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)
Eric D. Roiter, 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, 2004 |
Item 1. Reports to Stockholders
Fidelity®
Equity-Income II
Fund
Semiannual Report
May 31, 2004
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
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, | |
Notes | Notes to the financial statements. |
For a free copy of the fund's proxy voting guidelines visit www.fidelity.com/goto/proxyguidelines, call 1-800-544-8544, or visit the Securities and Exchange Commission (SEC)'s web site at www.sec.gov.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
(Recycle graphic) This report is printed on recycled paper using soy-based inks.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.
Neither the fund nor Fidelity Distributors Corporation is a bank.
For more information on any Fidelity Advisor fund, including charges and expenses, contact your investment professional for a free prospectus. Read it carefully before you invest or send money.
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Many of you have read or heard news stories recently that were critical of mutual funds and made allegations that the mutual fund industry has been less than forthright. I find these reports unsettling and not necessarily an accurate picture of the overall industry, and I would like you to know where we at Fidelity stand.
With specific regard to allegations that certain mutual fund companies were violating the Securities and Exchange Commission's forward pricing rules or were involved in so-called "market timing" activities, I want to say two things:
First, Fidelity does not have agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not to say that someone could not deceive the company through fraudulent acts. But I underscore that we have no so-called "agreements" which would permit this illegal practice.
Second, Fidelity has been on record for years opposing predatory short-term trading which adversely affects other shareholders in a mutual fund. In fact, in the 1980s, we began charging a fee - which is returned to the fund and, therefore, to investors - to discourage this activity. What's more, several years ago we took the industry lead in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. It is reasonable to assume that another structure can be developed that would alter the system to make it much more difficult for predatory traders to operate. This, however, will only be achieved through close cooperation among regulators, legislators and the industry.
Certainly no industry is perfect, and there have been instances of unethical and illegal activity from time to time within the mutual fund industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. Clearly, every system can be improved. We applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors' holdings. But we remain concerned about the risk of over-regulation and the quick application of simplistic solutions to intricate problems.
For more than 57 years, Fidelity Investments has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Many of them were family and friends. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Investment Changes
Top Ten Stocks as of May 31, 2004 | ||
% of fund's | % of fund's net assets | |
Exxon Mobil Corp. | 5.1 | 3.4 |
Burlington Resources, Inc. | 5.0 | 4.7 |
International Business Machines Corp. | 4.9 | 2.2 |
American International Group, Inc. | 4.5 | 2.0 |
Verizon Communications, Inc. | 4.5 | 4.2 |
Charles Schwab Corp. | 4.3 | 4.4 |
Citigroup, Inc. | 3.2 | 3.3 |
Fannie Mae | 3.0 | 1.7 |
Dover Corp. | 2.6 | 1.5 |
Pfizer, Inc. | 2.5 | 1.6 |
39.6 | ||
Top Five Market Sectors as of May 31, 2004 | ||
% of fund's | % of fund's net assets | |
Financials | 27.8 | 29.7 |
Energy | 13.5 | 9.6 |
Industrials | 12.2 | 16.6 |
Consumer Discretionary | 10.1 | 12.2 |
Information Technology | 8.4 | 11.0 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2004 * | As of November 30, 2003 ** | ||||||
Stocks 97.1% | Stocks 98.3% | ||||||
Convertible | Convertible | ||||||
Short-Term | Short-Term | ||||||
* Foreign | 4.0% | ** Foreign investments | 4.2% |
Semiannual Report
Investments May 31, 2004 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.1% | |||
Shares | Value (Note 1) (000s) | ||
CONSUMER DISCRETIONARY - 10.1% | |||
Auto Components - 0.2% | |||
TRW Automotive Holdings Corp. | 984,250 | $ 19,331 | |
Automobiles - 0.3% | |||
Ford Motor Co. | 1,522,500 | 22,609 | |
Nissan Motor Co. Ltd. sponsored ADR | 886,700 | 18,035 | |
40,644 | |||
Hotels, Restaurants & Leisure - 0.6% | |||
Hilton Hotels Corp. | 2,466,400 | 42,792 | |
Marriott International, Inc. Class A | 612,500 | 30,215 | |
73,007 | |||
Internet & Catalog Retail - 2.2% | |||
InterActiveCorp (a) | 8,386,950 | 262,176 | |
Media - 5.9% | |||
Belo Corp. Series A | 2,001,300 | 58,878 | |
Clear Channel Communications, Inc. | 780,918 | 31,002 | |
McGraw-Hill Companies, Inc. | 354,500 | 27,623 | |
News Corp. Ltd. ADR (c) | 7,505,300 | 276,420 | |
Omnicom Group, Inc. | 1,463,380 | 116,880 | |
The DIRECTV Group, Inc. (a) | 431,300 | 7,595 | |
Viacom, Inc. Class B (non-vtg.) | 4,523,389 | 166,868 | |
Washington Post Co. Class B | 27,880 | 26,507 | |
711,773 | |||
Multiline Retail - 0.7% | |||
JCPenney Co., Inc. | 2,412,600 | 86,323 | |
Textiles Apparel & Luxury Goods - 0.2% | |||
Polo Ralph Lauren Corp. Class A | 633,600 | 21,036 | |
TOTAL CONSUMER DISCRETIONARY | 1,214,290 | ||
CONSUMER STAPLES - 6.1% | |||
Beverages - 0.3% | |||
The Coca-Cola Co. | 775,700 | 39,832 | |
Food & Staples Retailing - 1.1% | |||
Albertsons, Inc. | 1,309,500 | 30,682 | |
Safeway, Inc. (a) | 4,632,100 | 104,500 | |
135,182 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
CONSUMER STAPLES - continued | |||
Food Products - 1.2% | |||
McCormick & Co., Inc. (non-vtg.) | 3,475,600 | $ 123,210 | |
Smithfield Foods, Inc. (a) | 886,900 | 25,711 | |
148,921 | |||
Household Products - 1.9% | |||
Colgate-Palmolive Co. | 2,046,600 | 117,066 | |
Procter & Gamble Co. | 1,028,800 | 110,925 | |
227,991 | |||
Personal Products - 1.3% | |||
Estee Lauder Companies, Inc. Class A | 657,800 | 30,121 | |
Gillette Co. | 2,816,500 | 121,363 | |
151,484 | |||
Tobacco - 0.3% | |||
Altria Group, Inc. | 607,700 | 29,151 | |
TOTAL CONSUMER STAPLES | 732,561 | ||
ENERGY - 13.5% | |||
Energy Equipment & Services - 1.4% | |||
ENSCO International, Inc. | 2,606,110 | 69,427 | |
Smith International, Inc. (a) | 263,500 | 13,157 | |
Weatherford International Ltd. (a) | 2,133,600 | 88,566 | |
171,150 | |||
Oil & Gas - 12.1% | |||
Ashland, Inc. | 521,800 | 24,603 | |
BP PLC sponsored ADR | 3,578,200 | 189,645 | |
Burlington Resources, Inc. | 9,007,300 | 602,949 | |
Exxon Mobil Corp. | 14,250,900 | 616,348 | |
Premcor, Inc. (a) | 458,800 | 16,806 | |
1,450,351 | |||
TOTAL ENERGY | 1,621,501 | ||
FINANCIALS - 27.8% | |||
Capital Markets - 7.5% | |||
Allied Capital Corp. | 972,600 | 26,289 | |
Bank of New York Co., Inc. | 1,005,300 | 30,229 | |
Charles Schwab Corp. | 52,545,140 | 514,942 | |
J.P. Morgan Chase & Co. | 3,700,200 | 136,315 | |
