue South
Edina, MN
8342 3rd Street North
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Missouri
1524 South Lindbergh Blvd.
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Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
501 Route 73 South
Marlton, NJ
150 Essex Street
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35 Morris Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
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2261 Q Street NE
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New York
1130 Franklin Avenue
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37 West Jericho Turnpike
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1271 Avenue of the Americas
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980 Madison Avenue
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61 Broadway
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350 Park Avenue
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200 Fifth Avenue
New York, NY
733 Third Avenue
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2070 Broadway
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1075 Northern Blvd.
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799 Central Park Avenue
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3349 Monroe Avenue
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North Carolina
4611 Sharon Road
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7011 Fayetteville Road
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Ohio
3805 Edwards Road
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28699 Chagrin Boulevard
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7493 SW Bridgeport Road
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600 West DeKalb Pike
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1735 Market Street
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12001 Perry Highway
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2035 Mallory Lane
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Texas
10000 Research Boulevard
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4001 Northwest Parkway
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12532 Memorial Drive
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2701 Drexel Drive
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6005 West Park Boulevard
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15600 Southwest Freeway
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139 N. Loop 1604 East
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Utah
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10500 NE 8th Street
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1518 6th Avenue
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Semiannual Report
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Semiannual Report
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Convertible Securities
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Semiannual Report
May 31, 2010
Class A, Class T, Class B, and Class C are classes of Fidelity® Convertible Securities Fund
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Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
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 LLC or an affiliated company.
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.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
A yearlong uptrend in global equity markets came under significant pressure in May 2010 when investor sentiment turned bearish amid growing concern that Europe's debt crisis would expand and slow or derail economic recovery. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2009 to May 31, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Semiannual Report
Shareholder Expense Example - continued
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,068.10 | $ 4.80 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.29 | $ 4.68 |
Class T | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,066.20 | $ 6.18 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.95 | $ 6.04 |
Class B | 1.74% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,063.40 | $ 8.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,016.26 | $ 8.75 |
Class C | 1.74% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,063.60 | $ 8.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,016.26 | $ 8.75 |
Convertible Securities | .65% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,069.00 | $ 3.35 |
HypotheticalA |
| $ 1,000.00 | $ 1,021.69 | $ 3.28 |
Institutional Class | .67% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,069.10 | $ 3.46 |
HypotheticalA |
| $ 1,000.00 | $ 1,021.59 | $ 3.38 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Investments as of May 31, 2010 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
El Paso Corp. 4.99% | 5.1 | 4.5 |
Wells Fargo & Co. 7.50% | 4.9 | 4.5 |
Peabody Energy Corp. 4.75% 12/15/66 | 4.6 | 4.9 |
Celanese Corp. Class A | 3.7 | 0.0 |
Bank of America Corp. | 3.1 | 3.5 |
Intel Corp. 3.25% 8/1/39 | 3.0 | 0.8 |
Chesapeake Energy Corp. 2.5% 5/15/37 | 2.4 | 2.5 |
Ford Motor Co. 4.25% 11/15/16 | 2.4 | 0.0 |
Bank of America Corp. Series L, 7.25% | 1.9 | 1.7 |
Hertz Global Holdings, Inc. 5.25% 6/1/14 | 1.9 | 1.7 |
| 33.0 | |
Top Five Market Sectors as of May 31, 2010 | ||
| % of fund's | % of fund's net assets |
Energy | 19.2 | 17.9 |
Information Technology | 17.5 | 17.2 |
Financials | 16.7 | 14.2 |
Industrials | 11.8 | 9.1 |
Consumer Discretionary | 10.6 | 6.7 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2010 * | As of November 30, 2009 ** | ||||||
Convertible |
| Convertible |
| ||||
Stocks 14.0% |
| Stocks 9.5% |
| ||||
Nonconvertible |
| Nonconvertible |
| ||||
Short-Term |
| Short-Term |
| ||||
Floating Rate Loans 0.4% |
| Floating Rate Loans 0.7% |
| ||||
* Foreign investments | 3.5% |
| ** Foreign investments | 3.3% |
|
Semiannual Report
Investments May 31, 2010 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 62.8% | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - 62.4% | ||||
CONSUMER DISCRETIONARY - 6.9% | ||||
Auto Components - 0.0% | ||||
BorgWarner, Inc. 3.5% 4/15/12 | $ 910 | $ 1,166 | ||
Automobiles - 2.4% | ||||
Ford Motor Co. 4.25% 11/15/16 | 40,000 | 56,244 | ||
Diversified Consumer Services - 0.7% | ||||
Ingersoll-Rand Global Holding Co. Ltd. 4.5% 4/15/12 | 490 | 1,033 | ||
Regis Corp. 5% 7/15/14 | 4,230 | 5,687 | ||
Stewart Enterprises, Inc. 3.375% 7/15/16 (g) | 11,000 | 9,584 | ||
| 16,304 | |||
Hotels, Restaurants & Leisure - 1.3% | ||||
MGM Mirage, Inc. 4.25% 4/15/15 (g) | 6,300 | 5,808 | ||
WMS Industries, Inc.: | ||||
2.75% 7/15/10 (g) | 4,000 | 14,054 | ||
2.75% 7/15/10 | 2,800 | 9,838 | ||
| 29,700 | |||
Household Durables - 0.1% | ||||
Newell Rubbermaid, Inc. 5.5% 3/15/14 | 590 | 1,201 | ||
Media - 1.7% | ||||
Regal Entertainment Group 6.25% 3/15/11 (g) | 19,297 | 19,538 | ||
Virgin Media, Inc. 6.5% 11/15/16 | 8,000 | 9,082 | ||
XM Satellite Radio, Inc. 7% 12/1/14 (g) | 10,000 | 9,850 | ||
| 38,470 | |||
Specialty Retail - 0.7% | ||||
Asbury Automotive Group, Inc. 3% 9/15/12 (g) | 3,000 | 2,831 | ||
Charming Shoppes, Inc. 1.125% 5/1/14 | 10,000 | 7,950 | ||
Sonic Automotive, Inc. 5% 10/1/29 | 1,180 | 1,220 | ||
United Auto Group, Inc. 3.5% 4/1/26 | 4,533 | 4,550 | ||
| 16,551 | |||
TOTAL CONSUMER DISCRETIONARY | 159,636 | |||
CONSUMER STAPLES - 4.6% | ||||
Beverages - 0.6% | ||||
Molson Coors Brewing Co. 2.5% 7/30/13 | 14,000 | 14,861 | ||
Food & Staples Retailing - 2.4% | ||||
Nash-Finch Co. 1.6314% 3/15/35 (d) | 24,480 | 10,634 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
CONSUMER STAPLES - continued | ||||
Food & Staples Retailing - continued | ||||
Rite Aid Corp. 8.5% 5/15/15 | $ 34,100 | $ 31,244 | ||
The Pantry, Inc. 3% 11/15/12 | 14,000 | 12,871 | ||
| 54,749 | |||
Food Products - 1.6% | ||||
Smithfield Foods, Inc. 4% 6/30/13 | 22,250 | 22,486 | ||
Tyson Foods, Inc. 3.25% 10/15/13 | 13,000 | 15,486 | ||
| 37,972 | |||
TOTAL CONSUMER STAPLES | 107,582 | |||
ENERGY - 13.4% | ||||
Energy Equipment & Services - 2.5% | ||||
Exterran Holdings, Inc. 4.25% 6/15/14 | 10,000 | 12,678 | ||
Global Industries Ltd. 2.75% 8/1/27 (g) | 10,000 | 6,250 | ||
Hercules Offshore, Inc. 3.375% 6/1/38 (d) | 30,000 | 22,308 | ||
Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (d)(g) | 5,000 | 3,970 | ||
Oil States International, Inc. 2.375% 7/1/25 (g) | 4,500 | 5,961 | ||
SESI LLC 1.5% 12/15/26 (d)(g) | 7,000 | 6,467 | ||
| 57,634 | |||
Oil, Gas & Consumable Fuels - 10.9% | ||||
Alpha Natural Resources, Inc. 2.375% 4/15/15 | 25,000 | 25,040 | ||
Chesapeake Energy Corp. 2.5% 5/15/37 | 70,250 | 56,404 | ||
Goodrich Petroleum Corp. 3.25% 12/1/26 | 6,000 | 5,640 | ||
International Coal Group, Inc. 4% 4/1/17 | 2,160 | 2,172 | ||
Massey Energy Co. 3.25% 8/1/15 | 5,000 | 4,128 | ||
Peabody Energy Corp. 4.75% 12/15/66 | 107,250 | 107,518 | ||
Pioneer Natural Resources Co. 2.875% 1/15/38 | 20,000 | 23,875 | ||
Quicksilver Resources, Inc. 1.875% 11/1/24 (g) | 14,500 | 14,897 | ||
Western Refining, Inc. 5.75% 6/15/14 | 17,810 | 13,641 | ||
| 253,315 | |||
TOTAL ENERGY | 310,949 | |||
FINANCIALS - 1.3% | ||||
Diversified Financial Services - 1.3% | ||||
The NASDAQ Stock Market, Inc. 2.5% 8/15/13 | 30,000 | 28,800 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
HEALTH CARE - 5.3% | ||||
Health Care Equipment & Supplies - 3.4% | ||||
Beckman Coulter, Inc. 2.5% 12/15/36 (g) | $ 8,500 | $ 9,095 | ||
Inverness Medical Innovations, Inc.: | ||||
3% 5/15/16 (g) | 21,000 | 20,790 | ||
3% 5/15/16 | 10,000 | 9,900 | ||
Kinetic Concepts, Inc. 3.25% 4/15/15 (g) | 15,000 | 15,359 | ||
Medtronic, Inc. 1.625% 4/15/13 | 16,000 | 16,290 | ||
SonoSite, Inc. 3.75% 7/15/14 | 7,000 | 7,135 | ||
| 78,569 | |||
Health Care Providers & Services - 0.2% | ||||
Omnicare, Inc. 3.25% 12/15/35 | 7,000 | 5,749 | ||
Life Sciences Tools & Services - 0.2% | ||||
Charles River Laboratories International, Inc. 2.25% 6/15/13 (g) | 4,000 | 3,809 | ||
Pharmaceuticals - 1.5% | ||||
Biovail Corp. 5.375% 8/1/14 | 10,000 | 11,891 | ||
Nektar Therapeutics 3.25% 9/28/12 | 9,000 | 8,488 | ||
Valeant Pharmaceuticals International 4% 11/15/13 | 10,000 | 15,200 | ||
| 35,579 | |||
TOTAL HEALTH CARE | 123,706 | |||
INDUSTRIALS - 11.8% | ||||
Aerospace & Defense - 0.9% | ||||
Alliant Techsystems, Inc. 2.75% 9/15/11 | 14,000 | 13,799 | ||
GenCorp, Inc. 4.0625% 12/31/39 (g) | 7,830 | 7,027 | ||
| 20,826 | |||
Airlines - 3.5% | ||||
AirTran Holdings, Inc. 7% 7/1/23 | 10,000 | 10,125 | ||
AMR Corp. 6.25% 10/15/14 | 7,990 | 8,380 | ||
Continental Airlines, Inc. 4.5% 1/15/15 | 9,280 | 11,554 | ||
U.S. Airways Group, Inc. 7.25% 5/15/14 | 11,200 | 23,449 | ||
UAL Corp.: | ||||
4.5% 6/30/21 (g) | 10,500 | 10,215 | ||
4.5% 6/30/21 | 5,000 | 4,865 | ||
6% 10/15/29 | 3,600 | 8,729 | ||
US Airways Group, Inc. 7% 9/30/20 (g) | 4,810 | 4,792 | ||
| 82,109 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INDUSTRIALS - continued | ||||
Commercial Services & Supplies - 1.0% | ||||
Metalico, Inc. 7% 4/30/28 | $ 32,500 | $ 24,050 | ||
Construction & Engineering - 0.4% | ||||
MasTec, Inc. 4.25% 12/15/14 (g) | 8,000 | 8,200 | ||
Electrical Equipment - 2.0% | ||||
C&D Technologies, Inc.: | ||||
5.25% 11/1/25 (g) | 4,400 | 3,306 | ||
5.25% 11/1/25 | 32,596 | 24,488 | ||
Evergreen Solar, Inc. 4% 7/15/13 | 4,000 | 1,360 | ||
General Cable Corp. 4.5% 11/15/29 (d) | 14,800 | 15,610 | ||
SunPower Corp. 4.75% 4/15/14 | 2,020 | 1,603 | ||
| 46,367 | |||
Industrial Conglomerates - 0.1% | ||||
Textron, Inc. 4.5% 5/1/13 | 1,440 | 2,437 | ||
Machinery - 1.1% | ||||
Greenbrier Companies, Inc.: | ||||
2.375% 5/15/26 (g) | 5,500 | 4,613 | ||
2.375% 5/15/26 | 8,000 | 6,710 | ||
Terex Corp. 4% 6/1/15 | 1,090 | 1,639 | ||
Trinity Industries, Inc. 3.875% 6/1/36 | 15,000 | 12,188 | ||
| 25,150 | |||
Marine - 0.9% | ||||
Excel Maritime Carriers Ltd. 1.875% 10/15/27 (g) | 34,000 | 21,080 | ||
Road & Rail - 1.9% | ||||
Hertz Global Holdings, Inc. 5.25% 6/1/14 | 28,000 | 43,067 | ||
Trading Companies & Distributors - 0.0% | ||||
United Rentals, Inc. 4% 11/15/15 | 960 | 1,205 | ||
TOTAL INDUSTRIALS | 274,491 | |||
INFORMATION TECHNOLOGY - 15.4% | ||||
Communications Equipment - 2.0% | ||||
CommScope, Inc. 3.25% 7/1/15 | 10,000 | 12,070 | ||
Finisar Corp. 5% 10/15/29 (g) | 2,500 | 3,972 | ||
JDS Uniphase Corp. 1% 5/15/26 (g) | 14,000 | 12,390 | ||
L-3 Communications Corp. 3% 8/1/35 | 3,000 | 3,034 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Communications Equipment - continued | ||||
Lucent Technologies, Inc. 2.875% 6/15/25 | $ 10,000 | $ 8,275 | ||
Symmetricom, Inc. 3.25% 6/15/25 | 5,214 | 5,214 | ||
| 44,955 | |||
Computers & Peripherals - 1.6% | ||||
EMC Corp. 1.75% 12/1/13 (g) | 17,000 | 21,664 | ||
Hutchinson Technology, Inc. 3.25% 1/15/26 | 5,000 | 4,125 | ||
SanDisk Corp. 1% 5/15/13 | 13,000 | 11,603 | ||
| 37,392 | |||
Electronic Equipment & Components - 1.1% | ||||
Anixter International, Inc. 1% 2/15/13 (g) | 4,540 | 4,344 | ||
Itron, Inc. 2.5% 8/1/26 | 5,000 | 5,713 | ||
Newport Corp. 2.5% 2/15/12 (g) | 3,750 | 3,506 | ||
SYNNEX Corp. 4% 5/15/18 (g) | 10,000 | 11,123 | ||
| 24,686 | |||
Internet Software & Services - 0.4% | ||||
VeriSign, Inc. 3.25% 8/15/37 | 10,000 | 9,375 | ||
IT Services - 1.7% | ||||
Alliance Data Systems Corp. 4.75% 5/15/14 (g) | 10,200 | 16,448 | ||
BearingPoint, Inc. 3.1% 12/15/24 (c)(g) | 8,000 | 0 | ||
CACI International, Inc. 2.125% 5/1/14 | 6,000 | 6,008 | ||
DST Systems, Inc. 4.125% 8/15/23 | 8,100 | 7,877 | ||
Telvent GIT SA 5.5% 4/15/15 (g) | 10,000 | 9,700 | ||
| 40,033 | |||
Semiconductors & Semiconductor Equipment - 8.2% | ||||
Advanced Micro Devices, Inc. 6% 5/1/15 | 25,000 | 24,158 | ||
Amkor Technology, Inc. 6% 4/15/14 | 10,890 | 26,157 | ||
Intel Corp. 3.25% 8/1/39 (g) | 58,000 | 69,533 | ||
Micron Technology, Inc. 4.25% 10/15/13 | 6,130 | 11,731 | ||
ON Semiconductor Corp.: | ||||
1.875% 12/15/25 (g) | 3,750 | 4,495 | ||
2.625% 12/15/26 | 35,330 | 34,888 | ||
PMC-Sierra, Inc. 2.25% 10/15/25 | 10,000 | 11,219 | ||
Xilinx, Inc. 3.125% 3/15/37 | 10,000 | 8,838 | ||
| 191,019 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Software - 0.4% | ||||
Nuance Communications, Inc. 2.75% 8/15/27 | $ 9,085 | $ 9,925 | ||
TOTAL INFORMATION TECHNOLOGY | 357,385 | |||
MATERIALS - 1.7% | ||||
Chemicals - 0.8% | ||||
Ferro Corp. 6.5% 8/15/13 | 20,000 | 19,350 | ||
Containers & Packaging - 0.2% | ||||
Owens-Brockway Glass Container, Inc. 3% 6/1/15 (g) | 5,010 | 4,834 | ||
Metals & Mining - 0.7% | ||||
ArcelorMittal SA 5% 5/15/14 | 2,170 | 2,684 | ||
Goldcorp, Inc. 2% 8/1/14 (g) | 5,000 | 5,863 | ||
Newmont Mining Corp. 1.625% 7/15/17 | 5,000 | 6,542 | ||
Steel Dynamics, Inc. 5.125% 6/15/14 | 860 | 965 | ||
| 16,054 | |||
TOTAL MATERIALS | 40,238 | |||
TELECOMMUNICATION SERVICES - 2.0% | ||||
Diversified Telecommunication Services - 0.8% | ||||
Level 3 Communications, Inc. 7% 3/15/15 | 10,000 | 10,688 | ||
Time Warner Telecom, Inc. 2.375% 4/1/26 | 6,000 | 6,593 | ||
| 17,281 | |||
Wireless Telecommunication Services - 1.2% | ||||
Leap Wireless International, Inc. 4.5% 7/15/14 | 33,000 | 27,720 | ||
TOTAL TELECOMMUNICATION SERVICES | 45,001 | |||
TOTAL CONVERTIBLE BONDS | 1,447,788 | |||
Nonconvertible Bonds - 0.4% | ||||
CONSUMER DISCRETIONARY - 0.1% | ||||
Hotels, Restaurants & Leisure - 0.1% | ||||
Ambassadors International, Inc. 10% 1/15/12 pay-in-kind (g) | 2,278 | 2,278 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Nonconvertible Bonds - continued | ||||
FINANCIALS - 0.3% | ||||
Consumer Finance - 0.3% | ||||
GMAC LLC: | ||||
7.5% 12/31/13 | $ 4,264 | $ 4,168 | ||
8% 12/31/18 | 3,812 | 3,621 | ||
| 7,789 | |||
TOTAL NONCONVERTIBLE BONDS | 10,067 | |||
TOTAL CORPORATE BONDS (Cost $1,446,680) | 1,457,855 |
Common Stocks - 14.0% | |||
Shares |
| ||
CONSUMER DISCRETIONARY - 1.4% | |||
Auto Components - 0.4% | |||
Johnson Controls, Inc. | 344,134 | 9,818 | |
Diversified Consumer Services - 0.4% | |||
Service Corp. International | 1,143,000 | 9,761 | |
Hotels, Restaurants & Leisure - 0.6% | |||
Ambassadors International, Inc. (a)(f) | 1,843,012 | 922 | |
Las Vegas Sands Corp. (a)(e) | 558,200 | 13,107 | |
| 14,029 | ||
Media - 0.0% | |||
HMH Holdings, Inc. (a)(j) | 52,880 | 370 | |
HMH Holdings, Inc. warrants 3/9/17 (a) | 164,823 | 165 | |
| 535 | ||
TOTAL CONSUMER DISCRETIONARY | 34,143 | ||
ENERGY - 0.2% | |||
Oil, Gas & Consumable Fuels - 0.2% | |||
McMoRan Exploration Co. (a)(e) | 450,000 | 4,838 | |
FINANCIALS - 6.4% | |||
Commercial Banks - 3.3% | |||
Huntington Bancshares, Inc. | 5,820,500 | 35,854 | |
KeyCorp | 5,214,100 | 41,817 | |
| 77,671 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Diversified Financial Services - 3.1% | |||
Bank of America Corp. | 4,481,985 | $ 70,546 | |
TOTAL FINANCIALS | 148,217 | ||
INFORMATION TECHNOLOGY - 2.1% | |||
Communications Equipment - 0.8% | |||
Finisar Corp. (a)(e) | 1,174,120 | 17,847 | |
Electronic Equipment & Components - 0.4% | |||
Viasystems Group, Inc. (a) | 366,429 | 6,786 | |
Viasystems Group, Inc. (a)(g) | 183,214 | 3,054 | |
| 9,840 | ||
Semiconductors & Semiconductor Equipment - 0.9% | |||
Amkor Technology, Inc. (a) | 843,200 | 5,742 | |
ON Semiconductor Corp. (a) | 2,169,500 | 15,859 | |
| 21,601 | ||
TOTAL INFORMATION TECHNOLOGY | 49,288 | ||
MATERIALS - 3.7% | |||
Chemicals - 3.7% | |||
Celanese Corp. Class A | 2,961,930 | 84,919 | |
UTILITIES - 0.2% | |||
Independent Power Producers & Energy Traders - 0.2% | |||
NRG Energy, Inc. (a) | 167,000 | 3,899 | |
TOTAL COMMON STOCKS (Cost $272,357) | 325,304 | ||
Convertible Preferred Stocks - 19.7% | |||
|
|
|
|
CONSUMER DISCRETIONARY - 2.2% | |||
Automobiles - 0.9% | |||
Ford Motor Co. Capital Trust II 6.50% | 450,000 | 20,493 | |
Leisure Equipment & Products - 0.6% | |||
Callaway Golf Co. 7.50% (g) | 100,000 | 13,363 | |
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Media - 0.7% | |||
Interpublic Group of Companies, Inc. 5.25% | 10,000 | $ 8,304 | |
LodgeNet Entertainment Corp. 10.00% (g) | 4,997 | 7,754 | |
| 16,058 | ||
TOTAL CONSUMER DISCRETIONARY | 49,914 | ||
CONSUMER STAPLES - 1.9% | |||
Food Products - 1.9% | |||
Archer Daniels Midland Co. 6.25% | 600,000 | 21,552 | |
Bunge Ltd.: | |||
4.875% | 237,000 | 18,456 | |
5.125% | 10,000 | 4,823 | |
| 44,831 | ||
ENERGY - 5.6% | |||
Oil, Gas & Consumable Fuels - 5.6% | |||
El Paso Corp.: | |||
4.99% (g) | 119,290 | 117,712 | |
4.99% | 10,000 | 9,868 | |
Goodrich Petroleum Corp. 5.375% | 100,000 | 2,692 | |
| 130,272 | ||
FINANCIALS - 8.3% | |||
Commercial Banks - 5.0% | |||
Huntington Bancshares, Inc. 8.50% | 2,100 | 2,058 | |
Wells Fargo & Co. 7.50% | 120,550 | 113,076 | |
| 115,134 | ||
Diversified Financial Services - 3.0% | |||
Bank of America Corp. Series L, 7.25% | 47,085 | 43,554 | |
Citigroup, Inc. 7.50% | 215,400 | 25,770 | |
| 69,324 | ||
Insurance - 0.3% | |||
Assured Guaranty Ltd. 8.50% | 100,000 | 7,014 | |
TOTAL FINANCIALS | 191,472 | ||
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - 1.7% | |||
Health Care Providers & Services - 1.7% | |||
Tenet Healthcare Corp. 7.00% | 40,000 | $ 40,418 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $487,748) | 456,907 |
Floating Rate Loans - 0.4% | ||||
| Principal Amount (000s) |
| ||
FINANCIALS - 0.4% | ||||
Diversified Financial Services - 0.4% | ||||
CCO Holdings, LLC Tranche 3LN, term loan 2.7556% 9/6/14 (h) (Cost $8,052) | $ 9,000 | 8,100 |
Money Market Funds - 3.9% | |||
Shares |
| ||
Fidelity® Cash Central Fund, 0.23% (i) | 59,103,633 | 59,104 | |
Fidelity Securities Lending Cash Central Fund, 0.24% (b)(i) | 30,112,100 | 30,112 | |
TOTAL MONEY MARKET FUNDS (Cost $89,216) | 89,216 | ||
TOTAL INVESTMENT PORTFOLIO - 100.8% (Cost $2,304,053) | 2,337,382 | ||
NET OTHER ASSETS - (0.8)% | (17,448) | ||
NET ASSETS - 100% | $ 2,319,934 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Non-income producing - Issuer is in default. |
(d) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(e) Security or a portion of the security is on loan at period end. |
(f) Affiliated company |
(g) 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 end of the period, the value of these securities amounted to $519,529,000 or 22.4% of net assets. |
(h) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(i) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(j) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $370,000 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Cost |
HMH Holdings, Inc. | 8/1/08 - 12/31/09 | $ 6,902 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 116 |
Fidelity Securities Lending Cash Central Fund | 29 |
Total | $ 145 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
Ambassadors International, Inc. | $ 758 | $ - | $ - | $ - | $ 922 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 84,057 | $ 33,608 | $ 50,284 | $ 165 |
Consumer Staples | 44,831 | - | 44,831 | - |
Energy | 135,110 | 4,838 | 130,272 | - |
Financials | 339,689 | 217,541 | 122,148 | - |
Health Care | 40,418 | - | 40,418 | - |
Information Technology | 49,288 | 46,234 | 3,054 | - |
Materials | 84,919 | 84,919 | - | - |
Utilities | 3,899 | 3,899 | - | - |
Corporate Bonds | 1,457,855 | - | 1,455,577 | 2,278 |
Floating Rate Loans | 8,100 | - | 8,100 | - |
Money Market Funds | 89,216 | 89,216 | - | - |
Total Investments in Securities: | $ 2,337,382 | $ 480,255 | $ 1,854,684 | $ 2,443 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
(Amounts in thousands) |
|
Investments in Securities: | |
Beginning Balance | $ 3,577 |
Total Realized Gain (Loss) | 6,233 |
Total Unrealized Gain (Loss) | 1,260 |
Cost of Purchases | 140 |
Proceeds of Sales | (9,558) |
Amortization/Accretion | 791 |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 2,443 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at May 31, 2010 | $ 117 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 4.6% |
BBB | 3.2% |
BB | 13.4% |
B | 16.3% |
CCC,CC,C | 10.9% |
Not Rated | 14.8% |
Equities | 33.7% |
Short-Term Investments and Net Other Assets | 3.1% |
| 100.0% |
We have used ratings from Moody's Investors Service, Inc. Where Moody's ratings are not available, we have used S&P ratings. All ratings are as of the report date and do not reflect subsequent downgrades. |
Income Tax Information |
At November 30, 2009, the fund had a capital loss carryforward of approximately $373,212,000 of which $52,524,000 and $320,688,000 will expire on November 30, 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
The fund intends to elect to defer to its fiscal year ending November 30, 2010 approximately $499,000 of losses recognized during the period November 1, 2009 to November 30, 2009. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $29,021) - See accompanying schedule: Unaffiliated issuers (cost $2,210,197) | $ 2,247,244 |
|
Fidelity Central Funds (cost $89,216) | 89,216 |
|
Other affiliated issuers (cost $4,640) | 922 |
|
Total Investments (cost $2,304,053) |
| $ 2,337,382 |
Receivable for fund shares sold | 1,480 | |
Dividends receivable | 3,559 | |
Interest receivable | 14,425 | |