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Morgan Stanley | 3,210,493 | $ 171,793 | |
Northern Trust Corp. | 599,600 | 25,753 | |
905,321 | |||
Commercial Banks - 7.3% | |||
Bank of America Corp. | 3,501,600 | 291,088 | |
Bank One Corp. | 2,849,100 | 138,039 | |
Fifth Third Bancorp | 1,048,400 | 56,918 | |
Wachovia Corp. | 3,029,357 | 143,016 | |
Wells Fargo & Co. | 4,255,200 | 250,206 | |
879,267 | |||
Consumer Finance - 1.3% | |||
American Express Co. | 1,160,000 | 58,812 | |
SLM Corp. | 2,420,200 | 92,766 | |
151,578 | |||
Diversified Financial Services - 3.2% | |||
Citigroup, Inc. | 8,367,841 | 388,519 | |
Insurance - 5.3% | |||
AFLAC, Inc. | 783,300 | 31,802 | |
American International Group, Inc. | 7,456,400 | 546,554 | |
Scottish Re Group Ltd. | 276,780 | 6,089 | |
St. Paul Travelers Companies, Inc. | 840,400 | 33,347 | |
The Chubb Corp. | 301,300 | 20,299 | |
638,091 | |||
Real Estate - 0.2% | |||
Capital Automotive (SBI) | 334,010 | 9,185 | |
CenterPoint Properties Trust (SBI) | 129,310 | 9,524 | |
18,709 | |||
Thrifts & Mortgage Finance - 3.0% | |||
Fannie Mae | 5,305,760 | 359,200 | |
TOTAL FINANCIALS | 3,340,685 | ||
HEALTH CARE - 6.3% | |||
Biotechnology - 0.2% | |||
Genentech, Inc. (a) | 362,500 | 21,681 | |
Health Care Equipment & Supplies - 0.9% | |||
Medtronic, Inc. | 2,268,700 | 108,671 | |
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
HEALTH CARE - continued | |||
Health Care Providers & Services - 1.5% | |||
Cardinal Health, Inc. | 426,400 | $ 28,872 | |
McKesson Corp. | 1,400,400 | 48,174 | |
Tenet Healthcare Corp. (a) | 3,889,500 | 46,363 | |
UnitedHealth Group, Inc. | 867,500 | 56,604 | |
180,013 | |||
Pharmaceuticals - 3.7% | |||
Johnson & Johnson | 258,900 | 14,423 | |
Merck & Co., Inc. | 1,962,300 | 92,817 | |
Pfizer, Inc. | 8,645,990 | 305,549 | |
Wyeth | 1,127,600 | 40,594 | |
453,383 | |||
TOTAL HEALTH CARE | 763,748 | ||
INDUSTRIALS - 12.2% | |||
Aerospace & Defense - 3.2% | |||
Goodrich Corp. (c) | 7,360,600 | 206,318 | |
Honeywell International, Inc. | 3,741,300 | 126,082 | |
Lockheed Martin Corp. | 389,580 | 19,300 | |
Precision Castparts Corp. | 752,100 | 35,266 | |
386,966 | |||
Commercial Services & Supplies - 0.5% | |||
R.R. Donnelley & Sons Co. | 2,072,700 | 62,720 | |
Industrial Conglomerates - 1.8% | |||
3M Co. | 396,100 | 33,494 | |
General Electric Co. | 6,020,300 | 187,352 | |
220,846 | |||
Machinery - 4.2% | |||
Caterpillar, Inc. | 926,800 | 69,834 | |
Deere & Co. | 1,378,800 | 90,587 | |
Dover Corp. | 7,948,400 | 309,670 | |
Pall Corp. | 1,205,300 | 29,144 | |
499,235 | |||
Road & Rail - 2.5% | |||
Landstar System, Inc. (a) | 849,521 | 41,304 | |
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
INDUSTRIALS - continued | |||
Road & Rail - continued | |||
Norfolk Southern Corp. | 9,782,644 | $ 237,033 | |
Werner Enterprises, Inc. | 893,168 | 17,051 | |
295,388 | |||
TOTAL INDUSTRIALS | 1,465,155 | ||
INFORMATION TECHNOLOGY - 8.0% | |||
Communications Equipment - 0.2% | |||
QLogic Corp. (a) | 936,200 | 28,741 | |
Computers & Peripherals - 5.7% | |||
Apple Computer, Inc. (a) | 949,100 | 26,632 | |
Diebold, Inc. | 1,478,300 | 72,629 | |
International Business Machines Corp. | 6,590,100 | 583,817 | |
683,078 | |||
Electronic Equipment & Instruments - 0.1% | |||
Ingram Micro, Inc. Class A (a) | 1,090,800 | 15,762 | |
Software - 2.0% | |||
Microsoft Corp. | 8,653,800 | 228,028 | |
Take-Two Interactive Software, Inc. (a) | 465,700 | 13,864 | |
241,892 | |||
TOTAL INFORMATION TECHNOLOGY | 969,473 | ||
MATERIALS - 4.6% | |||
Chemicals - 3.3% | |||
Air Products & Chemicals, Inc. | 3,197,900 | 159,799 | |
Eastman Chemical Co. | 3,746,000 | 173,590 | |
FMC Corp. (a) | 1,533,300 | 62,206 | |
395,595 | |||
Containers & Packaging - 0.5% | |||
Smurfit-Stone Container Corp. (a) | 2,977,198 | 54,066 | |
Metals & Mining - 0.8% | |||
Alcoa, Inc. | 1,434,050 | 44,886 | |
International Steel Group, Inc. | 951,700 | 28,418 | |
Nucor Corp. | 430,800 | 28,368 | |
101,672 | |||
TOTAL MATERIALS | 551,333 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
TELECOMMUNICATION SERVICES - 7.2% | |||
Diversified Telecommunication Services - 7.2% | |||
SBC Communications, Inc. | 8,885,000 | $ 210,575 | |
Sprint Corp. - FON Group | 6,622,600 | 117,617 | |
Verizon Communications, Inc. | 15,764,000 | 545,119 | |
873,311 | |||
UTILITIES - 1.3% | |||
Electric Utilities - 1.3% | |||
American Electric Power Co., Inc. | 1,599,600 | 50,819 | |
Entergy Corp. | 1,853,900 | 101,241 | |
152,060 | |||
TOTAL COMMON STOCKS (Cost $10,966,202) | 11,684,117 | ||
Preferred Stocks - 0.4% | |||
Convertible Preferred Stocks - 0.4% | |||
INFORMATION TECHNOLOGY - 0.4% | |||
Office Electronics - 0.4% | |||
Xerox Corp. Series C, 6.25% | 339,100 | 42,790 | |
Nonconvertible Preferred Stocks - 0.0% | |||
FINANCIALS - 0.0% | |||
Commercial Banks - 0.0% | |||
Chevy Chase Bank FSB Series C, 8.00% | 13,969 | 370 | |
TOTAL PREFERRED STOCKS (Cost $40,534) | 43,160 | ||
Money Market Funds - 4.2% | |||
Shares | Value (Note 1) (000s) | ||
Fidelity Cash Central Fund, 1.09% (b) | 298,005,887 | $ 298,006 | |
Fidelity Securities Lending Cash Central Fund, 1.08% (b) | 213,085,900 | 213,086 | |
TOTAL MONEY MARKET FUNDS (Cost $511,092) | 511,092 | ||
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $11,517,828) | 12,238,369 | ||
NET OTHER ASSETS - (1.7)% | (205,487) | ||
NET ASSETS - 100% | $ 12,032,882 |
Legend |
(a) Non-income producing |
(b) 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 listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Affiliated company |
Other Information |
Purchases and sales of securities, other than short-term securities, aggregated $8,326,448,000 and $8,400,247,000, respectively. |
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 $639,000 for the period. |
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 amount) | May 31, 2004 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $208,573) (cost $11,517,828) - See accompanying schedule | $ 12,238,369 | |
Receivable for investments sold | 86,654 | |
Receivable for fund shares sold | 6,508 | |
Dividends receivable | 18,140 | |
Interest receivable | 184 | |
Prepaid expenses | 33 | |
Other affiliated receivables | 68 | |
Other receivables | 2,570 | |
Total assets | 12,352,526 | |
Liabilities | ||
Payable for investments purchased | $ 88,094 | |
Payable for fund shares redeemed | 11,299 | |
Accrued management fee | 4,733 | |
Other affiliated payables | 2,374 | |
Other payables and accrued expenses | 58 | |
Collateral on securities loaned, at value | 213,086 | |
Total liabilities | 319,644 | |
Net Assets | $ 12,032,882 | |
Net Assets consist of: | ||
Paid in capital | $ 10,898,384 | |
Undistributed net investment income | 34,305 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 379,652 | |
Net unrealized appreciation (depreciation) on investments | 720,541 | |
Net Assets, for 544,255 shares outstanding | $ 12,032,882 | |
Net Asset Value, offering price and redemption price per share ($12,032,882 ÷ 544,255 shares) | $ 22.11 |
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, 2004 (Unaudited) | |
Investment Income | ||
Dividends (including $4,991 received from affiliated issuers) | $ 111,292 | |
Interest | 1,954 | |
Security lending | 492 | |
Total income | 113,738 | |
Expenses | ||
Management fee | $ 29,236 | |
Transfer agent fees | 11,698 | |
Accounting and security lending fees | 655 | |
Non-interested trustees' compensation | 71 | |
Appreciation in deferred trustee compensation account | 3 | |
Custodian fees and expenses | 87 | |
Registration fees | 81 | |
Audit | 60 | |
Legal | 23 | |
Miscellaneous | 81 | |
Total expenses before reductions | 41,995 | |
Expense reductions | (3,136) | 38,859 |
Net investment income (loss) | 74,879 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities (including realized gain (loss) of $35,683 on sales of investments in affiliated issuers) | 446,552 | |
Foreign currency transactions | (77) | |
Total net realized gain (loss) | 446,475 | |
Change in net unrealized appreciation (depreciation) on investment securities | (52,431) | |
Net gain (loss) | 394,044 | |
Net increase (decrease) in net assets resulting from operations | $ 468,923 |
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, 2004 | Year ended |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 74,879 | $ 133,136 |
Net realized gain (loss) | 446,475 | 891,798 |
Change in net unrealized appreciation (depreciation) | (52,431) | 546,040 |
Net increase (decrease) in net assets resulting | 468,923 | 1,570,974 |
Distributions to shareholders from net investment income | (75,647) | (122,229) |
Distributions to shareholders from net realized gain | (91,775) | - |
Total distributions | (167,422) | (122,229) |
Share transactions | 1,056,471 | 1,470,308 |
Reinvestment of distributions | 159,466 | 115,783 |
Cost of shares redeemed | (1,009,139) | (1,666,126) |
Net increase (decrease) in net assets resulting from share transactions | 206,798 | (80,035) |
Total increase (decrease) in net assets | 508,299 | 1,368,710 |
Net Assets | ||
Beginning of period | 11,524,583 | 10,155,873 |
End of period (including undistributed net investment income of $34,305 and undistributed net investment income of $35,073, respectively) | $ 12,032,882 | $ 11,524,583 |
Other Information Shares | ||
Sold | 46,537 | 75,917 |
Issued in reinvestment of distributions | 7,002 | 6,305 |
Redeemed | (44,689) | (89,210) |
Net increase (decrease) | 8,850 | (6,988) |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights
Six months ended | Years ended November 30, | |||||
(Unaudited) | 2003 | 2002 | 2001 | 2000 | 1999 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $ 21.52 | $ 18.72 | $ 21.21 | $ 27.49 | $ 30.34 | $ 30.73 |
Income from Investment Operations | ||||||
Net investment income (loss)D | .14 | .25 | .24F | .34 | .40 | .37 |
Net realized and unrealized gain (loss) | .76 | 2.78 | (1.65)F | (1.15) | .50 | 2.01 |
Total from investment operations | .90 | 3.03 | (1.41) | (.81) | .90 | 2.38 |
Distributions from net investment income | (.14) | (.23) | (.23) | (.39) | (.40) | (.35) |
Distributions from net realized gain | (.17) | - | (.85) | (5.08) | (3.35) | (2.42) |
Total distributions | (.31) | (.23) | (1.08) | (5.47) | (3.75) | (2.77) |
Net asset value, end of period | $ 22.11 | $ 21.52 | $ 18.72 | $ 21.21 | $ 27.49 | $ 30.34 |
Total ReturnB,C | 4.15% | 16.40% | (7.08)% | (4.33)% | 3.50% | 8.25% |
Ratios to Average Net AssetsE | ||||||
Expenses before expense reductions | .68%A | .70% | .70% | .67% | .67% | .66% |
Expenses net of voluntary waivers, if any | .68%A | .70% | .70% | .67% | .67% | .66% |
Expenses net of all reductions | .63%A | .64% | .63% | .62% | .63% | .64% |
Net investment income (loss) | 1.22%A | 1.31% | 1.26%F | 1.49% | 1.47% | 1.19% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $ 12,033 | $ 11,525 | $ 10,156 | $ 12,029 | $ 13,401 | $ 18,184 |
Portfolio turnover rate | 138%A | 131% | 135% | 136% | 151% | 71% |
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 Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expenses net of any voluntary 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 fund.
F Effective December 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2004 (Unaudited)
(Amounts in thousands except ratios)
1. Significant Accounting Policies.
Fidelity Equity-Income II Fund (the fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The financial statements have been prepared in conformity with 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. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
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.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
1. Significant Accounting Policies - continued
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 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 nontaxable distributions or capital gain distributions for income tax purposes. Interest income is 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 the funds in the trust.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), non-interested Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the fund or are invested in a cross-section of other Fidelity funds, and are marked-to-market. Deferred amounts remain in the fund until distributed in accordance with the Plan.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each 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 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, contingent interest, non-taxable dividends and losses deferred due to wash sales.
Semiannual Report
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investments including unrealized appreciation (depreciation) as of period end was as follows:
Unrealized appreciation | $ 1,071,197 | | |
Unrealized depreciation | (369,538) | |
Net unrealized appreciation (depreciation) | $ 701,659 | |
Cost for federal income tax purposes | $ 11,536,710 |
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.
4. 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 .28% 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 .48% of the fund's average net assets.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
4. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annualized rate of .19% of average net assets.
Accounting and Security Lending Fees. FSC 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.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $721 for the period.
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 are shown under the caption "Other Information" at the end of the fund's Schedule of Investments.
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 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. During the period, there were no borrowings on this line of credit.
Semiannual Report
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. 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. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. 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 $3,117 for the period. In addition, through arrangements with the fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody and transfer agent expenses by $1 and $18, respectively.