Distributions receivable from Fidelity Central Funds | 20 | |
Prepaid expenses | 2 | |
Total assets | 2,356,868 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,194 | |
Payable for fund shares redeemed | 1,254 | |
Accrued management fee | 667 | |
Distribution fees payable | 8 | |
Other affiliated payables | 658 | |
Other payables and accrued expenses | 41 | |
Collateral on securities loaned, at value | 30,112 | |
Total liabilities | 36,934 | |
|
|
|
Net Assets | $ 2,319,934 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,586,263 | |
Undistributed net investment income | 22,482 | |
Accumulated undistributed net realized gain (loss) on investments | (322,140) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 33,329 | |
Net Assets | $ 2,319,934 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Calculation of Maximum Offering Price | $ 22.26 | |
|
|
|
Maximum offering price per share (100/94.25 of $22.26) | $ 23.62 | |
Class T: | $ 22.25 | |
|
|
|
Maximum offering price per share (100/96.50 of $22.25) | $ 23.06 | |
Class B: | $ 22.20 | |
|
|
|
Class C: | $ 22.19 | |
|
|
|
Convertible Securities: | $ 22.31 | |
|
|
|
Institutional Class: | $ 22.30 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Operations
Amounts in thousands | Six months ended May 31, 2010 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 18,124 |
Interest |
| 32,101 |
Income from Fidelity Central Funds |
| 145 |
Total income |
| 50,370 |
|
|
|
Expenses | ||
Management fee | $ 5,613 | |
Performance adjustment | (554) | |
Transfer agent fees | 2,415 | |
Distribution fees | 36 | |
Accounting and security lending fees | 377 | |
Custodian fees and expenses | 20 | |
Independent trustees' compensation | 7 | |
Registration fees | 117 | |
Audit | 41 | |
Legal | 15 | |
Miscellaneous | 18 | |
Total expenses before reductions | 8,105 | |
Expense reductions | (46) | 8,059 |
Net investment income (loss) | 42,311 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 56,858 | |
Capital gain distribution from Fidelity Central Funds | 1 | |
Total net realized gain (loss) |
| 56,859 |
Change in net unrealized appreciation (depreciation) on investment securities | 62,252 | |
Net gain (loss) | 119,111 | |
Net increase (decrease) in net assets resulting from operations | $ 161,422 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Amounts in thousands | Six months ended May 31, 2010 (Unaudited) | Year ended November 30, 2009 |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 42,311 | $ 101,950 |
Net realized gain (loss) | 56,859 | (232,140) |
Change in net unrealized appreciation (depreciation) | 62,252 | 1,040,568 |
Net increase (decrease) in net assets resulting | 161,422 | 910,378 |
Distributions to shareholders from net investment income | (49,664) | (103,307) |
Share transactions - net increase (decrease) | (144,502) | 106,423 |
Total increase (decrease) in net assets | (32,744) | 913,494 |
|
|
|
Net Assets | ||
Beginning of period | 2,352,678 | 1,439,184 |
End of period (including undistributed net investment income of $22,482 and undistributed net investment income of $29,835, respectively) | $ 2,319,934 | $ 2,352,678 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.25 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .36 | .58 |
Net realized and unrealized gain (loss) | 1.08 | 8.53 |
Total from investment operations | 1.44 | 9.11 |
Distributions from net investment income | (.43) | (.65) |
Net asset value, end of period | $ 22.26 | $ 21.25 |
Total Return B, C, D | 6.81% | 72.83% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | .93% A | 1.04% A |
Expenses net of fee waivers, if any | .93% A | 1.04% A |
Expenses net of all reductions | .93% A | 1.04% A |
Net investment income (loss) | 3.18% A | 3.70% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 10 | $ 6 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class T
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.25 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .33 | .57 |
Net realized and unrealized gain (loss) | 1.07 | 8.52 |
Total from investment operations | 1.40 | 9.09 |
Distributions from net investment income | (.40) | (.63) |
Net asset value, end of period | $ 22.25 | $ 21.25 |
Total Return B, C, D | 6.62% | 72.60% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.20% A | 1.25% A |
Expenses net of fee waivers, if any | 1.20% A | 1.25% A |
Expenses net of all reductions | 1.20% A | 1.25% A |
Net investment income (loss) | 2.91% A | 3.83% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 3 | $ 2 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class B
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.22 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .27 | .50 |
Net realized and unrealized gain (loss) | 1.07 | 8.51 |
Total from investment operations | 1.34 | 9.01 |
Distributions from net investment income | (.36) | (.58) |
Net asset value, end of period | $ 22.20 | $ 21.22 |
Total Return B, C, D | 6.34% | 71.85% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.74% A | 1.78% A |
Expenses net of fee waivers, if any | 1.74% A | 1.78% A |
Expenses net of all reductions | 1.74% A | 1.78% A |
Net investment income (loss) | 2.37% A | 3.41% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 1 | $ 1 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class C
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.20 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .27 | .47 |
Net realized and unrealized gain (loss) | 1.07 | 8.53 |
Total from investment operations | 1.34 | 9.00 |
Distributions from net investment income | (.35) | (.59) |
Net asset value, end of period | $ 22.19 | $ 21.20 |
Total Return B, C, D | 6.36% | 71.81% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.74% A | 1.80% A |
Expenses net of fee waivers, if any | 1.74% A | 1.80% A |
Expenses net of all reductions | 1.74% A | 1.80% A |
Net investment income (loss) | 2.37% A | 3.17% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 4 | $ 2 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Convertible Securities
| Six months ended May 31, 2010 | Years ended November 30, | ||||
| (Unaudited) | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 21.30 | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 | $ 21.06 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .39 | .96 | .76 | .59 | .49 | .41 |
Net realized and unrealized gain (loss) | 1.07 | 7.78 | (14.43) | 3.43 | 3.09 | 1.03 |
Total from investment operations | 1.46 | 8.74 | (13.67) | 4.02 | 3.58 | 1.44 |
Distributions from net investment income | (.45) | (.99) | (.64) | (.50) | (.50) | (.34) |
Distributions from net realized gain | - | - | (.85) | (.02) | (.01) | (.02) |
Total distributions | (.45) | (.99) | (1.49) | (.52) | (.51) | (.36) |
Net asset value, end of period | $ 22.31 | $ 21.30 | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 |
Total Return B, C | 6.90% | 67.65% | (50.09)% | 16.02% | 16.38% | 6.91% |
Ratios to Average Net Assets E, G |
|
|
|
|
| |
Expenses before reductions | .66% A | .70% | .78% | .79% | .83% | .70% |
Expenses net of fee waivers, if any | .65% A | .69% | .78% | .79% | .83% | .70% |
Expenses net of all reductions | .65% A | .69% | .78% | .79% | .83% | .69% |
Net investment income (loss) | 3.46% A | 5.59% | 3.06% | 2.11% | 2.09% | 1.95% |
Supplemental Data |
|
|
|
|
| |
Net assets, end of period (in millions) | $ 2,294 | $ 2,340 | $ 1,439 | $ 2,919 | $ 2,083 | $ 1,754 |
Portfolio turnover rate F | 36% A | 31% | 39% | 24% | 35% | 81% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Institutional Class
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.29 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .38 | .63 |
Net realized and unrealized gain (loss) | 1.09 | 8.54 |
Total from investment operations | 1.47 | 9.17 |
Distributions from net investment income | (.46) | (.67) |
Total distributions | (.46) | (.67) |
Net asset value, end of period | $ 22.30 | $ 21.29 |
Total Return B, C | 6.91% | 73.31% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .67% A | .73% A |
Expenses net of fee waivers, if any | .67% A | .73% A |
Expenses net of all reductions | .67% A | .73% A |
Net investment income (loss) | 3.44% A | 4.19% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 9 | $ 3 |
Portfolio turnover rate F | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2010 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Convertible Securities Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, Convertible Securities and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
(ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds and floating rate loans, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds,including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
gain distributions. The change in estimate has no impact on total net asset or total return of the fund. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 217,040 |
Gross unrealized depreciation | (177,080) |
Net unrealized appreciation (depreciation) | $ 39,960 |
|
|
Tax cost | $ 2,297,422 |
Semiannual Report
4. Operating Policies.
Restricted Securities. The Fund may 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. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short sales and short-term securities, aggregated $407,796 and $452,345, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .15% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Convertible Securities as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .41% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 11 | $ 1 |
Class T | .25% | .25% | 7 | - |
Class B | .75% | .25% | 5 | 4 |
Class C | .75% | .25% | 13 | 8 |
|
|
| $ 36 | $ 13 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 13 |
Class T | 1 |
Class B* | 1 |
Class C* | - |
| $ 15 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
| Amount | % of |
Class A | $ 10 | .22 |
Class T | 3 | .23 |
Class B | 1 | .28 |
Class C | 4 | .28 |
Convertible Securities | 2,392 | .20 |
Institutional Class | 5 | .21 |
| $ 2,415 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $1 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $5 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
8. Security Lending - continued
determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $29.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Convertible Securities operating expenses. During the period, this reimbursement reduced the Class' expenses by $45. Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $1 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income |
|
|
Class A | $ 170 | $ 62 |
Class T | 42 | 28 |
Class B | 14 | 9 |
Class C | 37 | 24 |
Convertible Securities | 49,322 | 103,134 |
Institutional Class | 79 | 50 |
Total | $ 49,664 | $ 103,307 |
A Distributions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
Semiannual Report
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Six months ended May 31, | Year ended November 30, | Six months ended May 31, | Year ended | |
Class A |
|
|
|
|
Shares sold | 423 | 306 | $ 9,565 | $ 5,806 |
Reinvestment of distributions | 7 | 3 | 155 | 54 |
Shares redeemed | (251) | (39) | (5,839) | (801) |
Net increase (decrease) | 179 | 270 | $ 3,881 | $ 5,059 |
Class T |
|
|
|
|
Shares sold | 192 | 95 | $ 4,469 | $ 1,656 |
Reinvestment of distributions | 2 | 2 | 41 | 27 |
Shares redeemed | (155) | (6) | (3,432) | (110) |
Net increase (decrease) | 39 | 91 | $ 1,078 | $ 1,573 |
Class B |
|
|
|
|
Shares sold | 34 | 30 | $ 773 | $ 491 |
Reinvestment of distributions | - | - | 10 | 8 |
Shares redeemed | (12) | - | (278) | (5) |
Net increase (decrease) | 22 | 30 | $ 505 | $ 494 |
Class C |
|
|
|
|
Shares sold | 98 | 91 | $ 2,187 | $ 1,573 |
Reinvestment of distributions | 1 | 1 | 33 | 23 |
Shares redeemed | (16) | (13) | (356) | (248) |
Net increase (decrease) | 83 | 79 | $ 1,864 | $ 1,348 |
Convertible Securities |
|
|
|
|
Shares sold | 11,644 | 36,051 | $ 262,941 | $ 630,445 |
Reinvestment of distributions | 2,014 | 6,070 | 44,619 | 92,808 |
Shares redeemed | (20,710) | (38,505) | (464,975) | (627,813) |
Net increase (decrease) | (7,052) | 3,616 | $ (157,415) | $ 95,440 |
Institutional Class |
|
|
|
|
Shares sold | 282 | 173 | $ 6,453 | $ 3,107 |
Reinvestment of distributions | 3 | 2 | 70 | 44 |
Shares redeemed | (41) | (30) | (938) | (642) |
Net increase (decrease) | 244 | 145 | $ 5,585 | $ 2,509 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
FIL Investments (Japan) Limited
FIL Investment Advisors
FIL Investment Advisors (U.K.) Ltd.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
ACVS-USAN-0710 1.884069.101
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Convertible Securities
Fund - Institutional Class
Semiannual Report
May 31, 2010
Institutional Class is a class of Fidelity® Convertible
Securities Fund
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
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 LLC or an affiliated company.
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.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
A yearlong uptrend in global equity markets came under significant pressure in May 2010 when investor sentiment turned bearish amid growing concern that Europe's debt crisis would expand and slow or derail economic recovery. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2009 to May 31, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Semiannual Report
Shareholder Expense Example - continued
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | .93% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,068.10 | $ 4.80 |
HypotheticalA |
| $ 1,000.00 | $ 1,020.29 | $ 4.68 |
Class T | 1.20% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,066.20 | $ 6.18 |
HypotheticalA |
| $ 1,000.00 | $ 1,018.95 | $ 6.04 |
Class B | 1.74% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,063.40 | $ 8.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,016.26 | $ 8.75 |
Class C | 1.74% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,063.60 | $ 8.95 |
HypotheticalA |
| $ 1,000.00 | $ 1,016.26 | $ 8.75 |
Convertible Securities | .65% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,069.00 | $ 3.35 |
HypotheticalA |
| $ 1,000.00 | $ 1,021.69 | $ 3.28 |
Institutional Class | .67% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,069.10 | $ 3.46 |
HypotheticalA |
| $ 1,000.00 | $ 1,021.59 | $ 3.38 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Investments as of May 31, 2010 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
El Paso Corp. 4.99% | 5.1 | 4.5 |
Wells Fargo & Co. 7.50% | 4.9 | 4.5 |
Peabody Energy Corp. 4.75% 12/15/66 | 4.6 | 4.9 |
Celanese Corp. Class A | 3.7 | 0.0 |
Bank of America Corp. | 3.1 | 3.5 |
Intel Corp. 3.25% 8/1/39 | 3.0 | 0.8 |
Chesapeake Energy Corp. 2.5% 5/15/37 | 2.4 | 2.5 |
Ford Motor Co. 4.25% 11/15/16 | 2.4 | 0.0 |
Bank of America Corp. Series L, 7.25% | 1.9 | 1.7 |
Hertz Global Holdings, Inc. 5.25% 6/1/14 | 1.9 | 1.7 |
| 33.0 | |
Top Five Market Sectors as of May 31, 2010 | ||
| % of fund's | % of fund's net assets |
Energy | 19.2 | 17.9 |
Information Technology | 17.5 | 17.2 |
Financials | 16.7 | 14.2 |
Industrials | 11.8 | 9.1 |
Consumer Discretionary | 10.6 | 6.7 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2010 * | As of November 30, 2009 ** | ||||||
Convertible |
| Convertible |
| ||||
Stocks 14.0% |
| Stocks 9.5% |
| ||||
Nonconvertible |
| Nonconvertible |
| ||||
Short-Term |
| Short-Term |
| ||||
Floating Rate Loans 0.4% |
| Floating Rate Loans 0.7% |
| ||||
* Foreign investments | 3.5% |
| ** Foreign investments | 3.3% |
|
Semiannual Report
Investments May 31, 2010 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 62.8% | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - 62.4% | ||||
CONSUMER DISCRETIONARY - 6.9% | ||||
Auto Components - 0.0% | ||||
BorgWarner, Inc. 3.5% 4/15/12 | $ 910 | $ 1,166 | ||
Automobiles - 2.4% | ||||
Ford Motor Co. 4.25% 11/15/16 | 40,000 | 56,244 | ||
Diversified Consumer Services - 0.7% | ||||
Ingersoll-Rand Global Holding Co. Ltd. 4.5% 4/15/12 | 490 | 1,033 | ||
Regis Corp. 5% 7/15/14 | 4,230 | 5,687 | ||
Stewart Enterprises, Inc. 3.375% 7/15/16 (g) | 11,000 | 9,584 | ||
| 16,304 | |||
Hotels, Restaurants & Leisure - 1.3% | ||||
MGM Mirage, Inc. 4.25% 4/15/15 (g) | 6,300 | 5,808 | ||
WMS Industries, Inc.: | ||||
2.75% 7/15/10 (g) | 4,000 | 14,054 | ||
2.75% 7/15/10 | 2,800 | 9,838 | ||
| 29,700 | |||
Household Durables - 0.1% | ||||
Newell Rubbermaid, Inc. 5.5% 3/15/14 | 590 | 1,201 | ||
Media - 1.7% | ||||
Regal Entertainment Group 6.25% 3/15/11 (g) | 19,297 | 19,538 | ||
Virgin Media, Inc. 6.5% 11/15/16 | 8,000 | 9,082 | ||
XM Satellite Radio, Inc. 7% 12/1/14 (g) | 10,000 | 9,850 | ||
| 38,470 | |||
Specialty Retail - 0.7% | ||||
Asbury Automotive Group, Inc. 3% 9/15/12 (g) | 3,000 | 2,831 | ||
Charming Shoppes, Inc. 1.125% 5/1/14 | 10,000 | 7,950 | ||
Sonic Automotive, Inc. 5% 10/1/29 | 1,180 | 1,220 | ||
United Auto Group, Inc. 3.5% 4/1/26 | 4,533 | 4,550 | ||
| 16,551 | |||
TOTAL CONSUMER DISCRETIONARY | 159,636 | |||
CONSUMER STAPLES - 4.6% | ||||
Beverages - 0.6% | ||||
Molson Coors Brewing Co. 2.5% 7/30/13 | 14,000 | 14,861 | ||
Food & Staples Retailing - 2.4% | ||||
Nash-Finch Co. 1.6314% 3/15/35 (d) | 24,480 | 10,634 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
CONSUMER STAPLES - continued | ||||
Food & Staples Retailing - continued | ||||
Rite Aid Corp. 8.5% 5/15/15 | $ 34,100 | $ 31,244 | ||
The Pantry, Inc. 3% 11/15/12 | 14,000 | 12,871 | ||
| 54,749 | |||
Food Products - 1.6% | ||||
Smithfield Foods, Inc. 4% 6/30/13 | 22,250 | 22,486 | ||
Tyson Foods, Inc. 3.25% 10/15/13 | 13,000 | 15,486 | ||
| 37,972 | |||
TOTAL CONSUMER STAPLES | 107,582 | |||
ENERGY - 13.4% | ||||
Energy Equipment & Services - 2.5% | ||||
Exterran Holdings, Inc. 4.25% 6/15/14 | 10,000 | 12,678 | ||
Global Industries Ltd. 2.75% 8/1/27 (g) | 10,000 | 6,250 | ||
Hercules Offshore, Inc. 3.375% 6/1/38 (d) | 30,000 | 22,308 | ||
Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (d)(g) | 5,000 | 3,970 | ||
Oil States International, Inc. 2.375% 7/1/25 (g) | 4,500 | 5,961 | ||
SESI LLC 1.5% 12/15/26 (d)(g) | 7,000 | 6,467 | ||
| 57,634 | |||
Oil, Gas & Consumable Fuels - 10.9% | ||||
Alpha Natural Resources, Inc. 2.375% 4/15/15 | 25,000 | 25,040 | ||
Chesapeake Energy Corp. 2.5% 5/15/37 | 70,250 | 56,404 | ||
Goodrich Petroleum Corp. 3.25% 12/1/26 | 6,000 | 5,640 | ||
International Coal Group, Inc. 4% 4/1/17 | 2,160 | 2,172 | ||
Massey Energy Co. 3.25% 8/1/15 | 5,000 | 4,128 | ||
Peabody Energy Corp. 4.75% 12/15/66 | 107,250 | 107,518 | ||
Pioneer Natural Resources Co. 2.875% 1/15/38 | 20,000 | 23,875 | ||
Quicksilver Resources, Inc. 1.875% 11/1/24 (g) | 14,500 | 14,897 | ||
Western Refining, Inc. 5.75% 6/15/14 | 17,810 | 13,641 | ||
| 253,315 | |||
TOTAL ENERGY | 310,949 | |||
FINANCIALS - 1.3% | ||||
Diversified Financial Services - 1.3% | ||||
The NASDAQ Stock Market, Inc. 2.5% 8/15/13 | 30,000 | 28,800 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
HEALTH CARE - 5.3% | ||||
Health Care Equipment & Supplies - 3.4% | ||||
Beckman Coulter, Inc. 2.5% 12/15/36 (g) | $ 8,500 | $ 9,095 | ||
Inverness Medical Innovations, Inc.: | ||||
3% 5/15/16 (g) | 21,000 | 20,790 | ||
3% 5/15/16 | 10,000 | 9,900 | ||
Kinetic Concepts, Inc. 3.25% 4/15/15 (g) | 15,000 | 15,359 | ||
Medtronic, Inc. 1.625% 4/15/13 | 16,000 | 16,290 | ||
SonoSite, Inc. 3.75% 7/15/14 | 7,000 | 7,135 | ||
| 78,569 | |||
Health Care Providers & Services - 0.2% | ||||
Omnicare, Inc. 3.25% 12/15/35 | 7,000 | 5,749 | ||
Life Sciences Tools & Services - 0.2% | ||||
Charles River Laboratories International, Inc. 2.25% 6/15/13 (g) | 4,000 | 3,809 | ||
Pharmaceuticals - 1.5% | ||||
Biovail Corp. 5.375% 8/1/14 | 10,000 | 11,891 | ||
Nektar Therapeutics 3.25% 9/28/12 | 9,000 | 8,488 | ||
Valeant Pharmaceuticals International 4% 11/15/13 | 10,000 | 15,200 | ||
| 35,579 | |||
TOTAL HEALTH CARE | 123,706 | |||
INDUSTRIALS - 11.8% | ||||
Aerospace & Defense - 0.9% | ||||
Alliant Techsystems, Inc. 2.75% 9/15/11 | 14,000 | 13,799 | ||
GenCorp, Inc. 4.0625% 12/31/39 (g) | 7,830 | 7,027 | ||
| 20,826 | |||
Airlines - 3.5% | ||||
AirTran Holdings, Inc. 7% 7/1/23 | 10,000 | 10,125 | ||
AMR Corp. 6.25% 10/15/14 | 7,990 | 8,380 | ||
Continental Airlines, Inc. 4.5% 1/15/15 | 9,280 | 11,554 | ||
U.S. Airways Group, Inc. 7.25% 5/15/14 | 11,200 | 23,449 | ||
UAL Corp.: | ||||
4.5% 6/30/21 (g) | 10,500 | 10,215 | ||
4.5% 6/30/21 | 5,000 | 4,865 | ||
6% 10/15/29 | 3,600 | 8,729 | ||
US Airways Group, Inc. 7% 9/30/20 (g) | 4,810 | 4,792 | ||
| 82,109 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INDUSTRIALS - continued | ||||
Commercial Services & Supplies - 1.0% | ||||
Metalico, Inc. 7% 4/30/28 | $ 32,500 | $ 24,050 | ||
Construction & Engineering - 0.4% | ||||
MasTec, Inc. 4.25% 12/15/14 (g) | 8,000 | 8,200 | ||
Electrical Equipment - 2.0% | ||||
C&D Technologies, Inc.: | ||||
5.25% 11/1/25 (g) | 4,400 | 3,306 | ||
5.25% 11/1/25 | 32,596 | 24,488 | ||
Evergreen Solar, Inc. 4% 7/15/13 | 4,000 | 1,360 | ||
General Cable Corp. 4.5% 11/15/29 (d) | 14,800 | 15,610 | ||
SunPower Corp. 4.75% 4/15/14 | 2,020 | 1,603 | ||
| 46,367 | |||
Industrial Conglomerates - 0.1% | ||||
Textron, Inc. 4.5% 5/1/13 | 1,440 | 2,437 | ||
Machinery - 1.1% | ||||
Greenbrier Companies, Inc.: | ||||
2.375% 5/15/26 (g) | 5,500 | 4,613 | ||
2.375% 5/15/26 | 8,000 | 6,710 | ||
Terex Corp. 4% 6/1/15 | 1,090 | 1,639 | ||
Trinity Industries, Inc. 3.875% 6/1/36 | 15,000 | 12,188 | ||
| 25,150 | |||
Marine - 0.9% | ||||
Excel Maritime Carriers Ltd. 1.875% 10/15/27 (g) | 34,000 | 21,080 | ||
Road & Rail - 1.9% | ||||
Hertz Global Holdings, Inc. 5.25% 6/1/14 | 28,000 | 43,067 | ||
Trading Companies & Distributors - 0.0% | ||||
United Rentals, Inc. 4% 11/15/15 | 960 | 1,205 | ||
TOTAL INDUSTRIALS | 274,491 | |||
INFORMATION TECHNOLOGY - 15.4% | ||||
Communications Equipment - 2.0% | ||||
CommScope, Inc. 3.25% 7/1/15 | 10,000 | 12,070 | ||
Finisar Corp. 5% 10/15/29 (g) | 2,500 | 3,972 | ||
JDS Uniphase Corp. 1% 5/15/26 (g) | 14,000 | 12,390 | ||
L-3 Communications Corp. 3% 8/1/35 | 3,000 | 3,034 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Communications Equipment - continued | ||||
Lucent Technologies, Inc. 2.875% 6/15/25 | $ 10,000 | $ 8,275 | ||
Symmetricom, Inc. 3.25% 6/15/25 | 5,214 | 5,214 | ||
| 44,955 | |||
Computers & Peripherals - 1.6% | ||||
EMC Corp. 1.75% 12/1/13 (g) | 17,000 | 21,664 | ||
Hutchinson Technology, Inc. 3.25% 1/15/26 | 5,000 | 4,125 | ||
SanDisk Corp. 1% 5/15/13 | 13,000 | 11,603 | ||
| 37,392 | |||
Electronic Equipment & Components - 1.1% | ||||
Anixter International, Inc. 1% 2/15/13 (g) | 4,540 | 4,344 | ||
Itron, Inc. 2.5% 8/1/26 | 5,000 | 5,713 | ||
Newport Corp. 2.5% 2/15/12 (g) | 3,750 | 3,506 | ||
SYNNEX Corp. 4% 5/15/18 (g) | 10,000 | 11,123 | ||
| 24,686 | |||
Internet Software & Services - 0.4% | ||||
VeriSign, Inc. 3.25% 8/15/37 | 10,000 | 9,375 | ||
IT Services - 1.7% | ||||
Alliance Data Systems Corp. 4.75% 5/15/14 (g) | 10,200 | 16,448 | ||
BearingPoint, Inc. 3.1% 12/15/24 (c)(g) | 8,000 | 0 | ||