8. Transactions with Affiliated Companies.
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Companies which are affiliates of the fund at period-end are noted in the fund's Schedule of Investments. Transactions during the period with companies which are or were affiliates are as follows:
Affiliate | Value, beginning | Purchase | Sales | Dividend | Value, end | ||||
Burlington Resources, Inc. | $ 536,456 | $ 9,474 | $ 112,840 | $ 3,189 | $ 602,949 | ||||
Goodrich Corp. | 188,477 | 14,453 | - | 1,431 | 206,318 | ||||
News Corp. Ltd. ADR | 159,403 | 105,556 | - | 211 | 276,420 | ||||
Werner Enterprises, Inc. | 88,999 | - | 76,695 | 160 | 17,051 | ||||
TOTALS | $ 973,335 | $ 129,483 | $ 189,535 | $ 4,991 | $ 1,102,738 |
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
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)Fidelity's Web Site
www.fidelity.com
* 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
7001 West Ray Road
Chandler, AZ
7373 N. Scottsdale Road
Scottsdale, AZ
California
815 East Birch Street
Brea, CA
1411 Chapin Avenue
Burlingame, CA
851 East Hamilton Avenue
Campbell, CA
123 South Lake Avenue
Pasadena, CA
19200 Von Karman Avenue
Irvine, CA
601 Larkspur Landing Circle
Larkspur, CA
10100 Santa Monica Blvd.
Los Angeles, CA
27101 Puerta Real
Mission Viejo, CA
73-575 El Paseo
Palm Desert, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
8 Montgomery Street
San Francisco, CA
21701 Hawthorne Boulevard
Torrance, CA
2001 North Main Street
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
Colorado
1625 Broadway
Denver, CO
9185 East Westview Road
Littleton, CO
Connecticut
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
Delaware
222 Delaware Avenue
Wilmington, DE
Florida
4400 N. Federal Highway
Boca Raton, FL
121 Alhambra Plaza
Coral Gables, FL
2948 N. Federal Highway
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
3501 PGA Boulevard
West Palm Beach, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
Georgia
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
Illinois
One North LaSalle Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
Indiana
4729 East 82nd Street
Indianapolis, IN
Kansas
5400 College Boulevard
Overland Park, KS
Maine
Three Canal Plaza
Portland, ME
Maryland
7401 Wisconsin Avenue
Bethesda, MD
One W. Pennsylvania Ave.
Towson, MD
Massachusetts
801 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
405 Cochituate Road
Framingham, MA
416 Belmont Street
Worcester, MA
Semiannual Report
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Michigan
280 Old N. Woodward Ave.
Birmingham, MI
43420 Grand River Avenue
Novi, MI
29155 Northwestern Hwy.
Southfield, MI
Minnesota
7600 France Avenue South
Edina, MN
Missouri
8885 Ladue Road
Ladue, MO
New Jersey
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
3518 Route 1 North
Princeton, NJ
New York
1055 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
North Carolina
4611 Sharon Road
Charlotte, NC
Ohio
3805 Edwards Road
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1324 Polaris Parkway
Columbus, OH
Oregon
16850 SW 72nd Avenue
Tigard, OR
Pennsylvania
600 West DeKalb Pike
King of Prussia, PA
1735 Market Street
Philadelphia, PA
12001 Perry Highway
Wexford, PA
Rhode Island
47 Providence Place
Providence, RI
Tennessee
6150 Poplar Avenue
Memphis, TN
Texas
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
12532 Memorial Drive
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
6005 West Park Boulevard
Plano, TX
Utah
215 South State Street
Salt Lake City, UT
Virginia
1861 International Drive
McLean, VA
Washington
411 108th Avenue, N.E.
Bellevue, WA
1518 6th Avenue
Seattle, WA
Washington, DC
1900 K Street, N.W.
Washington, DC
Wisconsin
595 North Barker Road
Brookfield, WI
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity International Investment Advisors
Fidelity Investments Japan Limited
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Shareholder
Servicing Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
JPMorgan Chase Bank
New York, NY
Fidelity's Growth and Income Funds
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity ® Fund
Global Balanced Fund
Growth & Income Portfolio
Growth & Income II Portfolio
Puritan® Fund
Real Estate Income Fund
Real Estate Investment Portfolio
Utilities Fund
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®) (automated graphic) 1-800-544-5555
(automated graphic) Automated line for quickest service
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
EII-USAN-0704
1.786811.101
Fidelity®
Convertible Securities
Fund
Semiannual Report
May 31, 2004
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
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, | |
Notes | Notes to the financial statements. | |
For a free copy of the fund's proxy voting guidelines visit www.fidelity.com/goto/proxyguidelines, call 1-800-544-8544, or visit the Securities and Exchange Commission (SEC)'s web site at www.sec.gov.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
(Recycle graphic) This report is printed on recycled paper using soy-based inks.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.
Neither the fund nor Fidelity Distributors Corporation is a bank.
For more information on any Fidelity fund, including charges and expenses, call 1-800-544-6666 for a free prospectus. Read it carefully before you invest or send money.
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Many of you have read or heard news stories recently that were critical of mutual funds and made allegations that the mutual fund industry has been less than forthright. I find these reports unsettling and not necessarily an accurate picture of the overall industry, and I would like you to know where we at Fidelity stand.
With specific regard to allegations that certain mutual fund companies were violating the Securities and Exchange Commission's forward pricing rules or were involved in so-called "market timing" activities, I want to say two things:
First, Fidelity does not have agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not to say that someone could not deceive the company through fraudulent acts. But I underscore that we have no so-called "agreements" which would permit this illegal practice.
Second, Fidelity has been on record for years opposing predatory short-term trading which adversely affects other shareholders in a mutual fund. In fact, in the 1980s, we began charging a fee - which is returned to the fund and, therefore, to investors - to discourage this activity. What's more, several years ago we took the industry lead in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. It is reasonable to assume that another structure can be developed that would alter the system to make it much more difficult for predatory traders to operate. This, however, will only be achieved through close cooperation among regulators, legislators and the industry.
Certainly no industry is perfect, and there have been instances of unethical and illegal activity from time to time within the mutual fund industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. Clearly, every system can be improved. We applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors' holdings. But we remain concerned about the risk of over-regulation and the quick application of simplistic solutions to intricate problems.
For more than 57 years, Fidelity Investments has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Many of them were family and friends. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Investment Changes
Top Ten Investments as of May 31, 2004 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
Tyco International Group SA 3.125% 1/15/23 | 3.4 | 2.8 |
Yahoo!, Inc. 0% 4/1/08 | 3.3 | 0.0 |
Merrill Lynch & Co., Inc. liquid yield option note 0% 3/13/32 | 2.3 | 0.0 |
American Express Co. 1.85% 12/1/33 | 2.2 | 0.0 |
Comverse Technology, Inc. 0% 5/15/23 | 2.1 | 0.0 |
ALZA Corp. 0% 7/28/20 | 2.1 | 1.8 |
EchoStar Communications Corp. Class A | 2.0 | 1.9 |
Freeport-McMoRan Copper & Gold, Inc. 5.50% | 1.7 | 0.0 |
Nextel Partners, Inc. 1.5% 11/15/08 | 1.7 | 0.0 |
Baxter International, Inc. 7.00% | 1.5 | 2.3 |
22.3 | ||
Top Five Market Sectors as of May 31, 2004 | ||
% of fund's | % of fund's net assets | |
Health Care | 26.6 | 18.9 |
Information Technology | 20.1 | 23.2 |
Financials | 18.1 | 11.1 |
Consumer Discretionary | 8.2 | 15.3 |
Telecommunication Services | 7.6 | 6.4 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2004 * | As of November 30, 2003 ** | ||||||
Convertible | Convertible | ||||||
Common | Common and | ||||||
Nonconvertible | Nonconvertible | ||||||
Short-Term | Short-Term | ||||||
* Foreign | 14.3% | ** Foreign | 13.5% |
Semiannual Report
Investments May 31, 2004 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 69.5% | ||||
Principal | Value (Note 1) (000s) | |||
Convertible Bonds - 69.2% | ||||
CONSUMER DISCRETIONARY - 4.3% | ||||
Auto Components - 0.5% | ||||
American Axle & Manufacturing Holdings, Inc. 2% 2/15/24 (d)(e) | $ 9,300 | $ 8,672 | ||
Automobiles - 0.4% | ||||
Fleetwood Enterprises, Inc. 5% 12/15/23 (e) | 5,000 | 7,213 | ||
Hotels, Restaurants & Leisure - 1.3% | ||||
Fairmont Hotels & Resorts, Inc. 3.75% 12/1/23 (e) | 8,600 | 8,569 | ||
Kerzner International Ltd. 2.375% 4/15/24 (e) | 9,000 | 8,625 | ||
WMS Industries, Inc. 2.75% 7/15/10 (e) | 4,000 | 7,000 | ||
24,194 | ||||
Leisure Equipment & Products - 0.5% | ||||
Eastman Kodak Co. 3.375% 10/15/33 (e) | 7,800 | 8,599 | ||
Media - 1.2% | ||||
Interpublic Group of Companies, Inc.: | ||||
4.5% 3/15/23 (e) | 3,600 | 5,093 | ||
4.5% 3/15/23 | 6,200 | 8,771 | ||
Lamar Advertising Co. 2.875% 12/31/10 | 7,200 | 7,772 | ||
21,636 | ||||
Specialty Retail - 0.4% | ||||
Sonic Automotive, Inc. 5.25% 5/7/09 | 7,225 | 7,090 | ||
TOTAL CONSUMER DISCRETIONARY | 77,404 | |||
ENERGY - 1.8% | ||||
Energy Equipment & Services - 0.4% | ||||
Pride International, Inc. 2.5% 3/1/07 | 7,100 | 7,761 | ||
Oil & Gas - 1.4% | ||||
El Paso Corp. 0% 2/28/21 | 37,400 | 17,531 | ||
Evergreen Resources, Inc. 4.75% 12/15/21 | 2,000 | 3,130 | ||
McMoRan Exploration Co.: | ||||
6% 7/2/08 (e) | 1,000 | 1,270 | ||
6% 7/2/08 | 2,000 | 2,541 | ||
24,472 | ||||
TOTAL ENERGY | 32,233 | |||
Corporate Bonds - continued | ||||
Principal | Value (Note 1) (000s) | |||
Convertible Bonds - continued | ||||
FINANCIALS - 11.6% | ||||
Capital Markets - 2.3% | ||||
Merrill Lynch & Co., Inc. liquid yield option note 0% 3/13/32 | $ 40,800 | $ 41,771 | ||
Commercial Banks - 0.8% | ||||
Silicon Valley Bancshares 0% 6/15/08 | 11,800 | 14,433 | ||
Consumer Finance - 2.2% | ||||
American Express Co. 1.85% 12/1/33 (d)(e) | 36,500 | 39,603 | ||
Diversified Financial Services - 4.9% | ||||
Bunge Ltd. Finance Corp.: | ||||
3.75% 11/15/22 (e) | 5,000 | 6,444 | ||
3.75% 11/15/22 | 3,800 | 4,897 | ||
Tyco International Group SA: | ||||
3.125% 1/15/23 (e) | 39,900 | 60,891 | ||
yankee 3.125% 1/15/23 | 10,100 | 15,436 | ||
87,668 | ||||
Insurance - 1.4% | ||||
HCC Insurance Holdings, Inc. 1.3% 4/1/23 | 16,200 | 17,455 | ||
Scottish Re Group Ltd. 4.5% 12/1/22 | 7,000 | 8,400 | ||
25,855 | ||||
TOTAL FINANCIALS | 209,330 | |||
HEALTH CARE - 23.4% | ||||
Biotechnology - 8.8% | ||||
BioMarin Pharmaceutical, Inc.: | ||||
3.5% 6/15/08 (e) | 2,000 | 1,770 | ||
3.5% 6/15/08 | 8,000 | 7,080 | ||
Celgene Corp.: | ||||
1.75% 6/1/08 (e) | 2,000 | 2,705 | ||
1.75% 6/1/08 | 2,400 | 3,246 | ||
Cephalon, Inc. 0% 6/15/33 | 11,300 | 12,042 | ||
Ciphergen Biosystems, Inc. 4.5% 9/1/08 (e) | 5,000 | 4,950 | ||
Enzon Pharmaceuticals, Inc. 4.5% 7/1/08 | 27,260 | 25,216 | ||
Gilead Sciences, Inc. 2% 12/15/07 (e) | 8,500 | 12,405 | ||
IDEC Pharmaceuticals Corp. liquid yield option note 0% 2/16/19 | 10,200 | 25,615 | ||
Invitrogen Corp. 2.25% 12/15/06 | 22,903 | 23,876 | ||
Medarex, Inc. 2.25% 5/15/11 (e) | 10,000 | 9,134 | ||
Oscient Pharmaceuticals Corp. 3.5% 4/15/11 (e) | 11,500 | 11,370 | ||
Corporate Bonds - continued | ||||
Principal | Value (Note 1) (000s) | |||
Convertible Bonds - continued | ||||
HEALTH CARE - continued | ||||
Biotechnology - continued | ||||
OSI Pharmaceuticals, Inc. 3.25% 9/8/23 | $ 10,000 | $ 18,644 | ||
Transkaryotic Therapies, Inc. 1.25% 5/15/11 | 1,000 | 978 | ||
159,031 | ||||
Health Care Equipment & Supplies - 6.8% | ||||
Bausch & Lomb, Inc.: | ||||
1.71% 8/1/23 (e)(f) | 9,100 | 11,974 | ||
1.71% 8/1/23 (f) | 17,000 | 22,369 | ||
Cooper Companies, Inc.: | ||||
2.625% 7/1/23 (e) | 7,500 | 10,402 | ||
2.625% 7/1/23 | 8,800 | 12,205 | ||
Cytyc Corp. 2.25% 3/15/24 (e) | 16,500 | 17,284 | ||
Fisher Scientific International, Inc.: | ||||
2.5% 10/1/23 (e) | 15,600 | 21,944 | ||
2.5% 10/1/23 | 7,400 | 10,409 | ||
Integra LifeSciences Holdings Corp.: | ||||
2.5% 3/15/08 (e) | 6,000 | 6,941 | ||
2.5% 3/15/08 | 1,300 | 1,504 | ||
Thoratec Corp. 1.3798% 5/16/34 (d)(e) | 14,900 | 8,754 | ||
123,786 | ||||
Health Care Providers & Services - 0.9% | ||||
Health Management Associates, Inc.: | ||||
1.5% 8/1/23 (e) | 8,000 | 8,509 | ||
1.5% 8/1/23 | 7,500 | 7,977 | ||
16,486 | ||||
Pharmaceuticals - 6.9% | ||||
ALZA Corp. 0% 7/28/20 | 50,000 | 38,469 | ||
Guilford Pharmaceuticals, Inc. 5% 7/1/08 | 2,000 | 2,394 | ||
IVAX Corp. 1.5% 3/1/24 (e) | 16,750 | 17,348 | ||
King Pharmaceuticals, Inc. 2.75% 11/15/21 (f) | 10,000 | 9,363 | ||
Medicis Pharmaceutical Corp. 2.5% 6/4/32 | 9,300 | 14,351 | ||
MGI Pharma, Inc. 1.6821% 3/2/24 (d)(e) | 26,000 | 23,122 | ||
Roche Holdings, Inc. 0% 7/25/21 (e) | 30,000 | 18,975 | ||
124,022 | ||||
TOTAL HEALTH CARE | 423,325 | |||
Corporate Bonds - continued | ||||
Principal | Value (Note 1) (000s) | |||
Convertible Bonds - continued | ||||
INDUSTRIALS - 2.2% | ||||
Construction & Engineering - 0.5% | ||||
Fluor Corp. 1.5% 2/15/24 | $ 9,000 | $ 8,884 | ||
Electrical Equipment - 0.6% | ||||
Roper Industries, Inc. 1.4813% 1/15/34 (d)(e) | 25,624 | 11,099 | ||
Machinery - 1.1% | ||||
Actuant Corp. 2% 11/15/23 (e) | 5,300 | 5,804 | ||
AGCO Corp. 1.75% 12/31/33 (e) | 4,400 | 4,769 | ||
Wabash National Corp. 3.25% 8/1/08 (e) | 5,300 | 8,268 | ||
18,841 | ||||
TOTAL INDUSTRIALS | 38,824 | |||
INFORMATION TECHNOLOGY - 17.0% | ||||
Communications Equipment - 4.1% | ||||
Brocade Communications Systems, Inc. 2% 1/1/07 | 7,660 | 6,951 | ||
CIENA Corp. 3.75% 2/1/08 | 12,930 | 11,346 | ||