CACI International, Inc. 2.125% 5/1/14 | 6,000 | 6,008 | ||
DST Systems, Inc. 4.125% 8/15/23 | 8,100 | 7,877 | ||
Telvent GIT SA 5.5% 4/15/15 (g) | 10,000 | 9,700 | ||
| 40,033 | |||
Semiconductors & Semiconductor Equipment - 8.2% | ||||
Advanced Micro Devices, Inc. 6% 5/1/15 | 25,000 | 24,158 | ||
Amkor Technology, Inc. 6% 4/15/14 | 10,890 | 26,157 | ||
Intel Corp. 3.25% 8/1/39 (g) | 58,000 | 69,533 | ||
Micron Technology, Inc. 4.25% 10/15/13 | 6,130 | 11,731 | ||
ON Semiconductor Corp.: | ||||
1.875% 12/15/25 (g) | 3,750 | 4,495 | ||
2.625% 12/15/26 | 35,330 | 34,888 | ||
PMC-Sierra, Inc. 2.25% 10/15/25 | 10,000 | 11,219 | ||
Xilinx, Inc. 3.125% 3/15/37 | 10,000 | 8,838 | ||
| 191,019 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Software - 0.4% | ||||
Nuance Communications, Inc. 2.75% 8/15/27 | $ 9,085 | $ 9,925 | ||
TOTAL INFORMATION TECHNOLOGY | 357,385 | |||
MATERIALS - 1.7% | ||||
Chemicals - 0.8% | ||||
Ferro Corp. 6.5% 8/15/13 | 20,000 | 19,350 | ||
Containers & Packaging - 0.2% | ||||
Owens-Brockway Glass Container, Inc. 3% 6/1/15 (g) | 5,010 | 4,834 | ||
Metals & Mining - 0.7% | ||||
ArcelorMittal SA 5% 5/15/14 | 2,170 | 2,684 | ||
Goldcorp, Inc. 2% 8/1/14 (g) | 5,000 | 5,863 | ||
Newmont Mining Corp. 1.625% 7/15/17 | 5,000 | 6,542 | ||
Steel Dynamics, Inc. 5.125% 6/15/14 | 860 | 965 | ||
| 16,054 | |||
TOTAL MATERIALS | 40,238 | |||
TELECOMMUNICATION SERVICES - 2.0% | ||||
Diversified Telecommunication Services - 0.8% | ||||
Level 3 Communications, Inc. 7% 3/15/15 | 10,000 | 10,688 | ||
Time Warner Telecom, Inc. 2.375% 4/1/26 | 6,000 | 6,593 | ||
| 17,281 | |||
Wireless Telecommunication Services - 1.2% | ||||
Leap Wireless International, Inc. 4.5% 7/15/14 | 33,000 | 27,720 | ||
TOTAL TELECOMMUNICATION SERVICES | 45,001 | |||
TOTAL CONVERTIBLE BONDS | 1,447,788 | |||
Nonconvertible Bonds - 0.4% | ||||
CONSUMER DISCRETIONARY - 0.1% | ||||
Hotels, Restaurants & Leisure - 0.1% | ||||
Ambassadors International, Inc. 10% 1/15/12 pay-in-kind (g) | 2,278 | 2,278 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Nonconvertible Bonds - continued | ||||
FINANCIALS - 0.3% | ||||
Consumer Finance - 0.3% | ||||
GMAC LLC: | ||||
7.5% 12/31/13 | $ 4,264 | $ 4,168 | ||
8% 12/31/18 | 3,812 | 3,621 | ||
| 7,789 | |||
TOTAL NONCONVERTIBLE BONDS | 10,067 | |||
TOTAL CORPORATE BONDS (Cost $1,446,680) | 1,457,855 |
Common Stocks - 14.0% | |||
Shares |
| ||
CONSUMER DISCRETIONARY - 1.4% | |||
Auto Components - 0.4% | |||
Johnson Controls, Inc. | 344,134 | 9,818 | |
Diversified Consumer Services - 0.4% | |||
Service Corp. International | 1,143,000 | 9,761 | |
Hotels, Restaurants & Leisure - 0.6% | |||
Ambassadors International, Inc. (a)(f) | 1,843,012 | 922 | |
Las Vegas Sands Corp. (a)(e) | 558,200 | 13,107 | |
| 14,029 | ||
Media - 0.0% | |||
HMH Holdings, Inc. (a)(j) | 52,880 | 370 | |
HMH Holdings, Inc. warrants 3/9/17 (a) | 164,823 | 165 | |
| 535 | ||
TOTAL CONSUMER DISCRETIONARY | 34,143 | ||
ENERGY - 0.2% | |||
Oil, Gas & Consumable Fuels - 0.2% | |||
McMoRan Exploration Co. (a)(e) | 450,000 | 4,838 | |
FINANCIALS - 6.4% | |||
Commercial Banks - 3.3% | |||
Huntington Bancshares, Inc. | 5,820,500 | 35,854 | |
KeyCorp | 5,214,100 | 41,817 | |
| 77,671 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Diversified Financial Services - 3.1% | |||
Bank of America Corp. | 4,481,985 | $ 70,546 | |
TOTAL FINANCIALS | 148,217 | ||
INFORMATION TECHNOLOGY - 2.1% | |||
Communications Equipment - 0.8% | |||
Finisar Corp. (a)(e) | 1,174,120 | 17,847 | |
Electronic Equipment & Components - 0.4% | |||
Viasystems Group, Inc. (a) | 366,429 | 6,786 | |
Viasystems Group, Inc. (a)(g) | 183,214 | 3,054 | |
| 9,840 | ||
Semiconductors & Semiconductor Equipment - 0.9% | |||
Amkor Technology, Inc. (a) | 843,200 | 5,742 | |
ON Semiconductor Corp. (a) | 2,169,500 | 15,859 | |
| 21,601 | ||
TOTAL INFORMATION TECHNOLOGY | 49,288 | ||
MATERIALS - 3.7% | |||
Chemicals - 3.7% | |||
Celanese Corp. Class A | 2,961,930 | 84,919 | |
UTILITIES - 0.2% | |||
Independent Power Producers & Energy Traders - 0.2% | |||
NRG Energy, Inc. (a) | 167,000 | 3,899 | |
TOTAL COMMON STOCKS (Cost $272,357) | 325,304 | ||
Convertible Preferred Stocks - 19.7% | |||
|
|
|
|
CONSUMER DISCRETIONARY - 2.2% | |||
Automobiles - 0.9% | |||
Ford Motor Co. Capital Trust II 6.50% | 450,000 | 20,493 | |
Leisure Equipment & Products - 0.6% | |||
Callaway Golf Co. 7.50% (g) | 100,000 | 13,363 | |
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Media - 0.7% | |||
Interpublic Group of Companies, Inc. 5.25% | 10,000 | $ 8,304 | |
LodgeNet Entertainment Corp. 10.00% (g) | 4,997 | 7,754 | |
| 16,058 | ||
TOTAL CONSUMER DISCRETIONARY | 49,914 | ||
CONSUMER STAPLES - 1.9% | |||
Food Products - 1.9% | |||
Archer Daniels Midland Co. 6.25% | 600,000 | 21,552 | |
Bunge Ltd.: | |||
4.875% | 237,000 | 18,456 | |
5.125% | 10,000 | 4,823 | |
| 44,831 | ||
ENERGY - 5.6% | |||
Oil, Gas & Consumable Fuels - 5.6% | |||
El Paso Corp.: | |||
4.99% (g) | 119,290 | 117,712 | |
4.99% | 10,000 | 9,868 | |
Goodrich Petroleum Corp. 5.375% | 100,000 | 2,692 | |
| 130,272 | ||
FINANCIALS - 8.3% | |||
Commercial Banks - 5.0% | |||
Huntington Bancshares, Inc. 8.50% | 2,100 | 2,058 | |
Wells Fargo & Co. 7.50% | 120,550 | 113,076 | |
| 115,134 | ||
Diversified Financial Services - 3.0% | |||
Bank of America Corp. Series L, 7.25% | 47,085 | 43,554 | |
Citigroup, Inc. 7.50% | 215,400 | 25,770 | |
| 69,324 | ||
Insurance - 0.3% | |||
Assured Guaranty Ltd. 8.50% | 100,000 | 7,014 | |
TOTAL FINANCIALS | 191,472 | ||
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - 1.7% | |||
Health Care Providers & Services - 1.7% | |||
Tenet Healthcare Corp. 7.00% | 40,000 | $ 40,418 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $487,748) | 456,907 |
Floating Rate Loans - 0.4% | ||||
| Principal Amount (000s) |
| ||
FINANCIALS - 0.4% | ||||
Diversified Financial Services - 0.4% | ||||
CCO Holdings, LLC Tranche 3LN, term loan 2.7556% 9/6/14 (h) (Cost $8,052) | $ 9,000 | 8,100 |
Money Market Funds - 3.9% | |||
Shares |
| ||
Fidelity® Cash Central Fund, 0.23% (i) | 59,103,633 | 59,104 | |
Fidelity Securities Lending Cash Central Fund, 0.24% (b)(i) | 30,112,100 | 30,112 | |
TOTAL MONEY MARKET FUNDS (Cost $89,216) | 89,216 | ||
TOTAL INVESTMENT PORTFOLIO - 100.8% (Cost $2,304,053) | 2,337,382 | ||
NET OTHER ASSETS - (0.8)% | (17,448) | ||
NET ASSETS - 100% | $ 2,319,934 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Non-income producing - Issuer is in default. |
(d) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(e) Security or a portion of the security is on loan at period end. |
(f) Affiliated company |
(g) 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 end of the period, the value of these securities amounted to $519,529,000 or 22.4% of net assets. |
(h) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(i) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(j) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $370,000 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Cost |
HMH Holdings, Inc. | 8/1/08 - 12/31/09 | $ 6,902 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 116 |
Fidelity Securities Lending Cash Central Fund | 29 |
Total | $ 145 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
Ambassadors International, Inc. | $ 758 | $ - | $ - | $ - | $ 922 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 84,057 | $ 33,608 | $ 50,284 | $ 165 |
Consumer Staples | 44,831 | - | 44,831 | - |
Energy | 135,110 | 4,838 | 130,272 | - |
Financials | 339,689 | 217,541 | 122,148 | - |
Health Care | 40,418 | - | 40,418 | - |
Information Technology | 49,288 | 46,234 | 3,054 | - |
Materials | 84,919 | 84,919 | - | - |
Utilities | 3,899 | 3,899 | - | - |
Corporate Bonds | 1,457,855 | - | 1,455,577 | 2,278 |
Floating Rate Loans | 8,100 | - | 8,100 | - |
Money Market Funds | 89,216 | 89,216 | - | - |
Total Investments in Securities: | $ 2,337,382 | $ 480,255 | $ 1,854,684 | $ 2,443 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value: |
(Amounts in thousands) |
|
Investments in Securities: | |
Beginning Balance | $ 3,577 |
Total Realized Gain (Loss) | 6,233 |
Total Unrealized Gain (Loss) | 1,260 |
Cost of Purchases | 140 |
Proceeds of Sales | (9,558) |
Amortization/Accretion | 791 |
Transfers in to Level 3 | - |
Transfers out of Level 3 | - |
Ending Balance | $ 2,443 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at May 31, 2010 | $ 117 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations. |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 4.6% |
BBB | 3.2% |
BB | 13.4% |
B | 16.3% |
CCC,CC,C | 10.9% |
Not Rated | 14.8% |
Equities | 33.7% |
Short-Term Investments and Net Other Assets | 3.1% |
| 100.0% |
We have used ratings from Moody's Investors Service, Inc. Where Moody's ratings are not available, we have used S&P ratings. All ratings are as of the report date and do not reflect subsequent downgrades. |
Income Tax Information |
At November 30, 2009, the fund had a capital loss carryforward of approximately $373,212,000 of which $52,524,000 and $320,688,000 will expire on November 30, 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
The fund intends to elect to defer to its fiscal year ending November 30, 2010 approximately $499,000 of losses recognized during the period November 1, 2009 to November 30, 2009. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $29,021) - See accompanying schedule: Unaffiliated issuers (cost $2,210,197) | $ 2,247,244 |
|
Fidelity Central Funds (cost $89,216) | 89,216 |
|
Other affiliated issuers (cost $4,640) | 922 |
|
Total Investments (cost $2,304,053) |
| $ 2,337,382 |
Receivable for fund shares sold | 1,480 | |
Dividends receivable | 3,559 | |
Interest receivable | 14,425 | |
Distributions receivable from Fidelity Central Funds | 20 | |
Prepaid expenses | 2 | |
Total assets | 2,356,868 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 4,194 | |
Payable for fund shares redeemed | 1,254 | |
Accrued management fee | 667 | |
Distribution fees payable | 8 | |
Other affiliated payables | 658 | |
Other payables and accrued expenses | 41 | |
Collateral on securities loaned, at value | 30,112 | |
Total liabilities | 36,934 | |
|
|
|
Net Assets | $ 2,319,934 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,586,263 | |
Undistributed net investment income | 22,482 | |
Accumulated undistributed net realized gain (loss) on investments | (322,140) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 33,329 | |
Net Assets | $ 2,319,934 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Calculation of Maximum Offering Price | $ 22.26 | |
|
|
|
Maximum offering price per share (100/94.25 of $22.26) | $ 23.62 | |
Class T: | $ 22.25 | |
|
|
|
Maximum offering price per share (100/96.50 of $22.25) | $ 23.06 | |
Class B: | $ 22.20 | |
|
|
|
Class C: | $ 22.19 | |
|
|
|
Convertible Securities: | $ 22.31 | |
|
|
|
Institutional Class: | $ 22.30 |
A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Operations
Amounts in thousands | Six months ended May 31, 2010 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 18,124 |
Interest |
| 32,101 |
Income from Fidelity Central Funds |
| 145 |
Total income |
| 50,370 |
|
|
|
Expenses | ||
Management fee | $ 5,613 | |
Performance adjustment | (554) | |
Transfer agent fees | 2,415 | |
Distribution fees | 36 | |
Accounting and security lending fees | 377 | |
Custodian fees and expenses | 20 | |
Independent trustees' compensation | 7 | |
Registration fees | 117 | |
Audit | 41 | |
Legal | 15 | |
Miscellaneous | 18 | |
Total expenses before reductions | 8,105 | |
Expense reductions | (46) | 8,059 |
Net investment income (loss) | 42,311 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 56,858 | |
Capital gain distribution from Fidelity Central Funds | 1 | |
Total net realized gain (loss) |
| 56,859 |
Change in net unrealized appreciation (depreciation) on investment securities | 62,252 | |
Net gain (loss) | 119,111 | |
Net increase (decrease) in net assets resulting from operations | $ 161,422 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Amounts in thousands | Six months ended May 31, 2010 (Unaudited) | Year ended November 30, 2009 |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 42,311 | $ 101,950 |
Net realized gain (loss) | 56,859 | (232,140) |
Change in net unrealized appreciation (depreciation) | 62,252 | 1,040,568 |
Net increase (decrease) in net assets resulting | 161,422 | 910,378 |
Distributions to shareholders from net investment income | (49,664) | (103,307) |
Share transactions - net increase (decrease) | (144,502) | 106,423 |
Total increase (decrease) in net assets | (32,744) | 913,494 |
|
|
|
Net Assets | ||
Beginning of period | 2,352,678 | 1,439,184 |
End of period (including undistributed net investment income of $22,482 and undistributed net investment income of $29,835, respectively) | $ 2,319,934 | $ 2,352,678 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.25 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .36 | .58 |
Net realized and unrealized gain (loss) | 1.08 | 8.53 |
Total from investment operations | 1.44 | 9.11 |
Distributions from net investment income | (.43) | (.65) |
Net asset value, end of period | $ 22.26 | $ 21.25 |
Total Return B, C, D | 6.81% | 72.83% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | .93% A | 1.04% A |
Expenses net of fee waivers, if any | .93% A | 1.04% A |
Expenses net of all reductions | .93% A | 1.04% A |
Net investment income (loss) | 3.18% A | 3.70% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 10 | $ 6 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class T
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.25 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .33 | .57 |
Net realized and unrealized gain (loss) | 1.07 | 8.52 |
Total from investment operations | 1.40 | 9.09 |
Distributions from net investment income | (.40) | (.63) |
Net asset value, end of period | $ 22.25 | $ 21.25 |
Total Return B, C, D | 6.62% | 72.60% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.20% A | 1.25% A |
Expenses net of fee waivers, if any | 1.20% A | 1.25% A |
Expenses net of all reductions | 1.20% A | 1.25% A |
Net investment income (loss) | 2.91% A | 3.83% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 3 | $ 2 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class B
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.22 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .27 | .50 |
Net realized and unrealized gain (loss) | 1.07 | 8.51 |
Total from investment operations | 1.34 | 9.01 |
Distributions from net investment income | (.36) | (.58) |
Net asset value, end of period | $ 22.20 | $ 21.22 |
Total Return B, C, D | 6.34% | 71.85% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.74% A | 1.78% A |
Expenses net of fee waivers, if any | 1.74% A | 1.78% A |
Expenses net of all reductions | 1.74% A | 1.78% A |
Net investment income (loss) | 2.37% A | 3.41% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 1 | $ 1 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class C
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 H |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.20 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) E | .27 | .47 |
Net realized and unrealized gain (loss) | 1.07 | 8.53 |
Total from investment operations | 1.34 | 9.00 |
Distributions from net investment income | (.35) | (.59) |
Net asset value, end of period | $ 22.19 | $ 21.20 |
Total Return B, C, D | 6.36% | 71.81% |
Ratios to Average Net Assets F, I |
|
|
Expenses before reductions | 1.74% A | 1.80% A |
Expenses net of fee waivers, if any | 1.74% A | 1.80% A |
Expenses net of all reductions | 1.74% A | 1.80% A |
Net investment income (loss) | 2.37% A | 3.17% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 4 | $ 2 |
Portfolio turnover rate G | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Convertible Securities
| Six months ended May 31, 2010 | Years ended November 30, | ||||
| (Unaudited) | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 21.30 | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 | $ 21.06 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .39 | .96 | .76 | .59 | .49 | .41 |
Net realized and unrealized gain (loss) | 1.07 | 7.78 | (14.43) | 3.43 | 3.09 | 1.03 |
Total from investment operations | 1.46 | 8.74 | (13.67) | 4.02 | 3.58 | 1.44 |
Distributions from net investment income | (.45) | (.99) | (.64) | (.50) | (.50) | (.34) |
Distributions from net realized gain | - | - | (.85) | (.02) | (.01) | (.02) |
Total distributions | (.45) | (.99) | (1.49) | (.52) | (.51) | (.36) |
Net asset value, end of period | $ 22.31 | $ 21.30 | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 |
Total Return B, C | 6.90% | 67.65% | (50.09)% | 16.02% | 16.38% | 6.91% |
Ratios to Average Net Assets E, G |
|
|
|
|
| |
Expenses before reductions | .66% A | .70% | .78% | .79% | .83% | .70% |
Expenses net of fee waivers, if any | .65% A | .69% | .78% | .79% | .83% | .70% |
Expenses net of all reductions | .65% A | .69% | .78% | .79% | .83% | .69% |
Net investment income (loss) | 3.46% A | 5.59% | 3.06% | 2.11% | 2.09% | 1.95% |
Supplemental Data |
|
|
|
|
| |
Net assets, end of period (in millions) | $ 2,294 | $ 2,340 | $ 1,439 | $ 2,919 | $ 2,083 | $ 1,754 |
Portfolio turnover rate F | 36% A | 31% | 39% | 24% | 35% | 81% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Institutional Class
| Six months ended May 31, 2010 | Year ended November 30, |
| (Unaudited) | 2009 G |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 21.29 | $ 12.79 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .38 | .63 |
Net realized and unrealized gain (loss) | 1.09 | 8.54 |
Total from investment operations | 1.47 | 9.17 |
Distributions from net investment income | (.46) | (.67) |
Total distributions | (.46) | (.67) |
Net asset value, end of period | $ 22.30 | $ 21.29 |
Total Return B, C | 6.91% | 73.31% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .67% A | .73% A |
Expenses net of fee waivers, if any | .67% A | .73% A |
Expenses net of all reductions | .67% A | .73% A |
Net investment income (loss) | 3.44% A | 4.19% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 9 | $ 3 |
Portfolio turnover rate F | 36% A | 31% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2010 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Convertible Securities Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, Convertible Securities and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares will be closed to new accounts and additional purchases by existing shareholders. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2010, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
(ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds and floating rate loans, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds,including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
gain distributions. The change in estimate has no impact on total net asset or total return of the fund. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 217,040 |
Gross unrealized depreciation | (177,080) |
Net unrealized appreciation (depreciation) | $ 39,960 |
|
|
Tax cost | $ 2,297,422 |
Semiannual Report
4. Operating Policies.
Restricted Securities. The Fund may 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. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short sales and short-term securities, aggregated $407,796 and $452,345, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .15% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Convertible Securities as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .41% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of FMR, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 11 | $ 1 |
Class T | .25% | .25% | 7 | - |
Class B | .75% | .25% | 5 | 4 |
Class C | .75% | .25% | 13 | 8 |
|
|
| $ 36 | $ 13 |
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained |
Class A | $ 13 |
Class T | 1 |
Class B* | 1 |
Class C* | - |
| $ 15 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
| Amount | % of |
Class A | $ 10 | .22 |
Class T | 3 | .23 |
Class B | 1 | .28 |
Class C | 4 | .28 |
Convertible Securities | 2,392 | .20 |
Institutional Class | 5 | .21 |
| $ 2,415 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $1 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $5 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
8. Security Lending - continued
determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $29.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Convertible Securities operating expenses. During the period, this reimbursement reduced the Class' expenses by $45. Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $1 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income |
|
|
Class A | $ 170 | $ 62 |
Class T | 42 | 28 |
Class B | 14 | 9 |
Class C | 37 | 24 |
Convertible Securities | 49,322 | 103,134 |
Institutional Class | 79 | 50 |
Total | $ 49,664 | $ 103,307 |
A Distributions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
Semiannual Report
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Six months ended May 31, | Year ended November 30, | Six months ended May 31, | Year ended | |
Class A |
|
|
|
|
Shares sold | 423 | 306 | $ 9,565 | $ 5,806 |
Reinvestment of distributions | 7 | 3 | 155 | 54 |
Shares redeemed | (251) | (39) | (5,839) | (801) |
Net increase (decrease) | 179 | 270 | $ 3,881 | $ 5,059 |
Class T |
|
|
|
|
Shares sold | 192 | 95 | $ 4,469 | $ 1,656 |
Reinvestment of distributions | 2 | 2 | 41 | 27 |
Shares redeemed | (155) | (6) | (3,432) | (110) |
Net increase (decrease) | 39 | 91 | $ 1,078 | $ 1,573 |
Class B |
|
|
|
|
Shares sold | 34 | 30 | $ 773 | $ 491 |
Reinvestment of distributions | - | - | 10 | 8 |
Shares redeemed | (12) | - | (278) | (5) |
Net increase (decrease) | 22 | 30 | $ 505 | $ 494 |
Class C |
|
|
|
|
Shares sold | 98 | 91 | $ 2,187 | $ 1,573 |
Reinvestment of distributions | 1 | 1 | 33 | 23 |
Shares redeemed | (16) | (13) | (356) | (248) |
Net increase (decrease) | 83 | 79 | $ 1,864 | $ 1,348 |
Convertible Securities |
|
|
|
|
Shares sold | 11,644 | 36,051 | $ 262,941 | $ 630,445 |
Reinvestment of distributions | 2,014 | 6,070 | 44,619 | 92,808 |
Shares redeemed | (20,710) | (38,505) | (464,975) | (627,813) |
Net increase (decrease) | (7,052) | 3,616 | $ (157,415) | $ 95,440 |
Institutional Class |
|
|
|
|
Shares sold | 282 | 173 | $ 6,453 | $ 3,107 |
Reinvestment of distributions | 3 | 2 | 70 | 44 |
Shares redeemed | (41) | (30) | (938) | (642) |
Net increase (decrease) | 244 | 145 | $ 5,585 | $ 2,509 |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
FIL Investments (Japan) Limited
FIL Investment Advisors
FIL Investment Advisors (U.K.) Ltd.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
ACVSI-USAN-0710 1.884061.101
Fidelity®
Equity-Income II
Fund
Semiannual Report
May 31, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
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 LLC or an affiliated company.