Comverse Technology, Inc. 0% 5/15/23 | 33,400 | 38,702 | ||
Juniper Networks, Inc. 0% 6/15/08 | 14,000 | 17,452 | ||
74,451 | ||||
Computers & Peripherals - 1.3% | ||||
Electronics for Imaging, Inc.: | ||||
1.5% 6/1/23 (e) | 7,300 | 8,840 | ||
1.5% 6/1/23 | 1,800 | 2,180 | ||
Hutchinson Technology, Inc. 2.25% 3/15/10 | 6,700 | 7,362 | ||
Komag, Inc. 2% 2/1/24 | 710 | 597 | ||
Silicon Graphics, Inc. 6.5% 6/1/09 | 2,500 | 4,060 | ||
23,039 | ||||
Electronic Equipment & Instruments - 1.2% | ||||
Bell Microproducts, Inc. 3.75% 3/5/24 (e) | 3,000 | 2,664 | ||
Flextronics International Ltd. 1% 8/1/10 | 7,000 | 9,314 | ||
Global Imaging Systems, Inc.: | ||||
4% 11/15/08 (e) | 5,000 | 7,706 | ||
4% 11/15/08 | 1,500 | 2,312 | ||
21,996 | ||||
Internet Software & Services - 4.0% | ||||
Ask Jeeves, Inc. 0% 6/1/08 | 5,000 | 12,531 | ||
Yahoo!, Inc. 0% 4/1/08 | 37,000 | 59,917 | ||
72,448 | ||||
Corporate Bonds - continued | ||||
Principal | Value (Note 1) (000s) | |||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
IT Services - 1.7% | ||||
CSG Systems International, Inc. 2.5% 6/15/24 (e) | $ 2,500 | $ 2,538 | ||
DST Systems, Inc.: | ||||
4.125% 8/15/23 (e) | 12,300 | 15,489 | ||
4.125% 8/15/23 | 9,400 | 11,837 | ||
29,864 | ||||
Semiconductors & Semiconductor Equipment - 2.8% | ||||
Agere Systems, Inc. 6.5% 12/15/09 | 10,900 | 13,296 | ||
ASML Holding NV 5.5% 5/15/10 | EUR | 10,000 | 16,231 | |
Conexant Systems, Inc. 4.25% 5/1/06 | 9,791 | 9,473 | ||
FEI Co. 0% 6/15/23 | 10,300 | 11,485 | ||
50,485 | ||||
Software - 1.9% | ||||
Amdocs Ltd. 0.5% 3/15/24 (e) | 13,800 | 12,655 | ||
Concord Communications, Inc. 3% 12/15/23 (e) | 8,950 | 7,742 | ||
i2 Technologies, Inc. 5.25% 12/15/06 | 5,000 | 4,350 | ||
Red Hat, Inc. 0.5% 1/15/24 (e) | 7,768 | 9,959 | ||
34,706 | ||||
TOTAL INFORMATION TECHNOLOGY | 306,989 | |||
MATERIALS - 2.5% | ||||
Chemicals - 0.4% | ||||
Millennium Chemicals, Inc. 4% 11/15/23 (e) | 5,500 | 8,442 | ||
Metals & Mining - 2.1% | ||||
Agnico-Eagle Mines Ltd. 4.5% 2/15/12 | 15,000 | 17,756 | ||
Inco Ltd. yankee 3.5% 3/14/52 | 9,000 | 12,375 | ||
Massey Energy Co. 2.25% 4/1/24 (e) | 7,000 | 7,265 | ||
37,396 | ||||
TOTAL MATERIALS | 45,838 | |||
TELECOMMUNICATION SERVICES - 5.9% | ||||
Diversified Telecommunication Services - 0.4% | ||||
Covad Communications Group, Inc. 3% 3/15/24 (e) | 1,000 | 907 | ||
Level 3 Communications, Inc. 6% 9/15/09 | 10,480 | 6,183 | ||
7,090 | ||||
Corporate Bonds - continued | ||||
Principal | Value (Note 1) (000s) | |||
Convertible Bonds - continued | ||||
TELECOMMUNICATION SERVICES - continued | ||||
Wireless Telecommunication Services - 5.5% | ||||
American Tower Corp.: | ||||
3.25% 8/1/10 (e) | $ 15,400 | $ 21,184 | ||
3.25% 8/1/10 | 4,155 | 5,715 | ||
Crown Castle International Corp. 4% 7/15/10 | 14,860 | 23,925 | ||
Nextel Partners, Inc.: | ||||
1.5% 11/15/08 (e) | 4,000 | 8,995 | ||
1.5% 11/15/08 | 13,400 | 30,134 | ||
NII Holdings, Inc. 2.875% 2/1/34 (e) | 10,000 | 10,254 | ||
100,207 | ||||
TOTAL TELECOMMUNICATION SERVICES | 107,297 | |||
UTILITIES - 0.5% | ||||
Multi-Utilities & Unregulated Power - 0.5% | ||||
AES Corp. 4.5% 8/15/05 | 9,200 | 9,082 | ||
TOTAL CONVERTIBLE BONDS | 1,250,322 | |||
Nonconvertible Bonds - 0.3% | ||||
TELECOMMUNICATION SERVICES - 0.3% | ||||
Diversified Telecommunication Services - 0.3% | ||||
Telewest Communications PLC yankee 11.25% 11/1/08 (c) | 9,200 | 5,152 | ||
TOTAL CORPORATE BONDS (Cost $1,179,924) | 1,255,474 |
Common Stocks - 13.6% | |||
Shares | |||
CONSUMER DISCRETIONARY - 3.2% | |||
Internet & Catalog Retail - 1.0% | |||
InterActiveCorp (a) | 576,700 | 18,028 | |
Media - 2.1% | |||
Clear Media Ltd. (a) | 2,405,000 | 2,129 | |
EchoStar Communications Corp. Class A (a) | 1,099,069 | 35,346 | |
37,475 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Specialty Retail - 0.1% | |||
Select Comfort Corp. (a) | 112,900 | $ 3,060 | |
TOTAL CONSUMER DISCRETIONARY | 58,563 | ||
CONSUMER STAPLES - 1.3% | |||
Food & Staples Retailing - 1.3% | |||
Albertsons, Inc. unit | 497,000 | 12,569 | |
Safeway, Inc. (a) | 212,900 | 4,803 | |
Whole Foods Market, Inc. | 71,655 | 6,162 | |
23,534 | |||
ENERGY - 1.6% | |||
Energy Equipment & Services - 1.3% | |||
National-Oilwell, Inc. (a) | 320,900 | 8,883 | |
Precision Drilling Corp. (a) | 100,000 | 4,340 | |
Weatherford International Ltd. (a) | 269,000 | 11,166 | |
24,389 | |||
Oil & Gas - 0.3% | |||
EnCana Corp. | 138,800 | 5,454 | |
TOTAL ENERGY | 29,843 | ||
FINANCIALS - 1.0% | |||
Thrifts & Mortgage Finance - 1.0% | |||
Golden West Financial Corp., Delaware | 91,830 | 9,988 | |
New York Community Bancorp, Inc. | 315,000 | 7,377 | |
17,365 | |||
HEALTH CARE - 1.7% | |||
Biotechnology - 0.7% | |||
MedImmune, Inc. (a) | 400,000 | 9,628 | |
OSI Pharmaceuticals, Inc. (a) | 27,500 | 2,254 | |
11,882 | |||
Health Care Equipment & Supplies - 0.5% | |||
St. Jude Medical, Inc. (a) | 124,600 | 9,502 | |
Health Care Providers & Services - 0.5% | |||
Pharmaceutical Product Development, Inc. (a) | 300,000 | 9,084 | |
TOTAL HEALTH CARE | 30,468 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
INDUSTRIALS - 0.8% | |||
Building Products - 0.3% | |||
Trex Co., Inc. (a) | 144,700 | $ 5,257 | |
Commercial Services & Supplies - 0.5% | |||
Strayer Education, Inc. | 80,200 | 9,351 | |
Electrical Equipment - 0.0% | |||
Aura Systems, Inc. warrants 5/31/05 (a) | 1 | 0 | |
TOTAL INDUSTRIALS | 14,608 | ||
INFORMATION TECHNOLOGY - 3.1% | |||
Communications Equipment - 0.1% | |||
QLogic Corp. (a) | 85,633 | 2,629 | |
Computers & Peripherals - 1.0% | |||
Diebold, Inc. | 155,300 | 7,630 | |
PalmOne, Inc. (a) | 450,000 | 9,554 | |
17,184 | |||
Internet Software & Services - 0.5% | |||
Yahoo Japan Corp. (a) | 800 | 8,416 | |
Semiconductors & Semiconductor Equipment - 1.2% | |||
PMC-Sierra, Inc. (a) | 439,000 | 6,190 | |
Samsung Electronics Co. Ltd. | 32,800 | 14,647 | |
20,837 | |||
Software - 0.3% | |||
BEA Systems, Inc. (a) | 431,652 | 3,725 | |
Red Hat, Inc. (a) | 94,600 | 2,585 | |
6,310 | |||
TOTAL INFORMATION TECHNOLOGY | 55,376 | ||
MATERIALS - 0.5% | |||
Chemicals - 0.5% | |||
Lyondell Chemical Co. | 308,304 | 5,093 | |
Nitto Denko Corp. | 65,800 | 3,568 | |
8,661 | |||
TELECOMMUNICATION SERVICES - 0.4% | |||
Wireless Telecommunication Services - 0.4% | |||
KDDI Corp. | 1,300 | 7,592 | |
TOTAL COMMON STOCKS (Cost $228,883) | 246,010 | ||
Convertible Preferred Stocks - 15.9% | |||
Shares | Value (Note 1) (000s) | ||
CONSUMER DISCRETIONARY - 0.7% | |||
Specialty Retail - 0.7% | |||
Toys 'R' US, Inc. 6.25% | 296,000 | $ 13,276 | |
ENERGY - 2.8% | |||
Oil & Gas - 2.8% | |||
Chesapeake Energy Corp. 6.75% (e) | 283,600 | 25,010 | |
Teekay Shipping Corp. Series A, 7.25% | 361,000 | 14,588 | |
Valero Energy Corp. 2.00% | 335,000 | 10,971 | |
50,569 | |||
FINANCIALS - 5.5% | |||
Diversified Financial Services - 4.7% | |||
AES Trust III 6.75% | 108,700 | 4,474 | |
AES Trust VII: | |||
6.00% (e) | 126,215 | 5,648 | |
6.00% | 128,900 | 5,768 | |
Central Parking Finance Trust 5.25% TIPS | 230,000 | 4,428 | |
CMS Energy Trust I 7.75% | 350,000 | 14,875 | |
News Corp. Finance Trust II (British Sky Broadcasting Group PLC (BSkyB)) 0.75% (e) | 15,000 | 15,375 | |