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.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
A yearlong uptrend in global equity markets came under significant pressure in May 2010 when investor sentiment turned bearish amid growing concern that Europe's debt crisis would expand and slow or derail economic recovery. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2009 to May 31, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Semiannual Report
Shareholder Expense Example - continued
| Annualized | Beginning | Ending | Expenses Paid |
Equity-Income II | .69% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,003.90 | $ 3.45 |
Hypothetical A |
| $ 1,000.00 | $ 1,021.49 | $ 3.48 |
Class K | .54% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,005.30 | $ 2.70 |
Hypothetical A |
| $ 1,000.00 | $ 1,022.24 | $ 2.72 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of May 31, 2010 | ||
| % of fund's | % of fund's net assets |
JPMorgan Chase & Co. | 3.7 | 4.2 |
Bank of America Corp. | 3.6 | 3.1 |
Wells Fargo & Co. | 3.4 | 3.3 |
Exxon Mobil Corp. | 3.2 | 2.8 |
PNC Financial Services Group, Inc. | 2.5 | 2.0 |
Chevron Corp. | 2.4 | 3.2 |
AT&T, Inc. | 2.4 | 3.1 |
Pfizer, Inc. | 2.1 | 2.5 |
Toll Brothers, Inc. | 1.8 | 1.6 |
Verizon Communications, Inc. | 1.7 | 1.7 |
| 26.8 | |
Top Five Market Sectors as of May 31, 2010 | ||
| % of fund's | % of fund's net assets |
Financials | 27.7 | 26.0 |
Consumer Discretionary | 16.2 | 14.8 |
Energy | 15.2 | 16.1 |
Industrials | 10.6 | 10.3 |
Information Technology | 7.0 | 7.4 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2010* | As of November 30, 2009** | ||||||
Stocks 97.9% |
| Stocks 97.8% |
| ||||
Convertible |
| Convertible |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 12.2% |
| ** Foreign investments | 13.1% |
|
Semiannual Report
Investments May 31, 2010 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.8% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 15.7% | |||
Auto Components - 1.6% | |||
ArvinMeritor, Inc. (a) | 116,400 | $ 1,692 | |
Johnson Controls, Inc. | 1,444,692 | 41,217 | |
Michelin CGDE Series B | 217,413 | 14,578 | |
The Goodyear Tire & Rubber Co. (a) | 2,016,500 | 23,996 | |
| 81,483 | ||
Automobiles - 1.5% | |||
Bayerische Motoren Werke AG (BMW) (d) | 154,222 | 7,203 | |
Daimler AG (Germany) (a) | 280,476 | 14,148 | |
Fiat SpA | 943,300 | 10,358 | |
Harley-Davidson, Inc. | 1,244,158 | 37,586 | |
Thor Industries, Inc. | 192,700 | 5,619 | |
Winnebago Industries, Inc. (a) | 374,600 | 4,544 | |
| 79,458 | ||
Diversified Consumer Services - 0.6% | |||
Career Education Corp. (a) | 142,982 | 4,003 | |
H&R Block, Inc. | 1,709,300 | 27,486 | |
| 31,489 | ||
Hotels, Restaurants & Leisure - 0.1% | |||
Sands China Ltd. | 4,090,800 | 6,063 | |
Household Durables - 4.3% | |||
KB Home | 276,700 | 4,007 | |
Lennar Corp. Class A | 562,700 | 9,735 | |
Newell Rubbermaid, Inc. | 1,731,800 | 28,852 | |
Pulte Group, Inc. (a) | 639,300 | 7,122 | |
Stanley Black & Decker, Inc. | 680,186 | 37,948 | |
Techtronic Industries Co. Ltd. | 2,152,000 | 1,910 | |
Toll Brothers, Inc. (a) | 4,402,250 | 92,755 | |
Whirlpool Corp. | 376,088 | 39,279 | |
| 221,608 | ||
Internet & Catalog Retail - 0.2% | |||
Liberty Media Corp. Interactive Series A (a) | 776,284 | 10,068 | |
Media - 2.9% | |||
Belo Corp. Series A | 912,073 | 6,631 | |
Cablevision Systems Corp. - NY Group Class A | 230,200 | 5,711 | |
Comcast Corp. Class A | 1,842,400 | 33,329 | |
Informa PLC | 1,805,725 | 9,924 | |
Interpublic Group of Companies, Inc. (a) | 943,600 | 7,879 | |
The Walt Disney Co. | 1,094,725 | 36,586 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Media - continued | |||
Time Warner, Inc. | 1,430,717 | $ 44,338 | |
Vivendi | 283,335 | 6,147 | |
| 150,545 | ||
Multiline Retail - 1.9% | |||
Kohl's Corp. (a) | 577,812 | 29,324 | |
Macy's, Inc. | 1,051,019 | 23,343 | |
Target Corp. | 726,100 | 39,594 | |
Tuesday Morning Corp. (a) | 468,400 | 2,651 | |
| 94,912 | ||
Specialty Retail - 2.5% | |||
Home Depot, Inc. | 2,012,800 | 68,153 | |
Lowe's Companies, Inc. | 979,600 | 24,245 | |
OfficeMax, Inc. (a) | 400,800 | 7,146 | |
RadioShack Corp. | 523,800 | 10,706 | |
Staples, Inc. | 907,116 | 19,521 | |
| 129,771 | ||
Textiles, Apparel & Luxury Goods - 0.1% | |||
Phillips-Van Heusen Corp. | 57,347 | 3,139 | |
TOTAL CONSUMER DISCRETIONARY | 808,536 | ||
CONSUMER STAPLES - 4.2% | |||
Beverages - 0.9% | |||
Carlsberg AS Series B (a) | 194,588 | 14,868 | |
The Coca-Cola Co. | 655,600 | 33,698 | |
| 48,566 | ||
Food & Staples Retailing - 1.1% | |||
CVS Caremark Corp. | 578,700 | 20,040 | |
Kroger Co. | 981,100 | 19,750 | |
Walgreen Co. | 350,300 | 11,224 | |
Winn-Dixie Stores, Inc. (a) | 547,110 | 6,128 | |
| 57,142 | ||
Food Products - 0.6% | |||
Nestle SA | 618,607 | 28,060 | |
Household Products - 0.7% | |||
Procter & Gamble Co. | 586,800 | 35,848 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Personal Products - 0.1% | |||
Avon Products, Inc. | 138,119 | $ 3,659 | |
Herbalife Ltd. | 51,800 | 2,339 | |
| 5,998 | ||
Tobacco - 0.8% | |||
Philip Morris International, Inc. | 927,959 | 40,942 | |
TOTAL CONSUMER STAPLES | 216,556 | ||
ENERGY - 15.2% | |||
Energy Equipment & Services - 2.4% | |||
Baker Hughes, Inc. | 676,863 | 25,816 | |
Halliburton Co. | 704,200 | 17,485 | |
Nabors Industries Ltd. (a) | 910,300 | 17,323 | |
Noble Corp. | 838,700 | 24,381 | |
Pride International, Inc. (a) | 401,529 | 9,946 | |
Schlumberger Ltd. | 511,676 | 28,731 | |
| 123,682 | ||
Oil, Gas & Consumable Fuels - 12.8% | |||
Anadarko Petroleum Corp. | 455,698 | 23,847 | |
Apache Corp. | 204,000 | 18,266 | |
BP PLC sponsored ADR | 88,600 | 3,805 | |
Chevron Corp. | 1,677,070 | 123,885 | |
Cloud Peak Energy, Inc. | 174,700 | 2,579 | |
ConocoPhillips | 1,148,100 | 59,540 | |
CONSOL Energy, Inc. | 523,000 | 19,079 | |
Devon Energy Corp. | 204,786 | 13,076 | |
EOG Resources, Inc. | 319,786 | 33,526 | |
Exxon Mobil Corp. | 2,763,167 | 167,061 | |
Marathon Oil Corp. | 738,368 | 22,956 | |
Occidental Petroleum Corp. | 529,795 | 43,713 | |
Reliance Industries Ltd. | 452,840 | 10,212 | |
Royal Dutch Shell PLC: | |||
Class A sponsored ADR | 1,461,900 | 76,604 | |
Class B ADR (a) | 235,100 | 11,905 | |
Southwestern Energy Co. (a) | 694,430 | 26,118 | |
Ultra Petroleum Corp. (a) | 88,500 | 4,073 | |
| 660,245 | ||
TOTAL ENERGY | 783,927 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - 26.8% | |||
Capital Markets - 4.7% | |||
Bank of New York Mellon Corp. | 1,395,110 | $ 37,947 | |
Bank Sarasin & Co. Ltd. Series B (Reg.) | 107,678 | 3,924 | |
Credit Suisse Group sponsored ADR (d) | 104,400 | 4,039 | |
Goldman Sachs Group, Inc. | 399,500 | 57,632 | |
Morgan Stanley | 2,603,292 | 70,575 | |
Nomura Holdings, Inc. | 523,600 | 3,253 | |
State Street Corp. | 832,400 | 31,773 | |
T. Rowe Price Group, Inc. | 189,185 | 9,368 | |
UBS AG (a) | 621,000 | 8,348 | |
UBS AG (NY Shares) (a) | 1,144,135 | 15,251 | |
| 242,110 | ||
Commercial Banks - 9.0% | |||
Associated Banc-Corp. | 1,626,055 | 21,838 | |
Barclays PLC | 2,152,049 | 9,546 | |
BB&T Corp. | 236,100 | 7,140 | |
Comerica, Inc. | 455,900 | 17,370 | |
Huntington Bancshares, Inc. | 1,520,800 | 9,368 | |
KeyCorp | 3,049,074 | 24,454 | |
Marshall & Ilsley Corp. | 461,100 | 3,758 | |
Mitsubishi UFJ Financial Group, Inc. sponsored ADR (d) | 3,711,800 | 17,965 | |
PNC Financial Services Group, Inc. | 2,043,700 | 128,242 | |
Standard Chartered PLC (United Kingdom) | 370,378 | 8,815 | |
Sumitomo Mitsui Financial Group, Inc. | 107,700 | 3,195 | |
U.S. Bancorp, Delaware | 1,449,800 | 34,737 | |
Wells Fargo & Co. | 6,190,208 | 177,597 | |
| 464,025 | ||
Consumer Finance - 1.6% | |||
American Express Co. | 618,470 | 24,658 | |
Capital One Financial Corp. | 637,833 | 26,343 | |
Discover Financial Services | 1,721,000 | 23,147 | |
SLM Corp. (a) | 867,281 | 9,635 | |
| 83,783 | ||
Diversified Financial Services - 8.6% | |||
Bank of America Corp. | 11,837,473 | 186,322 | |
Citigroup, Inc. (a) | 10,516,064 | 41,644 | |
CME Group, Inc. | 15,088 | 4,778 | |
JPMorgan Chase & Co. | 4,725,253 | 187,029 | |
Moody's Corp. (d) | 1,086,290 | 22,269 | |
| 442,042 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Insurance - 1.5% | |||
ACE Ltd. | 38,820 | $ 1,908 | |
Allstate Corp. | 194,600 | 5,961 | |
Berkshire Hathaway, Inc. Class B (a) | 107,800 | 7,605 | |
Hartford Financial Services Group, Inc. | 376,900 | 9,449 | |
Montpelier Re Holdings Ltd. | 1,205,300 | 18,815 | |
The First American Corp. | 270,575 | 9,208 | |
The Travelers Companies, Inc. | 386,552 | 19,123 | |
Unum Group | 273,500 | 6,318 | |
XL Capital Ltd. Class A | 53,800 | 947 | |
| 79,334 | ||
Real Estate Investment Trusts - 0.8% | |||
Boston Properties, Inc. | 107,675 | 8,257 | |
HCP, Inc. | 837,700 | 26,689 | |
Segro PLC | 1,191,112 | 4,955 | |
Simon Property Group, Inc. | 17,057 | 1,450 | |
| 41,351 | ||
Real Estate Management & Development - 0.6% | |||
Allgreen Properties Ltd. | 2,732,000 | 1,971 | |
CB Richard Ellis Group, Inc. Class A (a) | 1,043,300 | 16,515 | |
Indiabulls Real Estate Ltd. (a) | 2,558,497 | 8,697 | |
Unite Group PLC (a) | 631,797 | 1,764 | |
| 28,947 | ||
TOTAL FINANCIALS | 1,381,592 | ||
HEALTH CARE - 6.8% | |||
Biotechnology - 0.9% | |||
Amgen, Inc. (a) | 547,300 | 28,339 | |
Biogen Idec, Inc. (a) | 220,870 | 10,476 | |
Cephalon, Inc. (a) | 120,500 | 7,093 | |
Gilead Sciences, Inc. (a) | 35,900 | 1,290 | |
| 47,198 | ||
Health Care Equipment & Supplies - 0.7% | |||
C. R. Bard, Inc. | 134,305 | 10,875 | |
CareFusion Corp. (a) | 761,943 | 19,369 | |
Stryker Corp. | 35,500 | 1,883 | |
| 32,127 | ||
Health Care Providers & Services - 0.4% | |||
UnitedHealth Group, Inc. | 714,600 | 20,773 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - 4.8% | |||
Johnson & Johnson | 473,656 | $ 27,614 | |
Merck & Co., Inc. | 2,507,228 | 84,469 | |
Pfizer, Inc. | 7,070,135 | 107,678 | |
Sanofi-Aventis (d) | 459,182 | 27,936 | |
| 247,697 | ||
TOTAL HEALTH CARE | 347,795 | ||
INDUSTRIALS - 10.6% | |||
Aerospace & Defense - 3.1% | |||
Goodrich Corp. | 89,358 | 6,201 | |
Honeywell International, Inc. | 1,066,600 | 45,618 | |
Lockheed Martin Corp. | 81,800 | 6,537 | |
Raytheon Co. | 143,300 | 7,510 | |
Spirit AeroSystems Holdings, Inc. Class A (a) | 756,800 | 14,742 | |
The Boeing Co. | 475,417 | 30,512 | |
United Technologies Corp. | 736,628 | 49,634 | |
| 160,754 | ||
Building Products - 0.4% | |||
Armstrong World Industries, Inc. (a) | 62,933 | 2,359 | |
Masco Corp. | 1,273,300 | 16,999 | |
| 19,358 | ||
Commercial Services & Supplies - 0.1% | |||
Pitney Bowes, Inc. | 283,400 | 6,416 | |
Construction & Engineering - 0.4% | |||
Fluor Corp. | 226,900 | 10,646 | |
KBR, Inc. | 530,988 | 11,671 | |
| 22,317 | ||
Electrical Equipment - 0.2% | |||
Schneider Electric SA | 79,061 | 7,975 | |
Industrial Conglomerates - 3.1% | |||
General Electric Co. | 4,297,473 | 70,264 | |
Koninklijke Philips Electronics NV (NY Shares) unit | 53,800 | 1,604 | |
Rheinmetall AG | 331,542 | 18,800 | |
Siemens AG sponsored ADR | 455,400 | 40,772 | |
Textron, Inc. | 789,400 | 16,317 | |
Tyco International Ltd. | 364,800 | 13,202 | |
| 160,959 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Machinery - 2.5% | |||
Briggs & Stratton Corp. | 982,216 | $ 20,263 | |
Caterpillar, Inc. | 95,700 | 5,815 | |
Cummins, Inc. | 407,500 | 27,702 | |
Eaton Corp. | 233,400 | 16,326 | |
Ingersoll-Rand Co. Ltd. | 622,053 | 23,209 | |
Kennametal, Inc. | 442,300 | 12,477 | |
Navistar International Corp. (a) | 223,430 | 12,105 | |
SPX Corp. | 106,300 | 6,282 | |
Vallourec SA | 37,400 | 7,001 | |
| 131,180 | ||
Road & Rail - 0.8% | |||
CSX Corp. | 375,500 | 19,620 | |
Union Pacific Corp. | 265,200 | 18,943 | |
| 38,563 | ||
TOTAL INDUSTRIALS | 547,522 | ||
INFORMATION TECHNOLOGY - 6.9% | |||
Communications Equipment - 0.7% | |||
Cisco Systems, Inc. (a) | 832,615 | 19,283 | |
Comverse Technology, Inc. (a) | 627,700 | 5,361 | |
Motorola, Inc. (a) | 1,615,792 | 11,068 | |
| 35,712 | ||
Computers & Peripherals - 0.8% | |||
Hewlett-Packard Co. | 935,475 | 43,041 | |
Electronic Equipment & Components - 1.4% | |||
Agilent Technologies, Inc. (a) | 671,784 | 21,739 | |
Arrow Electronics, Inc. (a) | 237,538 | 6,480 | |
Avnet, Inc. (a) | 475,100 | 13,645 | |
Tyco Electronics Ltd. | 1,084,071 | 31,243 | |
| 73,107 | ||
IT Services - 0.3% | |||
Hewitt Associates, Inc. Class A (a) | 342,168 | 12,746 | |
MoneyGram International, Inc. (a) | 340,342 | 895 | |
Visa, Inc. Class A | 35,900 | 2,601 | |
| 16,242 | ||
Office Electronics - 0.2% | |||
Xerox Corp. | 1,089,380 | 10,142 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Semiconductors & Semiconductor Equipment - 3.3% | |||
Analog Devices, Inc. | 125,600 | $ 3,664 | |
Applied Materials, Inc. | 2,827,900 | 36,508 | |
Intel Corp. | 3,090,900 | 66,207 | |
Micron Technology, Inc. (a) | 1,472,300 | 13,383 | |
National Semiconductor Corp. | 1,593,602 | 22,390 | |
Novellus Systems, Inc. (a) | 182,200 | 4,704 | |
Samsung Electronics Co. Ltd. | 10,133 | 6,541 | |
Teradyne, Inc. (a) | 303,600 | 3,334 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 331,900 | 10,319 | |
| 167,050 | ||
Software - 0.2% | |||
Microsoft Corp. | 326,843 | 8,433 | |
TOTAL INFORMATION TECHNOLOGY | 353,727 | ||
MATERIALS - 2.6% | |||
Chemicals - 1.3% | |||
Clariant AG (Reg.) (a) | 1,117,842 | 13,025 | |
Dow Chemical Co. | 414,932 | 11,166 | |
E.I. du Pont de Nemours & Co. | 747,109 | 27,023 | |
Monsanto Co. | 186,700 | 9,497 | |
Wacker Chemie AG (d) | 43,900 | 5,514 | |
| 66,225 | ||
Construction Materials - 0.2% | |||
HeidelbergCement AG | 177,100 | 9,616 | |
Metals & Mining - 0.9% | |||
Alcoa, Inc. | 1,207,232 | 14,052 | |
Commercial Metals Co. | 407,409 | 6,343 | |
Freeport-McMoRan Copper & Gold, Inc. | 178,537 | 12,507 | |
Nucor Corp. | 315,500 | 13,582 | |
| 46,484 | ||
Paper & Forest Products - 0.2% | |||
Weyerhaeuser Co. | 270,650 | 11,524 | |
TOTAL MATERIALS | 133,849 | ||
TELECOMMUNICATION SERVICES - 5.5% | |||
Diversified Telecommunication Services - 4.9% | |||
AT&T, Inc. | 5,007,300 | 121,677 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
TELECOMMUNICATION SERVICES - continued | |||
Diversified Telecommunication Services - continued | |||
Qwest Communications International, Inc. | 7,619,100 | $ 39,924 | |
Verizon Communications, Inc. | 3,192,800 | 87,866 | |
| 249,467 | ||
Wireless Telecommunication Services - 0.6% | |||
Sprint Nextel Corp. (a) | 6,434,547 | 33,009 | |
TOTAL TELECOMMUNICATION SERVICES | 282,476 | ||
UTILITIES - 3.5% | |||
Electric Utilities - 2.4% | |||
Allegheny Energy, Inc. | 1,200,497 | 24,562 | |
American Electric Power Co., Inc. | 1,243,809 | 39,752 | |
Entergy Corp. | 365,400 | 27,431 | |
FirstEnergy Corp. | 921,831 | 32,458 | |
| 124,203 | ||
Independent Power Producers & Energy Traders - 0.8% | |||
AES Corp. (a) | 2,612,800 | 26,833 | |
Constellation Energy Group, Inc. | 365,400 | 12,928 | |
| 39,761 | ||
Multi-Utilities - 0.3% | |||
Alliant Energy Corp. | 301,039 | 9,675 | |
CMS Energy Corp. | 467,200 | 6,858 | |
| 16,533 | ||
TOTAL UTILITIES | 180,497 | ||
TOTAL COMMON STOCKS (Cost $4,627,566) | 5,036,477 | ||
Preferred Stocks - 0.8% | |||
|
|
|
|
Convertible Preferred Stocks - 0.7% | |||
FINANCIALS - 0.7% | |||
Commercial Banks - 0.1% | |||
Huntington Bancshares, Inc. 8.50% | 7,600 | 7,448 | |
Diversified Financial Services - 0.2% | |||
Citigroup, Inc. 7.50% | 81,000 | 9,691 | |
Preferred Stocks - continued | |||
Shares | Value (000s) | ||
Convertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Insurance - 0.4% | |||
Hartford Financial Services Group, Inc. Series F 7.25% (a) | 285,900 | $ 6,790 | |
XL Capital Ltd. 10.75% | 462,200 | 12,484 | |
| 19,274 | ||
TOTAL FINANCIALS | 36,413 | ||
Nonconvertible Preferred Stocks - 0.1% | |||
FINANCIALS - 0.1% | |||
Insurance - 0.1% | |||
Fondiaria-Sai SpA (Risparmio Shares) | 466,533 | 3,211 | |
TOTAL PREFERRED STOCKS (Cost $36,490) | 39,624 |
Convertible Bonds - 0.8% | ||||
| Principal Amount (000s) |
| ||
CONSUMER DISCRETIONARY - 0.5% | ||||
Automobiles - 0.3% | ||||
Ford Motor Co. 4.25% 11/15/16 | $ 9,710 | 13,653 | ||
Hotels, Restaurants & Leisure - 0.1% | ||||
MGM Mirage, Inc. 4.25% 4/15/15 (e) | 6,480 | 5,974 | ||
Leisure Equipment & Products - 0.0% | ||||
Eastman Kodak Co. 7% 4/1/17 (e) | 1,890 | 1,971 | ||
Media - 0.1% | ||||
Liberty Global, Inc. 4.5% 11/15/16 (e) | 3,190 | 3,692 | ||
TOTAL CONSUMER DISCRETIONARY | 25,290 | |||
FINANCIALS - 0.1% | ||||
Thrifts & Mortgage Finance - 0.1% | ||||
MGIC Investment Corp. 0% 4/1/63 (c)(e) | 5,910 | 6,043 | ||
INDUSTRIALS - 0.0% | ||||
Airlines - 0.0% | ||||
AMR Corp. 6.25% 10/15/14 | 1,800 | 1,888 | ||
Convertible Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
INFORMATION TECHNOLOGY - 0.1% | ||||
Semiconductors & Semiconductor Equipment - 0.1% | ||||
Micron Technology, Inc. 1.875% 6/1/14 | $ 5,220 | $ 4,639 | ||
MATERIALS - 0.1% | ||||
Metals & Mining - 0.1% | ||||
United States Steel Corp. 4% 5/15/14 | 2,900 | 4,723 | ||
TOTAL CONVERTIBLE BONDS (Cost $36,418) | 42,583 |
Money Market Funds - 1.6% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.23% (f) | 26,465,037 | 26,465 | |
Fidelity Securities Lending Cash Central Fund, 0.24% (b)(f) | 55,286,990 | 55,287 | |
TOTAL MONEY MARKET FUNDS (Cost $81,752) | 81,752 | ||
TOTAL INVESTMENT PORTFOLIO - 101.0% (Cost $4,782,226) | 5,200,436 | ||
NET OTHER ASSETS - (1.0)% | (52,568) | ||
NET ASSETS - 100% | $ 5,147,868 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security initially issued in zero coupon form which converts to coupon form at a specified rate and date. The rate shown is the rate at period end. |
(d) Security or a portion of the security is on loan at period end. |
(e) 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 end of the period, the value of these securities amounted to $17,680,000 or 0.3% of net assets. |
(f) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 17 |
Fidelity Securities Lending Cash Central Fund | 492 |
Total | $ 509 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 808,536 | $ 808,536 | $ - | $ - |
Consumer Staples | 216,556 | 216,556 | - | - |
Energy | 783,927 | 783,927 | - | - |
Financials | 1,421,216 | 1,406,978 | 14,238 | - |
Health Care | 347,795 | 347,795 | - | - |
Industrials | 547,522 | 547,522 | - | - |
Information Technology | 353,727 | 353,727 | - | - |
Materials | 133,849 | 133,849 | - | - |
Telecommunication Services | 282,476 | 282,476 | - | - |
Utilities | 180,497 | 180,497 | - | - |
Corporate Bonds | 42,583 | - | 42,583 | - |
Money Market Funds | 81,752 | 81,752 | - | - |
Total Investments in Securities: | $ 5,200,436 | $ 5,143,615 | $ 56,821 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.8% |
Switzerland | 2.8% |
United Kingdom | 2.3% |
Germany | 1.9% |
France | 1.3% |
Others (Individually Less Than 1%) | 3.9% |
| 100.0% |
Income Tax Information |
At November 30, 2009, the fund had a capital loss carryforward of approximately $2,327,266,000 of which $1,317,781,000 and $1,009,485,000 will expire on November 30, 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $52,622) - See accompanying schedule: Unaffiliated issuers (cost $4,700,474) | $ 5,118,684 |
|
Fidelity Central Funds (cost $81,752) | 81,752 |
|
Total Investments (cost $4,782,226) |
| $ 5,200,436 |
Foreign currency held at value (cost $1,565) | 1,564 | |
Receivable for investments sold | 16,542 | |
Receivable for fund shares sold | 4,400 | |
Dividends receivable | 13,549 | |
Interest receivable | 201 | |
Distributions receivable from Fidelity Central Funds | 318 | |
Prepaid expenses | 5 | |
Other receivables | 310 | |
Total assets | 5,237,325 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 25,799 | |
Payable for fund shares redeemed | 4,996 | |
Accrued management fee | 2,039 | |
Other affiliated payables | 1,001 | |
Other payables and accrued expenses | 335 | |
Collateral on securities loaned, at value | 55,287 | |
Total liabilities | 89,457 | |
|
|
|
Net Assets | $ 5,147,868 | |
Net Assets consist of: |
| |
Paid in capital | $ 6,871,182 | |
Undistributed net investment income | 17,563 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,159,050) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 418,173 | |
Net Assets | $ 5,147,868 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Equity-Income II: Net Asset Value, offering price and redemption price per share ($4,906,299 ÷ 304,494 shares) | $ 16.11 | |
|
|
|
Class K: | $ 16.12 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Operations
Amounts in thousands | Six months ended May 31, 2010 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 58,725 |
Interest |
| 790 |
Income from Fidelity Central Funds |
| 509 |
Total income |
| 60,024 |
|
|
|
Expenses | ||
Management fee | $ 12,594 | |
Transfer agent fees | 5,406 | |
Accounting and security lending fees | 585 | |
Custodian fees and expenses | 80 | |
Independent trustees' compensation | 15 | |
Appreciation in deferred trustee compensation account | 1 | |
Registration fees | 38 | |
Audit | 42 | |
Legal | 15 | |
Interest | 2 | |
Miscellaneous | 44 | |
Total expenses before reductions | 18,822 | |
Expense reductions | (98) | 18,724 |
Net investment income (loss) | 41,300 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $32) | 309,586 | |
Foreign currency transactions | (182) | |
Capital gain distributions from Fidelity Central Funds | 1 | |
Total net realized gain (loss) |
| 309,405 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $84) | (314,105) | |
Assets and liabilities in foreign currencies | (38) | |
Total change in net unrealized appreciation (depreciation) |
| (314,143) |
Net gain (loss) | (4,738) | |
Net increase (decrease) in net assets resulting from operations | $ 36,562 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Amounts in thousands | Six months ended May 31, 2010 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 41,300 | $ 98,006 |
Net realized gain (loss) | 309,405 | (645,454) |
Change in net unrealized appreciation (depreciation) | (314,143) | 1,598,050 |
Net increase (decrease) in net assets resulting | 36,562 | 1,050,602 |
Distributions to shareholders from net investment income | (39,578) | (107,786) |
Share transactions - net increase (decrease) | (344,586) | (813,458) |
Total increase (decrease) in net assets | (347,602) | 129,358 |
|
|
|
Net Assets | ||
Beginning of period | 5,495,470 | 5,366,112 |
End of period (including undistributed net investment income of $17,563 and undistributed net investment income of $15,841, respectively) | $ 5,147,868 | $ 5,495,470 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Equity-Income II
| Six months ended May 31, 2010 | Years ended November 30, | ||||
| (Unaudited) | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 16.16 | $ 13.32 | $ 24.29 | $ 25.12 | $ 24.57 | $ 23.90 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .13 | .27 | .33 | .33 | .35 | .35 |
Net realized and unrealized gain (loss) | (.06) | 2.86 | (9.72) | 1.29 | 2.44 | 1.36 |
Total from investment operations | .07 | 3.13 | (9.39) | 1.62 | 2.79 | 1.71 |
Distributions from net investment income | (.12) | (.29) | (.36) | (.38) | (.33) | (.41) |
Distributions from net realized gain | - | - | (1.22) | (2.07) | (1.91) | (.63) |
Total distributions | (.12) | (.29) | (1.58) | (2.45) | (2.24) | (1.04) |
Net asset value, end of period | $ 16.11 | $ 16.16 | $ 13.32 | $ 24.29 | $ 25.12 | $ 24.57 |
Total Return B,C | .39% | 24.07% | (41.13)% | 6.90% | 12.28% | 7.41% |
Ratios to Average Net Assets E,G |
|
|
|
|
| |
Expenses before reductions | .69% A | .75% | .67% | .65% | .67% | .68% |
Expenses net of fee waivers, if any | .69% A | .75% | .67% | .65% | .67% | .68% |
Expenses net of all reductions | .69% A | .74% | .67% | .65% | .66% | .62% |
Net investment income (loss) | 1.50% A | 1.98% | 1.70% | 1.34% | 1.50% | 1.49% |
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (in millions) | $ 4,906 | $ 5,288 | $ 5,212 | $ 10,530 | $ 11,635 | $ 12,248 |
Portfolio turnover rate F | 29% A | 75% | 76% | 47% | 160% | 143% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class K
| Six months ended May 31, 2010 | Years ended | |
| (Unaudited) | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 16.16 | $ 13.32 | $ 21.42 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .14 | .29 | .17 |
Net realized and unrealized gain (loss) | (.05) | 2.87 | (8.08) |
Total from investment operations | .09 | 3.16 | (7.91) |
Distributions from net investment income | (.13) | (.32) | (.19) |
Net asset value, end of period | $ 16.12 | $ 16.16 | $ 13.32 |
Total Return B,C | .53% | 24.30% | (37.13)% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .54% A | .56% | .54% A |
Expenses net of fee waivers, if any | .54% A | .56% | .54% A |
Expenses net of all reductions | .54% A | .56% | .54% A |
Net investment income (loss) | 1.65% A | 2.17% | 2.11% A |
Supplemental Data |
|
|
|
Net assets, end of period (in millions) | $ 242 | $ 208 | $ 154 |
Portfolio turnover rate F | 29% A | 75% | 76% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2010 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Equity-Income II Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Equity-Income II and Class K shares each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Security Valuation - continued
Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2010 is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which 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. Distributions received on
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Semiannual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 831,249 |
Gross unrealized depreciation | (550,669) |
Net unrealized appreciation (depreciation) | $ 280,580 |
Tax cost | $ 4,919,856 |
4. Operating Policies.
Restricted Securities. The Fund may 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. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $791,739 and $1,121,889, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .46% of the Fund's average net assets.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Equity-Income II. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Equity-Income II | $ 5,348 | .20 |
Class K | 58 | .05 |
| $ 5,406 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $8 for the period.
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 funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 9,021 | .41% | $ 2 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to
Semiannual Report
7. Committed Line of Credit - continued
pay commitment fees on its pro-rata portion of the line of credit, which amounted to $11 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $492.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $98 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended | Year ended |
From net investment income |
|
|
Equity-Income II | $ 37,877 | $ 103,988 |
Class K | 1,701 | 3,798 |
Total | $ 39,578 | $ 107,786 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Six months ended May 31, | Year ended | Six months ended May 31, | Year ended |
Equity-Income II |
|
|
|
|
Shares sold | 7,098 | 20,468 | $ 119,021 | $ 264,593 |
Conversion to Class K | - | (6,298) | - | (80,663) |
Reinvestment of distributions | 2,124 | 7,638 | 35,952 | 98,777 |
Shares redeemed | (31,945) | (85,985) | (534,709) | (1,111,308) |
Net increase (decrease) | (22,723) | (64,177) | $ (379,736) | $ (828,601) |
Class K |
|
|
|
|
Shares sold | 3,335 | 3,143 | $ 55,215 | $ 41,178 |
Conversion from Equity-Income II | - | 6,298 | - | 80,663 |
Reinvestment of distributions | 100 | 293 | 1,701 | 3,798 |
Shares redeemed | (1,303) | (8,420) | (21,766) | (110,496) |
Net increase (decrease) | 2,132 | 1,314 | $ 35,150 | $ 15,143 |
A Conversion transactions for Class K and Equity-Income II are presented for the period December 1, 2008 to August 31, 2009.
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
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 Automated Service Telephone 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)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
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
* 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.
Semiannual Report
To Write Fidelity
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
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
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 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Semiannual Report
To Visit Fidelity
For directions and hours,
please call 1-800-544-9797.
Arizona
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Colorado
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Delaware
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Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Semiannual Report
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Michigan
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Oakdale, MN
Missouri
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
501 Route 73 South
Marlton, NJ
150 Essex Street
Millburn, NJ
35 Morris Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
Shrewsbury, NJ
New Mexico
2261 Q Street NE
Albuquerque, NM
New York
1130 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
980 Madison Avenue
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
200 Fifth Avenue
New York, NY
733 Third Avenue
New York, NY
2070 Broadway
New York, NY
1075 Northern Blvd.
Roslyn, NY
799 Central Park Avenue
Scarsdale, NY
3349 Monroe Avenue
Rochester, NY
North Carolina
4611 Sharon Road
Charlotte, NC
7011 Fayetteville Road
Durham, NC
Ohio
3805 Edwards Road
Cincinnati, OH
1324 Polaris Parkway
Columbus, OH
1800 Crocker Road
Westlake, OH
28699 Chagrin Boulevard
Woodmere Village, OH
Oregon
7493 SW Bridgeport Road
Tigard, OR
Pennsylvania
600 West DeKalb Pike
King of Prussia, PA
1735 Market Street
Philadelphia, PA
12001 Perry Highway
Wexford, PA
Rhode Island
10 Memorial Boulevard
Providence, RI
Tennessee
3018 Peoples Street
Johnson City, TN
7628 West Farmington Blvd.
Germantown, TN
2035 Mallory Lane
Franklin, TN
Texas
10000 Research Boulevard
Austin, TX
4001 Northwest Parkway
Dallas, TX
12532 Memorial Drive
Houston, TX
2701 Drexel Drive
Houston, TX
6560 Fannin Street
Houston, TX
1701 Lake Robbins Drive
The Woodlands, TX
6500 N. MacArthur Blvd.
Irving, TX
6005 West Park Boulevard
Plano, TX
1576 East Southlake Blvd.
Southlake, TX
15600 Southwest Freeway
Sugar Land, TX
139 N. Loop 1604 East
San Antonio, TX
Utah
279 West South Temple
Salt Lake City, UT
Virginia
1861 International Drive
McLean, VA
11957 Democracy Drive
Reston, VA
Washington
10500 NE 8th Street
Bellevue, WA
1518 6th Avenue
Seattle, WA
304 Strander Blvd
Tukwila, WA
Washington, DC
1900 K Street, N.W.
Washington, DC
Wisconsin
16020 West Bluemound Road
Brookfield, WI
Semiannual Report
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EII-USAN-0710 1.786811.107
Fidelity®
Equity-Income II Fund -
Class K
Semiannual Report
May 31, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-835-5092 to request a free copy of the proxy voting guidelines.
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 LLC or an affiliated company.
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.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
A yearlong uptrend in global equity markets came under significant pressure in May 2010 when investor sentiment turned bearish amid growing concern that Europe's debt crisis would expand and slow or derail economic recovery. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2009 to May 31, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Semiannual Report
Shareholder Expense Example - continued
| Annualized | Beginning | Ending | Expenses Paid |
Equity-Income II | .69% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,003.90 | $ 3.45 |
Hypothetical A |
| $ 1,000.00 | $ 1,021.49 | $ 3.48 |
Class K | .54% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,005.30 | $ 2.70 |
Hypothetical A |
| $ 1,000.00 | $ 1,022.24 | $ 2.72 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of May 31, 2010 | ||
| % of fund's | % of fund's net assets |
JPMorgan Chase & Co. | 3.7 | 4.2 |
Bank of America Corp. | 3.6 | 3.1 |
Wells Fargo & Co. | 3.4 | 3.3 |
Exxon Mobil Corp. | 3.2 | 2.8 |
PNC Financial Services Group, Inc. | 2.5 | 2.0 |
Chevron Corp. | 2.4 | 3.2 |
AT&T, Inc. | 2.4 | 3.1 |
Pfizer, Inc. | 2.1 | 2.5 |
Toll Brothers, Inc. | 1.8 | 1.6 |
Verizon Communications, Inc. | 1.7 | 1.7 |
| 26.8 | |
Top Five Market Sectors as of May 31, 2010 | ||
| % of fund's | % of fund's net assets |
Financials | 27.7 | 26.0 |
Consumer Discretionary | 16.2 | 14.8 |
Energy | 15.2 | 16.1 |
Industrials | 10.6 | 10.3 |
Information Technology | 7.0 | 7.4 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2010* | As of November 30, 2009** | ||||||
Stocks 97.9% |
| Stocks 97.8% |
| ||||
Convertible |
| Convertible |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 12.2% |
| ** Foreign investments | 13.1% |
|
Semiannual Report
Investments May 31, 2010 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.8% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 15.7% | |||
Auto Components - 1.6% | |||
ArvinMeritor, Inc. (a) | 116,400 | $ 1,692 | |
Johnson Controls, Inc. | 1,444,692 | 41,217 | |
Michelin CGDE Series B | 217,413 | 14,578 | |
The Goodyear Tire & Rubber Co. (a) | 2,016,500 | 23,996 | |
| 81,483 | ||
Automobiles - 1.5% | |||
Bayerische Motoren Werke AG (BMW) (d) | 154,222 | 7,203 | |
Daimler AG (Germany) (a) | 280,476 | 14,148 | |
Fiat SpA | 943,300 | 10,358 | |
Harley-Davidson, Inc. | 1,244,158 | 37,586 | |
Thor Industries, Inc. | 192,700 | 5,619 | |
Winnebago Industries, Inc. (a) | 374,600 | 4,544 | |
| 79,458 | ||
Diversified Consumer Services - 0.6% | |||
Career Education Corp. (a) | 142,982 | 4,003 | |
H&R Block, Inc. | 1,709,300 | 27,486 | |
| 31,489 | ||
Hotels, Restaurants & Leisure - 0.1% | |||
Sands China Ltd. | 4,090,800 | 6,063 | |
Household Durables - 4.3% | |||
KB Home | 276,700 | 4,007 | |
Lennar Corp. Class A | 562,700 | 9,735 | |
Newell Rubbermaid, Inc. | 1,731,800 | 28,852 | |
Pulte Group, Inc. (a) | 639,300 | 7,122 | |
Stanley Black & Decker, Inc. | 680,186 | 37,948 | |
Techtronic Industries Co. Ltd. | 2,152,000 | 1,910 | |
Toll Brothers, Inc. (a) | 4,402,250 | 92,755 | |
Whirlpool Corp. | 376,088 | 39,279 | |
| 221,608 | ||
Internet & Catalog Retail - 0.2% | |||
Liberty Media Corp. Interactive Series A (a) | 776,284 | 10,068 | |
Media - 2.9% | |||
Belo Corp. Series A | 912,073 | 6,631 | |
Cablevision Systems Corp. - NY Group Class A | 230,200 | 5,711 | |
Comcast Corp. Class A | 1,842,400 | 33,329 | |
Informa PLC | 1,805,725 | 9,924 | |
Interpublic Group of Companies, Inc. (a) | 943,600 | 7,879 | |
The Walt Disney Co. | 1,094,725 | 36,586 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Media - continued | |||
Time Warner, Inc. | 1,430,717 | $ 44,338 | |
Vivendi | 283,335 | 6,147 | |
| 150,545 | ||
Multiline Retail - 1.9% | |||
Kohl's Corp. (a) | 577,812 | 29,324 | |
Macy's, Inc. | 1,051,019 | 23,343 | |
Target Corp. | 726,100 | 39,594 | |
Tuesday Morning Corp. (a) | 468,400 | 2,651 | |
| 94,912 | ||
Specialty Retail - 2.5% | |||
Home Depot, Inc. | 2,012,800 | 68,153 | |
Lowe's Companies, Inc. | 979,600 | 24,245 | |
OfficeMax, Inc. (a) | 400,800 | 7,146 | |
RadioShack Corp. | 523,800 | 10,706 | |
Staples, Inc. | 907,116 | 19,521 | |
| 129,771 | ||
Textiles, Apparel & Luxury Goods - 0.1% | |||
Phillips-Van Heusen Corp. | 57,347 | 3,139 | |
TOTAL CONSUMER DISCRETIONARY | 808,536 | ||
CONSUMER STAPLES - 4.2% | |||
Beverages - 0.9% | |||
Carlsberg AS Series B (a) | 194,588 | 14,868 | |
The Coca-Cola Co. | 655,600 | 33,698 | |
| 48,566 | ||
Food & Staples Retailing - 1.1% | |||
CVS Caremark Corp. | 578,700 | 20,040 | |
Kroger Co. | 981,100 | 19,750 | |
Walgreen Co. | 350,300 | 11,224 | |
Winn-Dixie Stores, Inc. (a) | 547,110 | 6,128 | |
| 57,142 | ||
Food Products - 0.6% | |||
Nestle SA | 618,607 | 28,060 | |
Household Products - 0.7% | |||
Procter & Gamble Co. | 586,800 | 35,848 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Personal Products - 0.1% | |||
Avon Products, Inc. | 138,119 | $ 3,659 | |
Herbalife Ltd. | 51,800 | 2,339 | |
| 5,998 | ||
Tobacco - 0.8% | |||
Philip Morris International, Inc. | 927,959 | 40,942 | |
TOTAL CONSUMER STAPLES | 216,556 | ||
ENERGY - 15.2% | |||
Energy Equipment & Services - 2.4% | |||
Baker Hughes, Inc. | 676,863 | 25,816 | |
Halliburton Co. | 704,200 | 17,485 | |
Nabors Industries Ltd. (a) | 910,300 | 17,323 | |
Noble Corp. | 838,700 | 24,381 | |
Pride International, Inc. (a) | 401,529 | 9,946 | |
Schlumberger Ltd. | 511,676 | 28,731 | |
| 123,682 | ||
Oil, Gas & Consumable Fuels - 12.8% | |||
Anadarko Petroleum Corp. | 455,698 | 23,847 | |
Apache Corp. | 204,000 | 18,266 | |
BP PLC sponsored ADR | 88,600 | 3,805 | |
Chevron Corp. | 1,677,070 | 123,885 | |
Cloud Peak Energy, Inc. | 174,700 | 2,579 | |
ConocoPhillips | 1,148,100 | 59,540 | |
CONSOL Energy, Inc. | 523,000 | 19,079 | |
Devon Energy Corp. | 204,786 | 13,076 | |
EOG Resources, Inc. | 319,786 | 33,526 | |
Exxon Mobil Corp. | 2,763,167 | 167,061 | |
Marathon Oil Corp. | 738,368 | 22,956 | |
Occidental Petroleum Corp. | 529,795 | 43,713 | |
Reliance Industries Ltd. | 452,840 | 10,212 | |
Royal Dutch Shell PLC: | |||
Class A sponsored ADR | 1,461,900 | 76,604 | |
Class B ADR (a) | 235,100 | 11,905 | |
Southwestern Energy Co. (a) | 694,430 | 26,118 | |
Ultra Petroleum Corp. (a) | 88,500 | 4,073 | |
| 660,245 | ||
TOTAL ENERGY | 783,927 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - 26.8% | |||
Capital Markets - 4.7% | |||
Bank of New York Mellon Corp. | 1,395,110 | $ 37,947 | |
Bank Sarasin & Co. Ltd. Series B (Reg.) | 107,678 | 3,924 | |
Credit Suisse Group sponsored ADR (d) | 104,400 | 4,039 | |
Goldman Sachs Group, Inc. | 399,500 | 57,632 | |
Morgan Stanley | 2,603,292 | 70,575 | |
Nomura Holdings, Inc. | 523,600 | 3,253 | |
State Street Corp. | 832,400 | 31,773 | |
T. Rowe Price Group, Inc. | 189,185 | 9,368 | |
UBS AG (a) | 621,000 | 8,348 | |
UBS AG (NY Shares) (a) | 1,144,135 | 15,251 | |
| 242,110 | ||
Commercial Banks - 9.0% | |||
Associated Banc-Corp. | 1,626,055 | 21,838 | |
Barclays PLC | 2,152,049 | 9,546 | |
BB&T Corp. | 236,100 | 7,140 | |
Comerica, Inc. | 455,900 | 17,370 | |
Huntington Bancshares, Inc. | 1,520,800 | 9,368 | |
KeyCorp | 3,049,074 | 24,454 | |
Marshall & Ilsley Corp. | 461,100 | 3,758 | |
Mitsubishi UFJ Financial Group, Inc. sponsored ADR (d) | 3,711,800 | 17,965 | |
PNC Financial Services Group, Inc. | 2,043,700 | 128,242 | |
Standard Chartered PLC (United Kingdom) | 370,378 | 8,815 | |
Sumitomo Mitsui Financial Group, Inc. | 107,700 | 3,195 | |
U.S. Bancorp, Delaware | 1,449,800 | 34,737 | |
Wells Fargo & Co. | 6,190,208 | 177,597 | |
| 464,025 | ||
Consumer Finance - 1.6% | |||
American Express Co. | 618,470 | 24,658 | |
Capital One Financial Corp. | 637,833 | 26,343 | |
Discover Financial Services | 1,721,000 | 23,147 | |
SLM Corp. (a) | 867,281 | 9,635 | |
| 83,783 | ||
Diversified Financial Services - 8.6% | |||
Bank of America Corp. | 11,837,473 | 186,322 | |
Citigroup, Inc. (a) | 10,516,064 | 41,644 | |
CME Group, Inc. | 15,088 | 4,778 | |
JPMorgan Chase & Co. | 4,725,253 | 187,029 | |
Moody's Corp. (d) | 1,086,290 | 22,269 | |
| 442,042 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Insurance - 1.5% | |||
ACE Ltd. | 38,820 | $ 1,908 | |
Allstate Corp. | 194,600 | 5,961 | |
Berkshire Hathaway, Inc. Class B (a) | 107,800 | 7,605 | |
Hartford Financial Services Group, Inc. | 376,900 | 9,449 | |
Montpelier Re Holdings Ltd. | 1,205,300 | 18,815 | |
The First American Corp. | 270,575 | 9,208 | |
The Travelers Companies, Inc. | 386,552 | 19,123 | |
Unum Group | 273,500 | 6,318 | |
XL Capital Ltd. Class A | 53,800 | 947 | |
| 79,334 | ||
Real Estate Investment Trusts - 0.8% | |||
Boston Properties, Inc. | 107,675 | 8,257 | |
HCP, Inc. | 837,700 | 26,689 | |
Segro PLC | 1,191,112 | 4,955 | |
Simon Property Group, Inc. | 17,057 | 1,450 | |
| 41,351 | ||
Real Estate Management & Development - 0.6% | |||
Allgreen Properties Ltd. | 2,732,000 | 1,971 | |
CB Richard Ellis Group, Inc. Class A (a) | 1,043,300 | 16,515 | |
Indiabulls Real Estate Ltd. (a) | 2,558,497 | 8,697 | |
Unite Group PLC (a) | 631,797 | 1,764 | |
| 28,947 | ||