SMFG Finance Cayman Ltd. 2.25% (e) | 378 | 26,005 | |
Sovereign Capital Trust IV 4.375% | 154,000 | 7,277 | |
83,850 | |||
Thrifts & Mortgage Finance - 0.8% | |||
Doral Financial Corp.: | |||
4.75% (e) | 21,400 | 5,505 | |
4.75% | 13,200 | 3,396 | |
The PMI Group, Inc. 5.875% | 224,000 | 6,205 | |
15,106 | |||
TOTAL FINANCIALS | 98,956 | ||
HEALTH CARE - 1.5% | |||
Health Care Equipment & Supplies - 1.5% | |||
Baxter International, Inc. 7.00% | 492,000 | 26,356 | |
Convertible Preferred Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
INDUSTRIALS - 1.7% | |||
Aerospace & Defense - 1.7% | |||
Northrop Grumman Corp.: | |||
7.25% | 188,100 | $ 19,581 | |
Series B, 7.00% | 86,100 | 11,052 | |
30,633 | |||
MATERIALS - 2.5% | |||
Metals & Mining - 2.5% | |||
Freeport-McMoRan Copper & Gold, Inc. 5.50% (e) | 34,500 | 31,162 | |
Phelps Dodge Corp. Series A, 6.75% MEDS | 91,000 | 13,559 | |
44,721 | |||
TELECOMMUNICATION SERVICES - 1.0% | |||
Wireless Telecommunication Services - 1.0% | |||
Crown Castle International Corp. 6.25% PIERS | 418,150 | 18,712 | |
UTILITIES - 0.2% | |||
Electric Utilities - 0.2% | |||
CMS Energy Corp. 4.50% (e) | 60,000 | 3,255 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $250,986) | 286,478 | ||
Money Market Funds - 1.3% | |||
Fidelity Cash Central Fund, 1.09% (b) | 16,442,428 | 16,442 | |
Fidelity Securities Lending Cash Central Fund, 1.08% (b) | 7,805,029 | 7,805 | |
TOTAL MONEY MARKET FUNDS (Cost $24,247) | 24,247 | ||
Cash Equivalents - 0.9% | |||
Maturity Amount (000s) | Value (Note 1) (000s) | ||
Investments in repurchase agreements (Collateralized by U.S. Treasury Obligations, in a joint trading account at 0.99%, dated 5/28/04 due 6/1/04) | $ 16,311 | $ 16,309 | |
TOTAL INVESTMENT PORTFOLIO - 101.2% (Cost $1,700,349) | 1,828,518 | ||
NET OTHER ASSETS - (1.2)% | (22,353) | ||
NET ASSETS - 100% | $ 1,806,165 |
Currency Abbreviations | ||
EUR | - | European Monetary Unit |
Security Type Abbreviations | ||
MEDS | - | Mandatorily Exchangeable Debt Securities |
PIERS | - | Preferred Income Equity Redeemable Securities |
TIPS | - | Trust Issued Preferred Securities |
Legend |
(a) Non-income producing |
(b) 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 listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Non-income producing - issuer filed for bankruptcy or is in default of interest payments. |
(d) Debt obligation initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(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 period end, the value of these securities amounted to $616,106,000 or 34.1% of net assets. |
(f) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(g) Principal amount is stated in United States dollars unless otherwise noted. |
Other Information |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 8.1% |
BBB | 5.3% |
BB | 14.1% |
B | 12.2% |
CCC,CC,C | 5.1% |
Not Rated | 24.7% |
Equities | 29.5% |
Short-Term Investments and Net Other Assets | 1.0% |
We have used ratings from Moody's Investors Services, Inc. Where Moody's ratings are not available, we have used S&P ratings. |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 85.7% |
Luxembourg | 4.2% |
Canada | 2.6% |
Japan | 2.5% |
United Kingdom | 1.0% |
Others (individually less than 1%) | 4.0% |
100.0% |
Purchases and sales of securities, other than short-term securities, aggregated $1,401,980,000 and $1,414,584,000, respectively. |
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 $23,000 for the period. |
The fund participated in the interfund lending program as a borrower. The average daily loan balance during the period for which loans were outstanding amounted to $6,256,000. The weighted average interest rate was 1.13%. Interest expense includes $3,000 paid under the interfund lending program. At period end there were no interfund loans outstanding. |
The fund participated in the bank borrowing program. The average daily loan balance during the period for which loans were outstanding amounted to $3,805,000. The weighted average interest rate was 1.25%. At period end there were no bank borrowings outstanding. |
Income Tax Information |
At November 30, 2003, the fund had a capital loss carryforward of approximately $329,726,000 of which $113,099,000 and $216,627,000 will expire on November 30, 2009 and 2010, respectively. |
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 amount) | May 31, 2004 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $7,456 and repurchase agreements of $16,309)(cost $1,700,349) - See accompanying schedule | $ 1,828,518 | |
Cash | 1 | |
Receivable for investments sold | 5,842 | |
Receivable for fund shares sold | 1,317 | |
Dividends receivable | 355 | |
Interest receivable | 6,822 | |
Prepaid expenses | 5 | |
Other receivables | 123 | |
Total assets | 1,842,983 | |
Liabilities | ||
Payable for investments purchased | $ 26,911 | |
Payable for fund shares redeemed | 1,140 | |
Accrued management fee | 586 | |
Other affiliated payables | 342 | |
Other payables and accrued expenses | 34 | |
Collateral on securities loaned, at value | 7,805 | |
Total liabilities | 36,818 | |
Net Assets | $ 1,806,165 | |
Net Assets consist of: | ||
Paid in capital | $ 1,865,130 | |
Undistributed net investment income | 14,257 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (201,395) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 128,173 | |
Net Assets, for 89,025 shares outstanding | $ 1,806,165 | |
Net Asset Value, offering price and redemption price per share ($1,806,165 ÷ 89,025 shares) | $ 20.29 |
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, 2004 (Unaudited) | |
Investment Income | ||
Dividends | $ 9,185 | |
Interest | 20,213 | |
Security lending | 14 | |
Total income | 29,412 | |
Expenses | ||
Management fee | $ 4,374 | |
Performance adjustment | (289) | |
Transfer agent fees | 1,755 | |
Accounting and security lending fees | 260 | |
Non-interested trustees' compensation | 5 | |
Custodian fees and expenses | 31 | |
Registration fees | 38 | |
Audit | 36 | |
Legal | 3 | |
Interest | 3 | |
Miscellaneous | 14 | |
Total expenses before reductions | 6,230 | |
Expense reductions | (114) | 6,116 |
Net investment income (loss) | 23,296 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 131,376 | |
Foreign currency transactions | 80 | |
Total net realized gain (loss) | 131,456 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (72,575) | |
Assets and liabilities in foreign currencies | (55) | |
Total change in net unrealized appreciation (depreciation) | (72,630) | |
Net gain (loss) | 58,826 | |
Net increase (decrease) in net assets resulting from operations | $ 82,122 |
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 | Year ended |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 23,296 | $ 69,413 |
Net realized gain (loss) | 131,456 | 49,492 |
Change in net unrealized appreciation (depreciation) | (72,630) | 200,991 |
Net increase (decrease) in net assets resulting | 82,122 | 319,896 |
Distributions to shareholders from net investment income | (31,536) | (71,200) |
Share transactions | 189,073 | 431,770 |