TOTAL FINANCIALS | 1,381,592 | ||
HEALTH CARE - 6.8% | |||
Biotechnology - 0.9% | |||
Amgen, Inc. (a) | 547,300 | 28,339 | |
Biogen Idec, Inc. (a) | 220,870 | 10,476 | |
Cephalon, Inc. (a) | 120,500 | 7,093 | |
Gilead Sciences, Inc. (a) | 35,900 | 1,290 | |
| 47,198 | ||
Health Care Equipment & Supplies - 0.7% | |||
C. R. Bard, Inc. | 134,305 | 10,875 | |
CareFusion Corp. (a) | 761,943 | 19,369 | |
Stryker Corp. | 35,500 | 1,883 | |
| 32,127 | ||
Health Care Providers & Services - 0.4% | |||
UnitedHealth Group, Inc. | 714,600 | 20,773 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Pharmaceuticals - 4.8% | |||
Johnson & Johnson | 473,656 | $ 27,614 | |
Merck & Co., Inc. | 2,507,228 | 84,469 | |
Pfizer, Inc. | 7,070,135 | 107,678 | |
Sanofi-Aventis (d) | 459,182 | 27,936 | |
| 247,697 | ||
TOTAL HEALTH CARE | 347,795 | ||
INDUSTRIALS - 10.6% | |||
Aerospace & Defense - 3.1% | |||
Goodrich Corp. | 89,358 | 6,201 | |
Honeywell International, Inc. | 1,066,600 | 45,618 | |
Lockheed Martin Corp. | 81,800 | 6,537 | |
Raytheon Co. | 143,300 | 7,510 | |
Spirit AeroSystems Holdings, Inc. Class A (a) | 756,800 | 14,742 | |
The Boeing Co. | 475,417 | 30,512 | |
United Technologies Corp. | 736,628 | 49,634 | |
| 160,754 | ||
Building Products - 0.4% | |||
Armstrong World Industries, Inc. (a) | 62,933 | 2,359 | |
Masco Corp. | 1,273,300 | 16,999 | |
| 19,358 | ||
Commercial Services & Supplies - 0.1% | |||
Pitney Bowes, Inc. | 283,400 | 6,416 | |
Construction & Engineering - 0.4% | |||
Fluor Corp. | 226,900 | 10,646 | |
KBR, Inc. | 530,988 | 11,671 | |
| 22,317 | ||
Electrical Equipment - 0.2% | |||
Schneider Electric SA | 79,061 | 7,975 | |
Industrial Conglomerates - 3.1% | |||
General Electric Co. | 4,297,473 | 70,264 | |
Koninklijke Philips Electronics NV (NY Shares) unit | 53,800 | 1,604 | |
Rheinmetall AG | 331,542 | 18,800 | |
Siemens AG sponsored ADR | 455,400 | 40,772 | |
Textron, Inc. | 789,400 | 16,317 | |
Tyco International Ltd. | 364,800 | 13,202 | |
| 160,959 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Machinery - 2.5% | |||
Briggs & Stratton Corp. | 982,216 | $ 20,263 | |
Caterpillar, Inc. | 95,700 | 5,815 | |
Cummins, Inc. | 407,500 | 27,702 | |
Eaton Corp. | 233,400 | 16,326 | |
Ingersoll-Rand Co. Ltd. | 622,053 | 23,209 | |
Kennametal, Inc. | 442,300 | 12,477 | |
Navistar International Corp. (a) | 223,430 | 12,105 | |
SPX Corp. | 106,300 | 6,282 | |
Vallourec SA | 37,400 | 7,001 | |
| 131,180 | ||
Road & Rail - 0.8% | |||
CSX Corp. | 375,500 | 19,620 | |
Union Pacific Corp. | 265,200 | 18,943 | |
| 38,563 | ||
TOTAL INDUSTRIALS | 547,522 | ||
INFORMATION TECHNOLOGY - 6.9% | |||
Communications Equipment - 0.7% | |||
Cisco Systems, Inc. (a) | 832,615 | 19,283 | |
Comverse Technology, Inc. (a) | 627,700 | 5,361 | |
Motorola, Inc. (a) | 1,615,792 | 11,068 | |
| 35,712 | ||
Computers & Peripherals - 0.8% | |||
Hewlett-Packard Co. | 935,475 | 43,041 | |
Electronic Equipment & Components - 1.4% | |||
Agilent Technologies, Inc. (a) | 671,784 | 21,739 | |
Arrow Electronics, Inc. (a) | 237,538 | 6,480 | |
Avnet, Inc. (a) | 475,100 | 13,645 | |
Tyco Electronics Ltd. | 1,084,071 | 31,243 | |
| 73,107 | ||
IT Services - 0.3% | |||
Hewitt Associates, Inc. Class A (a) | 342,168 | 12,746 | |
MoneyGram International, Inc. (a) | 340,342 | 895 | |
Visa, Inc. Class A | 35,900 | 2,601 | |
| 16,242 | ||
Office Electronics - 0.2% | |||
Xerox Corp. | 1,089,380 | 10,142 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Semiconductors & Semiconductor Equipment - 3.3% | |||
Analog Devices, Inc. | 125,600 | $ 3,664 | |
Applied Materials, Inc. | 2,827,900 | 36,508 | |
Intel Corp. | 3,090,900 | 66,207 | |
Micron Technology, Inc. (a) | 1,472,300 | 13,383 | |
National Semiconductor Corp. | 1,593,602 | 22,390 | |
Novellus Systems, Inc. (a) | 182,200 | 4,704 | |
Samsung Electronics Co. Ltd. | 10,133 | 6,541 | |
Teradyne, Inc. (a) | 303,600 | 3,334 | |
Varian Semiconductor Equipment Associates, Inc. (a) | 331,900 | 10,319 | |
| 167,050 | ||
Software - 0.2% | |||
Microsoft Corp. | 326,843 | 8,433 | |
TOTAL INFORMATION TECHNOLOGY | 353,727 | ||
MATERIALS - 2.6% | |||
Chemicals - 1.3% | |||
Clariant AG (Reg.) (a) | 1,117,842 | 13,025 | |
Dow Chemical Co. | 414,932 | 11,166 | |
E.I. du Pont de Nemours & Co. | 747,109 | 27,023 | |
Monsanto Co. | 186,700 | 9,497 | |
Wacker Chemie AG (d) | 43,900 | 5,514 | |
| 66,225 | ||
Construction Materials - 0.2% | |||
HeidelbergCement AG | 177,100 | 9,616 | |
Metals & Mining - 0.9% | |||
Alcoa, Inc. | 1,207,232 | 14,052 | |
Commercial Metals Co. | 407,409 | 6,343 | |
Freeport-McMoRan Copper & Gold, Inc. | 178,537 | 12,507 | |
Nucor Corp. | 315,500 | 13,582 | |
| 46,484 | ||
Paper & Forest Products - 0.2% | |||
Weyerhaeuser Co. | 270,650 | 11,524 | |
TOTAL MATERIALS | 133,849 | ||
TELECOMMUNICATION SERVICES - 5.5% | |||
Diversified Telecommunication Services - 4.9% | |||
AT&T, Inc. | 5,007,300 | 121,677 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
TELECOMMUNICATION SERVICES - continued | |||
Diversified Telecommunication Services - continued | |||
Qwest Communications International, Inc. | 7,619,100 | $ 39,924 | |
Verizon Communications, Inc. | 3,192,800 | 87,866 | |
| 249,467 | ||
Wireless Telecommunication Services - 0.6% | |||
Sprint Nextel Corp. (a) | 6,434,547 | 33,009 | |
TOTAL TELECOMMUNICATION SERVICES | 282,476 | ||
UTILITIES - 3.5% | |||
Electric Utilities - 2.4% | |||
Allegheny Energy, Inc. | 1,200,497 | 24,562 | |
American Electric Power Co., Inc. | 1,243,809 | 39,752 | |
Entergy Corp. | 365,400 | 27,431 | |
FirstEnergy Corp. | 921,831 | 32,458 | |
| 124,203 | ||
Independent Power Producers & Energy Traders - 0.8% | |||
AES Corp. (a) | 2,612,800 | 26,833 | |
Constellation Energy Group, Inc. | 365,400 | 12,928 | |
| 39,761 | ||
Multi-Utilities - 0.3% | |||
Alliant Energy Corp. | 301,039 | 9,675 | |
CMS Energy Corp. | 467,200 | 6,858 | |
| 16,533 | ||
TOTAL UTILITIES | 180,497 | ||
TOTAL COMMON STOCKS (Cost $4,627,566) | 5,036,477 | ||
Preferred Stocks - 0.8% | |||
|
|
|
|
Convertible Preferred Stocks - 0.7% | |||
FINANCIALS - 0.7% | |||
Commercial Banks - 0.1% | |||
Huntington Bancshares, Inc. 8.50% | 7,600 | 7,448 | |
Diversified Financial Services - 0.2% | |||
Citigroup, Inc. 7.50% | 81,000 | 9,691 | |
Preferred Stocks - continued | |||
Shares | Value (000s) | ||
Convertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Insurance - 0.4% | |||
Hartford Financial Services Group, Inc. Series F 7.25% (a) | 285,900 | $ 6,790 | |
XL Capital Ltd. 10.75% | 462,200 | 12,484 | |
| 19,274 | ||
TOTAL FINANCIALS | 36,413 | ||
Nonconvertible Preferred Stocks - 0.1% | |||
FINANCIALS - 0.1% | |||
Insurance - 0.1% | |||
Fondiaria-Sai SpA (Risparmio Shares) | 466,533 | 3,211 | |
TOTAL PREFERRED STOCKS (Cost $36,490) | 39,624 |
Convertible Bonds - 0.8% | ||||
| Principal Amount (000s) |
| ||
CONSUMER DISCRETIONARY - 0.5% | ||||
Automobiles - 0.3% | ||||
Ford Motor Co. 4.25% 11/15/16 | $ 9,710 | 13,653 | ||
Hotels, Restaurants & Leisure - 0.1% | ||||
MGM Mirage, Inc. 4.25% 4/15/15 (e) | 6,480 | 5,974 | ||
Leisure Equipment & Products - 0.0% | ||||
Eastman Kodak Co. 7% 4/1/17 (e) | 1,890 | 1,971 | ||
Media - 0.1% | ||||
Liberty Global, Inc. 4.5% 11/15/16 (e) | 3,190 | 3,692 | ||
TOTAL CONSUMER DISCRETIONARY | 25,290 | |||
FINANCIALS - 0.1% | ||||
Thrifts & Mortgage Finance - 0.1% | ||||
MGIC Investment Corp. 0% 4/1/63 (c)(e) | 5,910 | 6,043 | ||
INDUSTRIALS - 0.0% | ||||
Airlines - 0.0% | ||||
AMR Corp. 6.25% 10/15/14 | 1,800 | 1,888 | ||
Convertible Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
INFORMATION TECHNOLOGY - 0.1% | ||||
Semiconductors & Semiconductor Equipment - 0.1% | ||||
Micron Technology, Inc. 1.875% 6/1/14 | $ 5,220 | $ 4,639 | ||
MATERIALS - 0.1% | ||||
Metals & Mining - 0.1% | ||||
United States Steel Corp. 4% 5/15/14 | 2,900 | 4,723 | ||
TOTAL CONVERTIBLE BONDS (Cost $36,418) | 42,583 |
Money Market Funds - 1.6% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.23% (f) | 26,465,037 | 26,465 | |
Fidelity Securities Lending Cash Central Fund, 0.24% (b)(f) | 55,286,990 | 55,287 | |
TOTAL MONEY MARKET FUNDS (Cost $81,752) | 81,752 | ||
TOTAL INVESTMENT PORTFOLIO - 101.0% (Cost $4,782,226) | 5,200,436 | ||
NET OTHER ASSETS - (1.0)% | (52,568) | ||
NET ASSETS - 100% | $ 5,147,868 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security initially issued in zero coupon form which converts to coupon form at a specified rate and date. The rate shown is the rate at period end. |
(d) Security or a portion of the security is on loan at period end. |
(e) 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 end of the period, the value of these securities amounted to $17,680,000 or 0.3% of net assets. |
(f) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 17 |
Fidelity Securities Lending Cash Central Fund | 492 |
Total | $ 509 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 808,536 | $ 808,536 | $ - | $ - |
Consumer Staples | 216,556 | 216,556 | - | - |
Energy | 783,927 | 783,927 | - | - |
Financials | 1,421,216 | 1,406,978 | 14,238 | - |
Health Care | 347,795 | 347,795 | - | - |
Industrials | 547,522 | 547,522 | - | - |
Information Technology | 353,727 | 353,727 | - | - |
Materials | 133,849 | 133,849 | - | - |
Telecommunication Services | 282,476 | 282,476 | - | - |
Utilities | 180,497 | 180,497 | - | - |
Corporate Bonds | 42,583 | - | 42,583 | - |
Money Market Funds | 81,752 | 81,752 | - | - |
Total Investments in Securities: | $ 5,200,436 | $ 5,143,615 | $ 56,821 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 87.8% |
Switzerland | 2.8% |
United Kingdom | 2.3% |
Germany | 1.9% |
France | 1.3% |
Others (Individually Less Than 1%) | 3.9% |
| 100.0% |
Income Tax Information |
At November 30, 2009, the fund had a capital loss carryforward of approximately $2,327,266,000 of which $1,317,781,000 and $1,009,485,000 will expire on November 30, 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $52,622) - See accompanying schedule: Unaffiliated issuers (cost $4,700,474) | $ 5,118,684 |
|
Fidelity Central Funds (cost $81,752) | 81,752 |
|
Total Investments (cost $4,782,226) |
| $ 5,200,436 |
Foreign currency held at value (cost $1,565) | 1,564 | |
Receivable for investments sold | 16,542 | |
Receivable for fund shares sold | 4,400 | |
Dividends receivable | 13,549 | |
Interest receivable | 201 | |
Distributions receivable from Fidelity Central Funds | 318 | |
Prepaid expenses | 5 | |
Other receivables | 310 | |
Total assets | 5,237,325 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 25,799 | |
Payable for fund shares redeemed | 4,996 | |
Accrued management fee | 2,039 | |
Other affiliated payables | 1,001 | |
Other payables and accrued expenses | 335 | |
Collateral on securities loaned, at value | 55,287 | |
Total liabilities | 89,457 | |
|
|
|
Net Assets | $ 5,147,868 | |
Net Assets consist of: |
| |
Paid in capital | $ 6,871,182 | |
Undistributed net investment income | 17,563 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,159,050) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 418,173 | |
Net Assets | $ 5,147,868 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Equity-Income II: Net Asset Value, offering price and redemption price per share ($4,906,299 ÷ 304,494 shares) | $ 16.11 | |
|
|
|
Class K: | $ 16.12 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Operations
Amounts in thousands | Six months ended May 31, 2010 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 58,725 |
Interest |
| 790 |
Income from Fidelity Central Funds |
| 509 |
Total income |
| 60,024 |
|
|
|
Expenses | ||
Management fee | $ 12,594 | |
Transfer agent fees | 5,406 | |
Accounting and security lending fees | 585 | |
Custodian fees and expenses | 80 | |
Independent trustees' compensation | 15 | |
Appreciation in deferred trustee compensation account | 1 | |
Registration fees | 38 | |
Audit | 42 | |
Legal | 15 | |
Interest | 2 | |
Miscellaneous | 44 | |
Total expenses before reductions | 18,822 | |
Expense reductions | (98) | 18,724 |
Net investment income (loss) | 41,300 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers (net of foreign taxes of $32) | 309,586 | |
Foreign currency transactions | (182) | |
Capital gain distributions from Fidelity Central Funds | 1 | |
Total net realized gain (loss) |
| 309,405 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $84) | (314,105) | |
Assets and liabilities in foreign currencies | (38) | |
Total change in net unrealized appreciation (depreciation) |
| (314,143) |
Net gain (loss) | (4,738) | |
Net increase (decrease) in net assets resulting from operations | $ 36,562 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Amounts in thousands | Six months ended May 31, 2010 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 41,300 | $ 98,006 |
Net realized gain (loss) | 309,405 | (645,454) |
Change in net unrealized appreciation (depreciation) | (314,143) | 1,598,050 |
Net increase (decrease) in net assets resulting | 36,562 | 1,050,602 |
Distributions to shareholders from net investment income | (39,578) | (107,786) |
Share transactions - net increase (decrease) | (344,586) | (813,458) |
Total increase (decrease) in net assets | (347,602) | 129,358 |
|
|
|
Net Assets | ||
Beginning of period | 5,495,470 | 5,366,112 |
End of period (including undistributed net investment income of $17,563 and undistributed net investment income of $15,841, respectively) | $ 5,147,868 | $ 5,495,470 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Equity-Income II
| Six months ended May 31, 2010 | Years ended November 30, | ||||
| (Unaudited) | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 16.16 | $ 13.32 | $ 24.29 | $ 25.12 | $ 24.57 | $ 23.90 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .13 | .27 | .33 | .33 | .35 | .35 |
Net realized and unrealized gain (loss) | (.06) | 2.86 | (9.72) | 1.29 | 2.44 | 1.36 |
Total from investment operations | .07 | 3.13 | (9.39) | 1.62 | 2.79 | 1.71 |
Distributions from net investment income | (.12) | (.29) | (.36) | (.38) | (.33) | (.41) |
Distributions from net realized gain | - | - | (1.22) | (2.07) | (1.91) | (.63) |
Total distributions | (.12) | (.29) | (1.58) | (2.45) | (2.24) | (1.04) |
Net asset value, end of period | $ 16.11 | $ 16.16 | $ 13.32 | $ 24.29 | $ 25.12 | $ 24.57 |
Total Return B,C | .39% | 24.07% | (41.13)% | 6.90% | 12.28% | 7.41% |
Ratios to Average Net Assets E,G |
|
|
|
|
| |
Expenses before reductions | .69% A | .75% | .67% | .65% | .67% | .68% |
Expenses net of fee waivers, if any | .69% A | .75% | .67% | .65% | .67% | .68% |
Expenses net of all reductions | .69% A | .74% | .67% | .65% | .66% | .62% |
Net investment income (loss) | 1.50% A | 1.98% | 1.70% | 1.34% | 1.50% | 1.49% |
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (in millions) | $ 4,906 | $ 5,288 | $ 5,212 | $ 10,530 | $ 11,635 | $ 12,248 |
Portfolio turnover rate F | 29% A | 75% | 76% | 47% | 160% | 143% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class K
| Six months ended May 31, 2010 | Years ended | |
| (Unaudited) | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 16.16 | $ 13.32 | $ 21.42 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | .14 | .29 | .17 |
Net realized and unrealized gain (loss) | (.05) | 2.87 | (8.08) |
Total from investment operations | .09 | 3.16 | (7.91) |
Distributions from net investment income | (.13) | (.32) | (.19) |
Net asset value, end of period | $ 16.12 | $ 16.16 | $ 13.32 |
Total Return B,C | .53% | 24.30% | (37.13)% |
Ratios to Average Net Assets E,H |
|
|
|
Expenses before reductions | .54% A | .56% | .54% A |
Expenses net of fee waivers, if any | .54% A | .56% | .54% A |
Expenses net of all reductions | .54% A | .56% | .54% A |
Net investment income (loss) | 1.65% A | 2.17% | 2.11% A |
Supplemental Data |
|
|
|
Net assets, end of period (in millions) | $ 242 | $ 208 | $ 154 |
Portfolio turnover rate F | 29% A | 75% | 76% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2010 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Equity-Income II Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Equity-Income II and Class K shares each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Security Valuation - continued
Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2010 is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which 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. Distributions received on
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Semiannual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 831,249 |
Gross unrealized depreciation | (550,669) |
Net unrealized appreciation (depreciation) | $ 280,580 |
Tax cost | $ 4,919,856 |
4. Operating Policies.
Restricted Securities. The Fund may 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. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $791,739 and $1,121,889, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .46% of the Fund's average net assets.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Equity-Income II. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Equity-Income II | $ 5,348 | .20 |
Class K | 58 | .05 |
| $ 5,406 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $8 for the period.
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 funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 9,021 | .41% | $ 2 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to
Semiannual Report
7. Committed Line of Credit - continued
pay commitment fees on its pro-rata portion of the line of credit, which amounted to $11 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $492.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $98 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended | Year ended |
From net investment income |
|
|
Equity-Income II | $ 37,877 | $ 103,988 |
Class K | 1,701 | 3,798 |
Total | $ 39,578 | $ 107,786 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Six months ended May 31, | Year ended | Six months ended May 31, | Year ended |
Equity-Income II |
|
|
|
|
Shares sold | 7,098 | 20,468 | $ 119,021 | $ 264,593 |
Conversion to Class K | - | (6,298) | - | (80,663) |
Reinvestment of distributions | 2,124 | 7,638 | 35,952 | 98,777 |
Shares redeemed | (31,945) | (85,985) | (534,709) | (1,111,308) |
Net increase (decrease) | (22,723) | (64,177) | $ (379,736) | $ (828,601) |
Class K |
|
|
|
|
Shares sold | 3,335 | 3,143 | $ 55,215 | $ 41,178 |
Conversion from Equity-Income II | - | 6,298 | - | 80,663 |
Reinvestment of distributions | 100 | 293 | 1,701 | 3,798 |
Shares redeemed | (1,303) | (8,420) | (21,766) | (110,496) |
Net increase (decrease) | 2,132 | 1,314 | $ 35,150 | $ 15,143 |
A Conversion transactions for Class K and Equity-Income II are presented for the period December 1, 2008 to August 31, 2009.
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your workplace benefits (including your workplace savings plan, investments, and additional services) via your telephone or PC. You can access your plan and account information and research your investments 24 hours a day.
By Phone
Fidelity provides a single toll-free number to access plan information, account balances, positions, and quotes*. 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)
Fidelity Workplace
Investing
1-800-835-5092
By PC
Fidelity's web site on the Internet provides a wide range of information, including plan information, daily financial news, fund performance, interactive planning tools, and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.401k.com
* 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.
Semiannual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
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 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
FIL Investment Advisors
FIL Investments (Japan) Limited
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Northern Trust Company
Chicago, IL
EII-K-USAN-0710 1.863199.101
Fidelity®
Independence
Fund
Semiannual Report
May 31, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) website at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
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 LLC or an affiliated company.
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.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
A yearlong uptrend in global equity markets came under significant pressure in May 2010 when investor sentiment turned bearish amid growing concern that Europe's debt crisis would expand and slow or derail economic recovery. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2009 to May 31, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Semiannual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
|
| Expenses Paid |
Independence | 1.02% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,046.50 | $ 5.20 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.85 | $ 5.14 |
Class K | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,047.30 | $ 4.44 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.59 | $ 4.38 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of May 31, 2010 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 4.7 | 3.0 |
Delta Air Lines, Inc. | 4.0 | 2.6 |
JPMorgan Chase & Co. | 3.5 | 2.6 |
Wells Fargo & Co. | 3.2 | 3.3 |
Dow Chemical Co. | 2.4 | 2.7 |
Cisco Systems, Inc. | 2.3 | 1.8 |
General Electric Co. | 2.2 | 0.0 |
Express Scripts, Inc. | 2.2 | 3.0 |
Bank of America Corp. | 2.2 | 3.4 |
PNC Financial Services Group, Inc. | 2.1 | 1.9 |
| 28.8 | |
Top Five Market Sectors as of May 31, 2010 | ||
| % of fund's | % of fund's net assets |
Information Technology | 24.6 | 28.3 |
Industrials | 20.2 | 10.1 |
Financials | 17.7 | 22.4 |
Consumer Discretionary | 16.9 | 10.6 |
Energy | 7.2 | 9.0 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2010* | As of November 30, 2009** | ||||||
Stocks 99.7% |
| Stocks 99.9% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 13.1% |
| ** Foreign investments | 16.0% |
|
Semiannual Report
Investments May 31, 2010 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 16.9% | |||
Automobiles - 1.0% | |||
Bayerische Motoren Werke AG (BMW) (c) | 600,000 | $ 28,025 | |
Daimler AG (Germany) (a) | 200,000 | 10,088 | |
| 38,113 | ||
Hotels, Restaurants & Leisure - 3.6% | |||
Chipotle Mexican Grill, Inc. (a) | 150,000 | 21,342 | |
Ctrip.com International Ltd. sponsored ADR (a) | 1,596,900 | 62,902 | |
Las Vegas Sands Corp. (a) | 769,000 | 18,056 | |
MGM Mirage, Inc. (a) | 569,000 | 7,090 | |
Starwood Hotels & Resorts Worldwide, Inc. | 600,000 | 27,750 | |
| 137,140 | ||
Household Durables - 1.4% | |||
Cyrela Brazil Realty SA | 1,463,800 | 15,742 | |
Gafisa SA sponsored ADR (c) | 2,584,000 | 30,750 | |
Whirlpool Corp. | 75,000 | 7,833 | |
| 54,325 | ||
Internet & Catalog Retail - 1.5% | |||
Amazon.com, Inc. (a) | 369,800 | 46,395 | |
Priceline.com, Inc. (a) | 57,000 | 10,896 | |
| 57,291 | ||
Media - 0.6% | |||
Discovery Communications, Inc. (a) | 150,000 | 5,649 | |
Time Warner Cable, Inc. | 300,000 | 16,419 | |
| 22,068 | ||
Multiline Retail - 2.7% | |||
Dollarama, Inc. | 200,000 | 4,677 | |
Macy's, Inc. | 2,770,800 | 61,539 | |
Nordstrom, Inc. | 975,100 | 38,711 | |
| 104,927 | ||
Specialty Retail - 3.8% | |||
Bed Bath & Beyond, Inc. (a) | 600,000 | 26,922 | |
Home Depot, Inc. | 341,500 | 11,563 | |
Lowe's Companies, Inc. | 1,892,000 | 46,827 | |
Tiffany & Co., Inc. | 400,000 | 18,172 | |
Williams-Sonoma, Inc. | 1,336,100 | 39,923 | |
| 143,407 | ||
Textiles, Apparel & Luxury Goods - 2.3% | |||
Coach, Inc. | 150,000 | 6,167 | |
Deckers Outdoor Corp. (a) | 250,000 | 36,180 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Textiles, Apparel & Luxury Goods - continued | |||
Fossil, Inc. (a) | 500,000 | $ 18,750 | |
Phillips-Van Heusen Corp. | 525,800 | 28,777 | |
| 89,874 | ||
TOTAL CONSUMER DISCRETIONARY | 647,145 | ||
CONSUMER STAPLES - 1.3% | |||
Personal Products - 1.3% | |||
Estee Lauder Companies, Inc. Class A | 471,600 | 27,480 | |
Hengan International Group Co. Ltd. | 2,781,000 | 20,251 | |
| 47,731 | ||
ENERGY - 7.2% | |||
Energy Equipment & Services - 2.7% | |||
Baker Hughes, Inc. | 756,900 | 28,868 | |
Dril-Quip, Inc. (a) | 278,300 | 13,556 | |
Schlumberger Ltd. | 840,100 | 47,172 | |
Smith International, Inc. | 333,400 | 12,523 | |
| 102,119 | ||
Oil, Gas & Consumable Fuels - 4.5% | |||
Concho Resources, Inc. (a) | 666,300 | 34,681 | |
EOG Resources, Inc. | 150,000 | 15,726 | |
EXCO Resources, Inc. | 500,000 | 8,625 | |
Occidental Petroleum Corp. | 662,100 | 54,630 | |
Pioneer Natural Resources Co. | 300,000 | 19,110 | |
Southwestern Energy Co. (a) | 854,900 | 32,153 | |
Whiting Petroleum Corp. (a) | 100,000 | 8,371 | |
| 173,296 | ||
TOTAL ENERGY | 275,415 | ||
FINANCIALS - 17.7% | |||
Capital Markets - 0.6% | |||
Goldman Sachs Group, Inc. | 150,000 | 21,639 | |
Commercial Banks - 7.4% | |||
Comerica, Inc. | 350,000 | 13,335 | |
Huntington Bancshares, Inc. | 1,500,000 | 9,240 | |
Itau Unibanco Banco Multiplo SA ADR (c) | 714,700 | 13,158 | |
Marshall & Ilsley Corp. | 1,500,000 | 12,225 | |
PNC Financial Services Group, Inc. | 1,306,000 | 81,952 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Commercial Banks - continued | |||
Regions Financial Corp. | 4,087,200 | $ 31,185 | |
Wells Fargo & Co. | 4,278,600 | 122,753 | |
| 283,848 | ||
Consumer Finance - 1.7% | |||
American Express Co. | 1,591,400 | 63,449 | |
Diversified Financial Services - 6.0% | |||
Apollo Global Management LLC (d) | 1,703,400 | 13,627 | |
Bank of America Corp. | 5,360,781 | 84,379 | |
JPMorgan Chase & Co. | 3,350,200 | 132,601 | |
| 230,607 | ||
Insurance - 2.0% | |||
Assured Guaranty Ltd. | 392,800 | 6,599 | |
Hartford Financial Services Group, Inc. | 1,576,300 | 39,518 | |
Lincoln National Corp. | 1,144,200 | 30,276 | |
| 76,393 | ||
TOTAL FINANCIALS | 675,936 | ||
HEALTH CARE - 6.9% | |||
Biotechnology - 1.1% | |||
Dendreon Corp. (a) | 200,000 | 8,680 | |
Gilead Sciences, Inc. (a) | 100,000 | 3,592 | |
United Therapeutics Corp. (a) | 585,300 | 29,979 | |
| 42,251 | ||
Health Care Equipment & Supplies - 1.6% | |||
Edwards Lifesciences Corp. (a) | 200,000 | 10,106 | |
Intuitive Surgical, Inc. (a) | 80,000 | 25,822 | |
Varian Medical Systems, Inc. (a) | 200,000 | 10,018 | |
Volcano Corp. (a) | 600,000 | 13,314 | |
| 59,260 | ||
Health Care Providers & Services - 2.9% | |||
Emergency Medical Services Corp. Class A (a) | 200,000 | 10,714 | |
Express Scripts, Inc. (a) | 838,900 | 84,393 | |
HMS Holdings Corp. (a) | 55,900 | 3,033 | |
Medco Health Solutions, Inc. (a) | 249,800 | 14,401 | |
| 112,541 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Health Care Technology - 1.2% | |||
Cerner Corp. (a) | 383,200 | $ 32,078 | |
SXC Health Solutions Corp. (a) | 200,000 | 14,835 | |
| 46,913 | ||
Pharmaceuticals - 0.1% | |||
Valeant Pharmaceuticals International (a) | 100,000 | 4,648 | |
TOTAL HEALTH CARE | 265,613 | ||
INDUSTRIALS - 20.2% | |||
Aerospace & Defense - 2.7% | |||
BE Aerospace, Inc. (a) | 500,000 | 13,560 | |
Goodrich Corp. | 494,200 | 34,297 | |
The Boeing Co. | 889,500 | 57,088 | |
| 104,945 | ||
Air Freight & Logistics - 1.3% | |||
Air Lease Corp. Class A (a)(d) | 500,600 | 10,012 | |
United Parcel Service, Inc. Class B | 650,000 | 40,794 | |
| 50,806 | ||
Airlines - 7.9% | |||
Continental Airlines, Inc. Class B (a) | 3,400,000 | 71,740 | |
Delta Air Lines, Inc. (a) | 11,150,775 | 151,428 | |
Southwest Airlines Co. | 4,666,900 | 58,056 | |
UAL Corp. (a) | 988,500 | 19,780 | |
| 301,004 | ||
Construction & Engineering - 0.5% | |||
Fluor Corp. | 100,000 | 4,692 | |
Jacobs Engineering Group, Inc. (a) | 300,000 | 12,528 | |
| 17,220 | ||
Industrial Conglomerates - 2.2% | |||
General Electric Co. | 5,188,600 | 84,834 | |
Machinery - 4.3% | |||
Caterpillar, Inc. | 593,000 | 36,031 | |
Cummins, Inc. | 482,200 | 32,780 | |
Kennametal, Inc. | 900,000 | 25,389 | |
MAN SE | 250,000 | 21,463 | |
Parker Hannifin Corp. | 677,500 | 41,639 | |
Timken Co. | 200,000 | 5,758 | |
| 163,060 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Road & Rail - 1.3% | |||
CSX Corp. | 562,700 | $ 29,401 | |
Union Pacific Corp. | 281,400 | 20,100 | |
| 49,501 | ||
TOTAL INDUSTRIALS | 771,370 | ||
INFORMATION TECHNOLOGY - 24.6% | |||
Communications Equipment - 4.3% | |||
Cisco Systems, Inc. (a) | 3,749,300 | 86,834 | |
Juniper Networks, Inc. (a) | 742,300 | 19,760 | |
Research In Motion Ltd. (a) | 690,600 | 42,058 | |
Riverbed Technology, Inc. (a) | 500,000 | 13,365 | |
ZTE Corp. (H Shares) | 750,000 | 2,485 | |
| 164,502 | ||
Computers & Peripherals - 5.6% | |||
Apple, Inc. (a) | 695,700 | 178,904 | |
Dell, Inc. (a) | 1,500,000 | 19,995 | |
Seagate Technology (a) | 1,061,600 | 16,306 | |
| 215,205 | ||
Electronic Equipment & Components - 0.6% | |||
Agilent Technologies, Inc. (a) | 652,000 | 21,099 | |
Internet Software & Services - 3.7% | |||
Baidu.com, Inc. sponsored ADR (a) | 331,671 | 24,282 | |
eBay, Inc. (a) | 2,500,400 | 53,534 | |
Google, Inc. Class A (a) | 13,500 | 6,550 | |
Tencent Holdings Ltd. | 2,887,500 | 55,700 | |
| 140,066 | ||
IT Services - 2.0% | |||
Cognizant Technology Solutions Corp. Class A (a) | 600,000 | 30,024 | |
Visa, Inc. Class A | 630,500 | 45,686 | |
| 75,710 | ||
Semiconductors & Semiconductor Equipment - 3.2% | |||
Aixtron AG (c) | 500,000 | 13,499 | |
Broadcom Corp. Class A | 1,045,500 | 36,091 | |
Cree, Inc. (a) | 300,000 | 19,911 | |
Marvell Technology Group Ltd. (a) | 2,277,400 | 43,225 | |
NVIDIA Corp. (a) | 868,600 | 11,413 | |
| 124,139 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Software - 5.2% | |||
Citrix Systems, Inc. (a) | 870,600 | $ 37,967 | |
Informatica Corp. (a) | 1,350,200 | 34,835 | |
Microsoft Corp. | 2,542,400 | 65,594 | |
NCsoft Corp. | 35,000 | 5,648 | |
Nintendo Co. Ltd. | 20,000 | 5,900 | |
Rovi Corp. (a) | 985,300 | 36,791 | |
Taleo Corp. Class A (a) | 500,000 | 12,525 | |
| 199,260 | ||
TOTAL INFORMATION TECHNOLOGY | 939,981 | ||
MATERIALS - 4.1% | |||
Chemicals - 3.3% | |||
Dow Chemical Co. | 3,392,200 | 91,284 | |
Ferro Corp. (a) | 669,400 | 6,031 | |
Lubrizol Corp. | 100,000 | 8,857 | |
Rockwood Holdings, Inc. (a) | 778,300 | 20,189 | |
| 126,361 | ||
Metals & Mining - 0.8% | |||
Alcoa, Inc. | 2,726,600 | 31,738 | |
TOTAL MATERIALS | 158,099 | ||
TELECOMMUNICATION SERVICES - 0.8% | |||
Wireless Telecommunication Services - 0.8% | |||
NII Holdings, Inc. (a) | 600,000 | 21,882 | |
Vivo Participacoes SA sponsored ADR | 383,100 | 10,466 | |
| 32,348 | ||
TOTAL COMMON STOCKS (Cost $3,328,717) | 3,813,638 | ||
Money Market Funds - 0.9% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 0.23% (e) | 5,198,200 | $ 5,198 | |
Fidelity Securities Lending Cash Central Fund, 0.24% (b)(e) | 27,716,470 | 27,716 | |
TOTAL MONEY MARKET FUNDS (Cost $32,914) | 32,914 | ||
TOTAL INVESTMENT PORTFOLIO - 100.6% (Cost $3,361,631) | 3,846,552 | ||
NET OTHER ASSETS - (0.6)% | (22,690) | ||
NET ASSETS - 100% | $ 3,823,862 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $23,639,000 or 0.6% of net assets. |
(e) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 5 |
Fidelity Securities Lending Cash Central Fund | 371 |
Total | $ 376 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 647,145 | $ 647,145 | $ - | $ - |
Consumer Staples | 47,731 | 47,731 | - | - |
Energy | 275,415 | 275,415 | - | - |
Financials | 675,936 | 662,309 | 13,627 | - |
Health Care | 265,613 | 265,613 | - | - |
Industrials | 771,370 | 761,358 | 10,012 | - |
Information Technology | 939,981 | 939,981 | - | - |
Materials | 158,099 | 158,099 | - | - |
Telecommunication Services | 32,348 | 32,348 | - | - |
Money Market Funds | 32,914 | 32,914 | - | - |
Total Investments in Securities: | $ 3,846,552 | $ 3,822,913 | $ 23,639 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.9% |
Cayman Islands | 2.6% |
China | 2.2% |
Germany | 2.0% |
Brazil | 1.9% |
Canada | 1.6% |
Bermuda | 1.3% |
Netherlands Antilles | 1.2% |
Others (Individually Less Than 1%) | 0.3% |
| 100.0% |
Income Tax Information |
At November 30, 2009, the fund had a capital loss carryforward of approximately $2,045,828,000 of which $1,272,786,000 and $773,042,000 will expire on November 30, 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $26,364) - See accompanying schedule: Unaffiliated issuers (cost $3,328,717) | $ 3,813,638 |
|
Fidelity Central Funds (cost $32,914) | 32,914 |
|
Total Investments (cost $3,361,631) |
| $ 3,846,552 |
Cash | 119 | |
Foreign currency held at value (cost $365) | 364 | |
Receivable for investments sold | 89,114 | |
Receivable for fund shares sold | 1,293 | |
Dividends receivable | 4,244 | |
Distributions receivable from Fidelity Central Funds | 53 | |
Prepaid expenses | 3 | |
Other receivables | 137 | |
Total assets | 3,941,879 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 84,571 | |
Payable for fund shares redeemed | 2,398 | |
Accrued management fee | 2,433 | |
Other affiliated payables | 758 | |
Other payables and accrued expenses | 141 | |
Collateral on securities loaned, at value | 27,716 | |
Total liabilities | 118,017 | |
|
|
|
Net Assets | $ 3,823,862 | |
Net Assets consist of: |
| |
Paid in capital | $ 5,014,276 | |
Accumulated net investment loss | (4,630) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,670,707) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 484,923 | |
Net Assets | $ 3,823,862 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Independence: Net Asset Value, offering price and redemption price per share ($3,669,575 ÷ 183,937 shares) | $ 19.95 | |
|
|
|
Class K: | $ 19.95 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Operations
Amounts in thousands | Six months ended May 31, 2010 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 16,046 |
Income from Fidelity Central Funds |
| 376 |
Total income |
| 16,422 |
|
|
|
Expenses | ||
Management fee | $ 11,365 | |
Performance adjustment | 4,504 | |
Transfer agent fees | 3,931 | |
Accounting and security lending fees | 558 | |
Custodian fees and expenses | 71 | |
Independent trustees' compensation | 12 | |
Registration fees | 42 | |
Audit | 36 | |
Legal | 13 | |
Interest | 2 | |
Miscellaneous | 32 | |
Total expenses before reductions | 20,566 | |
Expense reductions | (144) | 20,422 |
Net investment income (loss) | (4,000) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 433,482 | |
Capital gain distributions from Fidelity Central Funds | 5 | |
Foreign currency transactions | (159) | |
Futures contracts | 683 | |
Total net realized gain (loss) |
| 434,011 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (236,175) | |
Assets and liabilities in foreign currencies | (12) | |
Total change in net unrealized appreciation (depreciation) |
| (236,187) |
Net gain (loss) | 197,824 | |
Net increase (decrease) in net assets resulting from operations | $ 193,824 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Changes in Net Assets
Amounts in thousands | Six months ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (4,000) | $ 13,175 |
Net realized gain (loss) | 434,011 | (303,965) |
Change in net unrealized appreciation (depreciation) | (236,187) | 1,385,715 |
Net increase (decrease) in net assets resulting | 193,824 | 1,094,925 |
Distributions to shareholders from net investment income | (7,207) | (20,945) |
Distributions to shareholders from net realized gain | (1,044) | - |
Total distributions | (8,251) | (20,945) |
Share transactions - net increase (decrease) | (363,690) | (556,508) |
Total increase (decrease) in net assets | (178,117) | 517,472 |
|
|
|
Net Assets | ||
Beginning of period | 4,001,979 | 3,484,507 |
End of period (including accumulated net investment loss of $4,630 and undistributed net investment income of $6,577, respectively) | $ 3,823,862 | $ 4,001,979 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Independence
| Six months ended | Years ended November 30, | ||||
| (Unaudited) | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 19.10 | $ 14.17 | $ 27.60 | $ 22.03 | $ 19.46 | $ 17.39 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | (.02) | .06 | .08 | .07 | .08 | .04 |
Net realized and unrealized gain (loss) | .91 | 4.96 | (12.75) | 5.60 | 2.54 | 2.14 |
Total from investment operations | .89 | 5.02 | (12.67) | 5.67 | 2.62 | 2.18 |
Distributions from net investment income | (.03) | (.09) | (.01) | (.10) | (.05) | (.11) |
Distributions from net realized gain | (.01) | - | (.75) | - | - | - |
Total distributions | (.04) H | (.09) | (.76) | (.10) | (.05) | (.11) |
Net asset value, end of period | $ 19.95 | $ 19.10 | $ 14.17 | $ 27.60 | $ 22.03 | $ 19.46 |
Total Return B, C | 4.65% | 35.62% | (47.19)% | 25.85% | 13.49% | 12.61% |
Ratios to Average Net Assets E, G |
|
|
|
|
| |
Expenses before reductions | 1.02% A | .92% | .91% | .90% | .87% | .77% |
Expenses net of fee waivers, if any | 1.02% A | .92% | .91% | .90% | .87% | .77% |
Expenses net of all reductions | 1.01% A | .91% | .90% | .89% | .86% | .72% |
Net investment income (loss) | (.20)% A | .36% | .34% | .31% | .41% | .24% |
Supplemental Data |
|
|
|
|
| |
Net assets, end of period (in millions) | $ 3,670 | $ 3,824 | $ 3,407 | $ 5,899 | $ 4,723 | $ 4,654 |
Portfolio turnover rate F | 104% A | 173% | 173% | 175% | 169% | 119% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Total distributions of $.04 per share is comprised of distributions from net investment income of $.033 and distributions from net realized gain of $.005 per share.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class K
| Six months ended | Years ended November 30, | |
| (Unaudited) | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 19.12 | $ 14.18 | $ 28.56 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | (.01) | .09 | .09 |
Net realized and unrealized gain (loss) | .91 | 4.96 | (14.47) |
Total from investment operations | .90 | 5.05 | (14.38) |
Distributions from net investment income | (.07) | (.11) | - |
Distributions from net realized gain | (.01) | - | - |
Total distributions | (.07) I | (.11) | - |
Net asset value, end of period | $ 19.95 | $ 19.12 | $ 14.18 |
Total Return B, C | 4.73% | 35.94% | (50.35)% |
Ratios to Average Net Assets E, H |
|
|
|
Expenses before reductions | .87% A | .73% | .79% A |
Expenses net of fee waivers, if any | .87% A | .73% | .79% A |
Expenses net of all reductions | .86% A | .72% | .78% A |
Net investment income (loss) | (.06)% A | .56% | 1.04% A |
Supplemental Data |
|
|
|
Net assets, end of period (in millions) | $ 154 | $ 178 | $ 78 |
Portfolio turnover rate F | 104% A | 173% | 173% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Total distributions of $.07 per share is comprised of distributions from net investment income of $.067 and distributions from net realized gain of $.005 per share.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2010 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Independence Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Independence and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2010, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Semiannual Report
3. 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, foreign currency transactions, partnerships, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 615,912 |
Gross unrealized depreciation | (184,559) |
Net unrealized appreciation (depreciation) | $ 431,353 |
|
|
Tax cost | $ 3,415,199 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
4. Operating Policies.
Restricted Securities. The Fund may 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. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund uses derivative instruments (derivatives), including futures contracts, in order to meet its investment objectives. The strategy is to use derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives may increase or decrease its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to sell the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. The Fund's maximum risk of loss from counterparty credit risk is generally the aggregate unrealized appreciation and unpaid counterparty fees in excess of any collateral pledged by the counterparty to the Fund. Counterparty risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Risk of loss may exceed the amounts recognized in the Statement of Assets and Liabilities.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund uses futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments (variation margin) are made or received by a fund depending on the
Semiannual Report
5. Derivative Instruments - continued
Futures Contracts - continued
daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
The underlying face amount at value of open futures contracts at period end, if any, is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments. The receivable and/or payable for the variation margin are reflected in the Statement of Assets and Liabilities.
Certain risks may arise upon entering into futures contracts, including the risk that an illiquid market may limit the ability to close out a futures contract prior to settlement date.
During the period the Fidelity Independence Fund recognized net realized gain (loss) of $683 and a change in net unrealized appreciation (depreciation) of $0, related to its investment in futures contracts. These amounts are included in the Statement of Operations.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $2,083,072 and $2,457,487, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Independence, as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .78% of the Fund's average net assets.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
7. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Independence. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Independence | $ 3,884 | .20 |
Class K | 47 | .05 |
| $ 3,931 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $30 for the period.
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 funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average | Interest |
Borrower | $ 8,993 | .41% | $ 2 |
Semiannual Report
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $8 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $371.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $144 for the period.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income |
|
|
Independence | $ 6,585 | $ 20,326 |
Class K | 622 | 619 |
Total | $ 7,207 | $ 20,945 |
From net realized gain |
|
|
Independence | $ 998 | $ - |
Class K | 46 | - |
Total | $ 1,044 | $ - |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Six months ended | Year ended | Six months ended | Year ended |
Independence |
|
|
|
|
Shares sold | 6,456 | 19,015 | $ 132,888 | $ 286,391 |
Conversion to Class K | - | (4,612) | - | (73,200) |
Reinvestment of distributions | 385 | 1,443 | 7,469 | 20,026 |
Shares redeemed | (23,092) | (56,069) | (472,772) | (841,423) |
Net increase (decrease) | (16,251) | (40,223) | $ (332,415) | $ (608,206) |
Class K |
|
|
|
|
Shares sold | 1,695 | 3,711 | $ 35,378 | $ 53,643 |
Conversion from Independence | - | 4,612 | - | 73,200 |
Reinvestment of distributions | 35 | 45 | 668 | 619 |
Shares redeemed | (3,326) | (4,524) | (67,321) | (75,764) |
Net increase (decrease) | (1,596) | 3,844 | $ (31,275) | $ 51,698 |
A Conversion transactions for Class K and Independence are presented for the period December 1, 2008 through August 31, 2009.
Semiannual Report
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
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 Automated Service Telephone 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)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
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
* 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.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
FIL Investment Advisors
FIL Investments (Japan) Limited
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Northern Trust Company
Chicago, Illinois
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
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)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
FRE-USAN-0710 1.786813.107
Fidelity®
Independence Fund -
Class K
Semiannual Report
May 31, 2010
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. | |
Notes | Notes to the financial statements. |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) website at http://www.sec.gov. You may also call 1-800-835-5092 to request a free copy of the proxy voting guidelines.
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 LLC or an affiliated company.
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.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
A yearlong uptrend in global equity markets came under significant pressure in May 2010 when investor sentiment turned bearish amid growing concern that Europe's debt crisis would expand and slow or derail economic recovery. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
(The chairman's signature appears here.)
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2009 to May 31, 2010).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Semiannual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
|
|
| Expenses Paid |
Independence | 1.02% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,046.50 | $ 5.20 |
Hypothetical A |
| $ 1,000.00 | $ 1,019.85 | $ 5.14 |
Class K | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,047.30 | $ 4.44 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.59 | $ 4.38 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of May 31, 2010 | ||
| % of fund's | % of fund's net assets |
Apple, Inc. | 4.7 | 3.0 |
Delta Air Lines, Inc. | 4.0 | 2.6 |
JPMorgan Chase & Co. | 3.5 | 2.6 |
Wells Fargo & Co. | 3.2 | 3.3 |
Dow Chemical Co. | 2.4 | 2.7 |
Cisco Systems, Inc. | 2.3 | 1.8 |
General Electric Co. | 2.2 | 0.0 |
Express Scripts, Inc. | 2.2 | 3.0 |
Bank of America Corp. | 2.2 | 3.4 |
PNC Financial Services Group, Inc. | 2.1 | 1.9 |
| 28.8 | |
Top Five Market Sectors as of May 31, 2010 | ||
| % of fund's | % of fund's net assets |
Information Technology | 24.6 | 28.3 |
Industrials | 20.2 | 10.1 |
Financials | 17.7 | 22.4 |
Consumer Discretionary | 16.9 | 10.6 |
Energy | 7.2 | 9.0 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2010* | As of November 30, 2009** | ||||||
Stocks 99.7% |
| Stocks 99.9% |
| ||||
Short-Term |
| Short-Term |
| ||||
* Foreign investments | 13.1% |
| ** Foreign investments | 16.0% |
|
Semiannual Report
Investments May 31, 2010 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 16.9% | |||
Automobiles - 1.0% | |||
Bayerische Motoren Werke AG (BMW) (c) | 600,000 | $ 28,025 | |
Daimler AG (Germany) (a) | 200,000 | 10,088 | |
| 38,113 | ||
Hotels, Restaurants & Leisure - 3.6% | |||
Chipotle Mexican Grill, Inc. (a) | 150,000 | 21,342 | |
Ctrip.com International Ltd. sponsored ADR (a) | 1,596,900 | 62,902 | |
Las Vegas Sands Corp. (a) | 769,000 | 18,056 | |
MGM Mirage, Inc. (a) | 569,000 | 7,090 | |
Starwood Hotels & Resorts Worldwide, Inc. | 600,000 | 27,750 | |
| 137,140 | ||
Household Durables - 1.4% | |||
Cyrela Brazil Realty SA | 1,463,800 | 15,742 | |
Gafisa SA sponsored ADR (c) | 2,584,000 | 30,750 | |
Whirlpool Corp. | 75,000 | 7,833 | |
| 54,325 | ||
Internet & Catalog Retail - 1.5% | |||
Amazon.com, Inc. (a) | 369,800 | 46,395 | |
Priceline.com, Inc. (a) | 57,000 | 10,896 | |
| 57,291 | ||
Media - 0.6% | |||
Discovery Communications, Inc. (a) | 150,000 | 5,649 | |
Time Warner Cable, Inc. | 300,000 | 16,419 | |
| 22,068 | ||
Multiline Retail - 2.7% | |||
Dollarama, Inc. | 200,000 | 4,677 | |
Macy's, Inc. | 2,770,800 | 61,539 | |
Nordstrom, Inc. | 975,100 | 38,711 | |
| 104,927 | ||
Specialty Retail - 3.8% | |||
Bed Bath & Beyond, Inc. (a) | 600,000 | 26,922 | |
Home Depot, Inc. | 341,500 | 11,563 | |
Lowe's Companies, Inc. | 1,892,000 | 46,827 | |
Tiffany & Co., Inc. | 400,000 | 18,172 | |
Williams-Sonoma, Inc. | 1,336,100 | 39,923 | |
| 143,407 | ||
Textiles, Apparel & Luxury Goods - 2.3% | |||
Coach, Inc. | 150,000 | 6,167 | |
Deckers Outdoor Corp. (a) | 250,000 | 36,180 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Textiles, Apparel & Luxury Goods - continued | |||
Fossil, Inc. (a) | 500,000 | $ 18,750 | |
Phillips-Van Heusen Corp. | 525,800 | 28,777 | |
| 89,874 | ||
TOTAL CONSUMER DISCRETIONARY | 647,145 | ||
CONSUMER STAPLES - 1.3% | |||
Personal Products - 1.3% | |||
Estee Lauder Companies, Inc. Class A | 471,600 | 27,480 | |
Hengan International Group Co. Ltd. | 2,781,000 | 20,251 | |
| 47,731 | ||
ENERGY - 7.2% | |||
Energy Equipment & Services - 2.7% | |||
Baker Hughes, Inc. | 756,900 | 28,868 | |
Dril-Quip, Inc. (a) | 278,300 | 13,556 | |
Schlumberger Ltd. | 840,100 | 47,172 | |
Smith International, Inc. | 333,400 | 12,523 | |
| 102,119 | ||
Oil, Gas & Consumable Fuels - 4.5% | |||
Concho Resources, Inc. (a) | 666,300 | 34,681 | |
EOG Resources, Inc. | 150,000 | 15,726 | |
EXCO Resources, Inc. | 500,000 | 8,625 | |
Occidental Petroleum Corp. | 662,100 | 54,630 | |
Pioneer Natural Resources Co. | 300,000 | 19,110 | |
Southwestern Energy Co. (a) | 854,900 | 32,153 | |
Whiting Petroleum Corp. (a) | 100,000 | 8,371 | |
| 173,296 | ||
TOTAL ENERGY | 275,415 | ||
FINANCIALS - 17.7% | |||
Capital Markets - 0.6% | |||
Goldman Sachs Group, Inc. | 150,000 | 21,639 | |
Commercial Banks - 7.4% | |||
Comerica, Inc. | 350,000 | 13,335 | |
Huntington Bancshares, Inc. | 1,500,000 | 9,240 | |
Itau Unibanco Banco Multiplo SA ADR (c) | 714,700 | 13,158 | |
Marshall & Ilsley Corp. | 1,500,000 | 12,225 | |
PNC Financial Services Group, Inc. | 1,306,000 | 81,952 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Commercial Banks - continued | |||
Regions Financial Corp. | 4,087,200 | $ 31,185 | |
Wells Fargo & Co. | 4,278,600 | 122,753 | |
| 283,848 | ||
Consumer Finance - 1.7% | |||
American Express Co. | 1,591,400 | 63,449 | |
Diversified Financial Services - 6.0% | |||
Apollo Global Management LLC (d) | 1,703,400 | 13,627 | |
Bank of America Corp. | 5,360,781 | 84,379 | |
JPMorgan Chase & Co. | 3,350,200 | 132,601 | |
| 230,607 | ||
Insurance - 2.0% | |||
Assured Guaranty Ltd. | 392,800 | 6,599 | |
Hartford Financial Services Group, Inc. | 1,576,300 | 39,518 | |
Lincoln National Corp. | 1,144,200 | 30,276 | |
| 76,393 | ||
TOTAL FINANCIALS | 675,936 | ||
HEALTH CARE - 6.9% | |||
Biotechnology - 1.1% | |||
Dendreon Corp. (a) | 200,000 | 8,680 | |
Gilead Sciences, Inc. (a) | 100,000 | 3,592 | |
United Therapeutics Corp. (a) | 585,300 | 29,979 | |
| 42,251 | ||
Health Care Equipment & Supplies - 1.6% | |||
Edwards Lifesciences Corp. (a) | 200,000 | 10,106 | |
Intuitive Surgical, Inc. (a) | 80,000 | 25,822 | |
Varian Medical Systems, Inc. (a) | 200,000 | 10,018 | |
Volcano Corp. (a) | 600,000 | 13,314 | |
| 59,260 | ||
Health Care Providers & Services - 2.9% | |||
Emergency Medical Services Corp. Class A (a) | 200,000 | 10,714 | |
Express Scripts, Inc. (a) | 838,900 | 84,393 | |
HMS Holdings Corp. (a) | 55,900 | 3,033 | |
Medco Health Solutions, Inc. (a) | 249,800 | 14,401 | |
| 112,541 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Health Care Technology - 1.2% | |||
Cerner Corp. (a) | 383,200 | $ 32,078 | |
SXC Health Solutions Corp. (a) | 200,000 | 14,835 | |
| 46,913 | ||
Pharmaceuticals - 0.1% | |||
Valeant Pharmaceuticals International (a) | 100,000 | 4,648 | |
TOTAL HEALTH CARE | 265,613 | ||
INDUSTRIALS - 20.2% | |||
Aerospace & Defense - 2.7% | |||
BE Aerospace, Inc. (a) | 500,000 | 13,560 | |
Goodrich Corp. | 494,200 | 34,297 | |
The Boeing Co. | 889,500 | 57,088 | |
| 104,945 | ||
Air Freight & Logistics - 1.3% | |||
Air Lease Corp. Class A (a)(d) | 500,600 | 10,012 | |
United Parcel Service, Inc. Class B | 650,000 | 40,794 | |
| 50,806 | ||
Airlines - 7.9% | |||
Continental Airlines, Inc. Class B (a) | 3,400,000 | 71,740 | |
Delta Air Lines, Inc. (a) | 11,150,775 | 151,428 | |
Southwest Airlines Co. | 4,666,900 | 58,056 | |
UAL Corp. (a) | 988,500 | 19,780 | |
| 301,004 | ||
Construction & Engineering - 0.5% | |||
Fluor Corp. | 100,000 | 4,692 | |
Jacobs Engineering Group, Inc. (a) | 300,000 | 12,528 | |
| 17,220 | ||
Industrial Conglomerates - 2.2% | |||
General Electric Co. | 5,188,600 | 84,834 | |
Machinery - 4.3% | |||
Caterpillar, Inc. | 593,000 | 36,031 | |
Cummins, Inc. | 482,200 | 32,780 | |
Kennametal, Inc. | 900,000 | 25,389 | |
MAN SE | 250,000 | 21,463 | |
Parker Hannifin Corp. | 677,500 | 41,639 | |
Timken Co. | 200,000 | 5,758 | |
| 163,060 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Road & Rail - 1.3% | |||
CSX Corp. | 562,700 | $ 29,401 | |
Union Pacific Corp. | 281,400 | 20,100 | |
| 49,501 | ||
TOTAL INDUSTRIALS | 771,370 | ||
INFORMATION TECHNOLOGY - 24.6% | |||
Communications Equipment - 4.3% | |||
Cisco Systems, Inc. (a) | 3,749,300 | 86,834 | |
Juniper Networks, Inc. (a) | 742,300 | 19,760 | |
Research In Motion Ltd. (a) | 690,600 | 42,058 | |
Riverbed Technology, Inc. (a) | 500,000 | 13,365 | |
ZTE Corp. (H Shares) | 750,000 | 2,485 | |
| 164,502 | ||
Computers & Peripherals - 5.6% | |||
Apple, Inc. (a) | 695,700 | 178,904 | |
Dell, Inc. (a) | 1,500,000 | 19,995 | |
Seagate Technology (a) | 1,061,600 | 16,306 | |
| 215,205 | ||
Electronic Equipment & Components - 0.6% | |||
Agilent Technologies, Inc. (a) | 652,000 | 21,099 | |
Internet Software & Services - 3.7% | |||
Baidu.com, Inc. sponsored ADR (a) | 331,671 | 24,282 | |
eBay, Inc. (a) | 2,500,400 | 53,534 | |
Google, Inc. Class A (a) | 13,500 | 6,550 | |
Tencent Holdings Ltd. | 2,887,500 | 55,700 | |
| 140,066 | ||
IT Services - 2.0% | |||
Cognizant Technology Solutions Corp. Class A (a) | 600,000 | 30,024 | |
Visa, Inc. Class A | 630,500 | 45,686 | |
| 75,710 | ||
Semiconductors & Semiconductor Equipment - 3.2% | |||
Aixtron AG (c) | 500,000 | 13,499 | |
Broadcom Corp. Class A | 1,045,500 | 36,091 | |
Cree, Inc. (a) | 300,000 | 19,911 | |
Marvell Technology Group Ltd. (a) | 2,277,400 | 43,225 | |
NVIDIA Corp. (a) | 868,600 | 11,413 | |
| 124,139 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Software - 5.2% | |||
Citrix Systems, Inc. (a) | 870,600 | $ 37,967 | |
Informatica Corp. (a) | 1,350,200 | 34,835 | |
Microsoft Corp. | 2,542,400 | 65,594 | |
NCsoft Corp. | 35,000 | 5,648 | |
Nintendo Co. Ltd. | 20,000 | 5,900 | |
Rovi Corp. (a) | 985,300 | 36,791 | |
Taleo Corp. Class A (a) | 500,000 | 12,525 | |
| 199,260 | ||
TOTAL INFORMATION TECHNOLOGY | 939,981 | ||
MATERIALS - 4.1% | |||
Chemicals - 3.3% | |||
Dow Chemical Co. | 3,392,200 | 91,284 | |
Ferro Corp. (a) | 669,400 | 6,031 | |
Lubrizol Corp. | 100,000 | 8,857 | |
Rockwood Holdings, Inc. (a) | 778,300 | 20,189 | |
| 126,361 | ||
Metals & Mining - 0.8% | |||
Alcoa, Inc. | 2,726,600 | 31,738 | |
TOTAL MATERIALS | 158,099 | ||
TELECOMMUNICATION SERVICES - 0.8% | |||
Wireless Telecommunication Services - 0.8% | |||
NII Holdings, Inc. (a) | 600,000 | 21,882 | |
Vivo Participacoes SA sponsored ADR | 383,100 | 10,466 | |
| 32,348 | ||
TOTAL COMMON STOCKS (Cost $3,328,717) | 3,813,638 | ||
Money Market Funds - 0.9% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 0.23% (e) | 5,198,200 | $ 5,198 | |
Fidelity Securities Lending Cash Central Fund, 0.24% (b)(e) | 27,716,470 | 27,716 | |
TOTAL MONEY MARKET FUNDS (Cost $32,914) | 32,914 | ||
TOTAL INVESTMENT PORTFOLIO - 100.6% (Cost $3,361,631) | 3,846,552 | ||
NET OTHER ASSETS - (0.6)% | (22,690) | ||
NET ASSETS - 100% | $ 3,823,862 |
Legend |
(a) Non-income producing |
(b) Investment made with cash collateral received from securities on loan. |
(c) Security or a portion of the security is on loan at period end. |
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $23,639,000 or 0.6% of net assets. |
(e) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 5 |
Fidelity Securities Lending Cash Central Fund | 371 |
Total | $ 376 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2010, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $ 647,145 | $ 647,145 | $ - | $ - |
Consumer Staples | 47,731 | 47,731 | - | - |
Energy | 275,415 | 275,415 | - | - |
Financials | 675,936 | 662,309 | 13,627 | - |
Health Care | 265,613 | 265,613 | - | - |
Industrials | 771,370 | 761,358 | 10,012 | - |
Information Technology | 939,981 | 939,981 | - | - |
Materials | 158,099 | 158,099 | - | - |
Telecommunication Services | 32,348 | 32,348 | - | - |
Money Market Funds | 32,914 | 32,914 | - | - |
Total Investments in Securities: | $ 3,846,552 | $ 3,822,913 | $ 23,639 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 86.9% |
Cayman Islands | 2.6% |
China | 2.2% |
Germany | 2.0% |
Brazil | 1.9% |
Canada | 1.6% |
Bermuda | 1.3% |
Netherlands Antilles | 1.2% |
Others (Individually Less Than 1%) | 0.3% |
| 100.0% |
Income Tax Information |
At November 30, 2009, the fund had a capital loss carryforward of approximately $2,045,828,000 of which $1,272,786,000 and $773,042,000 will expire on November 30, 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $26,364) - See accompanying schedule: Unaffiliated issuers (cost $3,328,717) | $ 3,813,638 |
|
Fidelity Central Funds (cost $32,914) | 32,914 |
|
Total Investments (cost $3,361,631) |
| $ 3,846,552 |
Cash | 119 | |
Foreign currency held at value (cost $365) | 364 | |
Receivable for investments sold | 89,114 | |
Receivable for fund shares sold | 1,293 | |
Dividends receivable | 4,244 | |
Distributions receivable from Fidelity Central Funds | 53 | |
Prepaid expenses | 3 | |
Other receivables | 137 | |
Total assets | 3,941,879 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 84,571 | |
Payable for fund shares redeemed | 2,398 | |
Accrued management fee | 2,433 | |
Other affiliated payables | 758 | |
Other payables and accrued expenses | 141 | |
Collateral on securities loaned, at value | 27,716 | |
Total liabilities | 118,017 | |
|
|
|
Net Assets | $ 3,823,862 | |
Net Assets consist of: |
| |
Paid in capital | $ 5,014,276 | |
Accumulated net investment loss | (4,630) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,670,707) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 484,923 | |
Net Assets | $ 3,823,862 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2010 (Unaudited) | |
|
|
|
Independence: Net Asset Value, offering price and redemption price per share ($3,669,575 ÷ 183,937 shares) | $ 19.95 | |
|
|
|
Class K: | $ 19.95 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Operations
Amounts in thousands | Six months ended May 31, 2010 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 16,046 |
Income from Fidelity Central Funds |
| 376 |
Total income |
| 16,422 |
|
|
|
Expenses | ||
Management fee | $ 11,365 | |
Performance adjustment | 4,504 | |
Transfer agent fees | 3,931 | |
Accounting and security lending fees | 558 | |
Custodian fees and expenses | 71 | |
Independent trustees' compensation | 12 | |
Registration fees | 42 | |
Audit | 36 | |
Legal | 13 | |
Interest | 2 | |
Miscellaneous | 32 | |
Total expenses before reductions | 20,566 | |
Expense reductions | (144) | 20,422 |
Net investment income (loss) | (4,000) | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | 433,482 | |
Capital gain distributions from Fidelity Central Funds | 5 | |
Foreign currency transactions | (159) | |
Futures contracts | 683 | |
Total net realized gain (loss) |
| 434,011 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (236,175) | |
Assets and liabilities in foreign currencies | (12) | |
Total change in net unrealized appreciation (depreciation) |
| (236,187) |
Net gain (loss) | 197,824 | |
Net increase (decrease) in net assets resulting from operations | $ 193,824 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Changes in Net Assets
Amounts in thousands | Six months ended | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ (4,000) | $ 13,175 |
Net realized gain (loss) | 434,011 | (303,965) |
Change in net unrealized appreciation (depreciation) | (236,187) | 1,385,715 |
Net increase (decrease) in net assets resulting | 193,824 | 1,094,925 |
Distributions to shareholders from net investment income | (7,207) | (20,945) |
Distributions to shareholders from net realized gain | (1,044) | - |
Total distributions | (8,251) | (20,945) |
Share transactions - net increase (decrease) | (363,690) | (556,508) |
Total increase (decrease) in net assets | (178,117) | 517,472 |
|
|
|
Net Assets | ||
Beginning of period | 4,001,979 | 3,484,507 |
End of period (including accumulated net investment loss of $4,630 and undistributed net investment income of $6,577, respectively) | $ 3,823,862 | $ 4,001,979 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Independence
| Six months ended | Years ended November 30, | ||||
| (Unaudited) | 2009 | 2008 | 2007 | 2006 | 2005 |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 19.10 | $ 14.17 | $ 27.60 | $ 22.03 | $ 19.46 | $ 17.39 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | (.02) | .06 | .08 | .07 | .08 | .04 |
Net realized and unrealized gain (loss) | .91 | 4.96 | (12.75) | 5.60 | 2.54 | 2.14 |
Total from investment operations | .89 | 5.02 | (12.67) | 5.67 | 2.62 | 2.18 |
Distributions from net investment income | (.03) | (.09) | (.01) | (.10) | (.05) | (.11) |
Distributions from net realized gain | (.01) | - | (.75) | - | - | - |
Total distributions | (.04) H | (.09) | (.76) | (.10) | (.05) | (.11) |
Net asset value, end of period | $ 19.95 | $ 19.10 | $ 14.17 | $ 27.60 | $ 22.03 | $ 19.46 |
Total Return B, C | 4.65% | 35.62% | (47.19)% | 25.85% | 13.49% | 12.61% |
Ratios to Average Net Assets E, G |
|
|
|
|
| |
Expenses before reductions | 1.02% A | .92% | .91% | .90% | .87% | .77% |
Expenses net of fee waivers, if any | 1.02% A | .92% | .91% | .90% | .87% | .77% |
Expenses net of all reductions | 1.01% A | .91% | .90% | .89% | .86% | .72% |
Net investment income (loss) | (.20)% A | .36% | .34% | .31% | .41% | .24% |
Supplemental Data |
|
|
|
|
| |
Net assets, end of period (in millions) | $ 3,670 | $ 3,824 | $ 3,407 | $ 5,899 | $ 4,723 | $ 4,654 |
Portfolio turnover rate F | 104% A | 173% | 173% | 175% | 169% | 119% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Total distributions of $.04 per share is comprised of distributions from net investment income of $.033 and distributions from net realized gain of $.005 per share.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class K
| Six months ended | Years ended November 30, | |
| (Unaudited) | 2009 | 2008 G |
Selected Per-Share Data |
|
|
|
Net asset value, beginning of period | $ 19.12 | $ 14.18 | $ 28.56 |
Income from Investment Operations |
|
|
|
Net investment income (loss) D | (.01) | .09 | .09 |
Net realized and unrealized gain (loss) | .91 | 4.96 | (14.47) |
Total from investment operations | .90 | 5.05 | (14.38) |
Distributions from net investment income | (.07) | (.11) | - |
Distributions from net realized gain | (.01) | - | - |
Total distributions | (.07) I | (.11) | - |
Net asset value, end of period | $ 19.95 | $ 19.12 | $ 14.18 |
Total Return B, C | 4.73% | 35.94% | (50.35)% |
Ratios to Average Net Assets E, H |
|
|
|
Expenses before reductions | .87% A | .73% | .79% A |
Expenses net of fee waivers, if any | .87% A | .73% | .79% A |
Expenses net of all reductions | .86% A | .72% | .78% A |
Net investment income (loss) | (.06)% A | .56% | 1.04% A |
Supplemental Data |
|
|
|
Net assets, end of period (in millions) | $ 154 | $ 178 | $ 78 |
Portfolio turnover rate F | 104% A | 173% | 173% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Total distributions of $.07 per share is comprised of distributions from net investment income of $.067 and distributions from net realized gain of $.005 per share.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2010 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Independence Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Independence and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below.
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the fund's own assumptions based on the best information available)
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2010, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value and are categorized as Level 2 in the hierarchy.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Semiannual Report
3. 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 each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, foreign currency transactions, partnerships, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 615,912 |
Gross unrealized depreciation | (184,559) |
Net unrealized appreciation (depreciation) | $ 431,353 |
|
|
Tax cost | $ 3,415,199 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
4. Operating Policies.
Restricted Securities. The Fund may 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. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund uses derivative instruments (derivatives), including futures contracts, in order to meet its investment objectives. The strategy is to use derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives may increase or decrease its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to sell the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. The Fund's maximum risk of loss from counterparty credit risk is generally the aggregate unrealized appreciation and unpaid counterparty fees in excess of any collateral pledged by the counterparty to the Fund. Counterparty risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Risk of loss may exceed the amounts recognized in the Statement of Assets and Liabilities.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund uses futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments (variation margin) are made or received by a fund depending on the
Semiannual Report
5. Derivative Instruments - continued
Futures Contracts - continued
daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
The underlying face amount at value of open futures contracts at period end, if any, is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments. The receivable and/or payable for the variation margin are reflected in the Statement of Assets and Liabilities.
Certain risks may arise upon entering into futures contracts, including the risk that an illiquid market may limit the ability to close out a futures contract prior to settlement date.
During the period the Fidelity Independence Fund recognized net realized gain (loss) of $683 and a change in net unrealized appreciation (depreciation) of $0, related to its investment in futures contracts. These amounts are included in the Statement of Operations.
6. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $2,083,072 and $2,457,487, respectively.
7. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Independence, as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .78% of the Fund's average net assets.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
7. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Independence. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Independence | $ 3,884 | .20 |
Class K | 47 | .05 |
| $ 3,931 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $30 for the period.
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 funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average | Interest |
Borrower | $ 8,993 | .41% | $ 2 |
Semiannual Report
8. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.75 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $8 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
9. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $371.
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $144 for the period.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income |
|
|
Independence | $ 6,585 | $ 20,326 |
Class K | 622 | 619 |
Total | $ 7,207 | $ 20,945 |
From net realized gain |
|
|
Independence | $ 998 | $ - |
Class K | 46 | - |
Total | $ 1,044 | $ - |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
| Six months ended | Year ended | Six months ended | Year ended |
Independence |
|
|
|
|
Shares sold | 6,456 | 19,015 | $ 132,888 | $ 286,391 |
Conversion to Class K | - | (4,612) | - | (73,200) |
Reinvestment of distributions | 385 | 1,443 | 7,469 | 20,026 |
Shares redeemed | (23,092) | (56,069) | (472,772) | (841,423) |
Net increase (decrease) | (16,251) | (40,223) | $ (332,415) | $ (608,206) |
Class K |
|
|
|
|
Shares sold | 1,695 | 3,711 | $ 35,378 | $ 53,643 |
Conversion from Independence | - | 4,612 | - | 73,200 |
Reinvestment of distributions | 35 | 45 | 668 | 619 |
Shares redeemed | (3,326) | (4,524) | (67,321) | (75,764) |
Net increase (decrease) | (1,596) | 3,844 | $ (31,275) | $ 51,698 |
A Conversion transactions for Class K and Independence are presented for the period December 1, 2008 through August 31, 2009.
Semiannual Report
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your workplace benefits (including your workplace savings plan, investments, and additional services) via your telephone or PC. You can access your plan and account information and research your investments 24 hours a day.
By Phone
Fidelity provides a single toll-free number to access plan information, account balances, positions, and quotes*. 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)
Fidelity Workplace
Investing
1-800-835-5092
By PC
Fidelity's web site on the Internet provides a wide range of information, including plan information, daily financial news, fund performance, interactive planning tools, and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.401k.com
* 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.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
FIL Investment Advisors
FIL Investments (Japan) Limited
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Northern Trust Company
Chicago, Illinois
FRE-K-USAN-0710 1.863218.101
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Not applicable.
(b) Not applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the Fidelity Financial Trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the Fidelity Financial Trust's (the "Trust") disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the Trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Not applicable. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) |
| Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Financial Trust
By: | /s/ Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
|
|
Date: | July 27, 2010 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
|
|
Date: | July 27, 2010 |
By: | /s/ Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
|
|
Date: | July 27, 2010 |