Reinvestment of distributions | 28,212 | 64,277 |
Cost of shares redeemed | (229,128) | (400,393) |
Net increase (decrease) in net assets resulting from share transactions | (11,843) | 95,654 |
Total increase (decrease) in net assets | 38,743 | 344,350 |
Net Assets | ||
Beginning of period | 1,767,422 | 1,423,072 |
End of period (including undistributed net investment income of $14,257 and undistributed net investment income of $22,497, respectively) | $ 1,806,165 | $ 1,767,422 |
Other Information Shares | ||
Sold | 9,264 | 24,029 |
Issued in reinvestment of distributions | 1,388 | 3,719 |
Redeemed | (11,278) | (22,390) |
Net increase (decrease) | (626) | 5,358 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights
Six months ended | Years ended November 30, | |||||
(Unaudited) | 2003 | 2002 | 2001 | 2000 | 1999 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $ 19.71 | $ 16.88 | $ 19.50 | $ 24.04 | $ 22.43 | $ 18.61 |
Income from Investment Operations | ||||||
Net investment income (loss)D | .26 | .79 | .79F,G | .69 | .77 | .57 |
Net realized and unrealized gain (loss) | .67 | 2.87 | (2.46)F,G | (.17) | 3.18 | 5.01 |
Total from investment operations | .93 | 3.66 | (1.67) | .52 | 3.95 | 5.58 |
Distributions from net investment income | (.35) | (.83) | (.95) | (.72) | (.64) | (.62) |
Distributions from net realized gain | - | - | - | (4.34) | (1.70) | (1.14) |
Total distributions | (.35) | (.83) | (.95) | (5.06) | (2.34) | (1.76) |
Net asset value, end of period | $ 20.29 | $ 19.71 | $ 16.88 | $ 19.50 | $ 24.04 | $ 22.43 |
Total ReturnB,C | 4.72% | 22.48% | (8.97)% | 1.56% | 18.07% | 32.36% |
Ratios to Average Net AssetsE | ||||||
Expenses before expense reductions | .68%A | .84% | .88% | .81% | .78% | .85% |
Expenses net of voluntary waivers, if any | .68%A | .84% | .88% | .81% | .78% | .85% |
Expenses net of all reductions | .66%A | .82% | .85% | .76% | .77% | .82% |
Net investment income (loss) | 2.53%A | 4.46% | 4.40%F,G | 3.40% | 2.96% | 2.85% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $ 1,806 | $ 1,767 | $ 1,423 | $ 1,734 | $ 1,843 | $ 1,214 |
Portfolio turnover rate | 155%A | 136% | 138% | 282% | 262% | 246% |
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 Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expenses net of any voluntary 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 fund.
F Effective December 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.
G As a result of a revision to reflect accretion of market discount using the interest method, certain amounts for the year ended November 30, 2002 have been reclassified from what was previously reported. The impact of this change was a decrease to net investment income (loss) of $0.06 per share with a corresponding increase to net realized and unrealized gain (loss) per share. The ratio of net investment income (loss) to average net assets decreased from 4.76% to 4.40%. The reclassification has no impact on the net assets of the fund.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2004 (Unaudited)
(Amounts in thousands except ratios)
1. Significant Accounting Policies.
Fidelity Convertible Securities Fund (the fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The financial statements have been prepared in conformity with 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. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. Debt securities for which quotations are readily available are valued at their most recent bid prices (sales prices if the principal market is an exchange) in the principal market in which such securities are normally traded, as determined by recognized dealers in such securities, or securities are valued on the basis of information provided by a pricing service. Pricing services use valuation matrices that incorporate both dealer-supplied valuations and valuation models. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
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.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
1. Significant Accounting Policies - continued
Foreign Currency - continued
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. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 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 nontaxable distributions or capital gain distributions for income tax purposes. Interest income is 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. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each 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 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, prior period premium and discount on debt securities, market discount, contingent interest,
Semiannual Report
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
non-taxable dividends, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investments including unrealized appreciation (depreciation) as of period end was as follows:
Unrealized appreciation | $ 179,647 | |
Unrealized depreciation | (51,276) | |
Net unrealized appreciation (depreciation) | $ 128,371 | |
Cost for federal income tax purposes | $ 1,700,147 |
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
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.
3. Purchases and Sales of Investments.
Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.
4. 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
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
4. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
fund's average net assets and a group fee rate that averaged .28% 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 fund's relative investment performance as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .44% of the fund's average net assets.
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annualized rate of .19% of average net assets.
Accounting and Security Lending Fees. FSC 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.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $50 for the period.
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 are shown under the caption "Other Information" at the end of the fund's Schedule of Investments.
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 funds. Information regarding the fund's participation in the program is included under the caption "Other Information" at the end of the fund's Schedule of Investments.
Semiannual Report
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 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. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. 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. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. Bank Borrowings.
The fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. Information regarding the fund's participation in the program is included under the caption "Other Information" at the end of the fund's Schedule of Investments.
8. 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 $113 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $1.
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
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)Fidelity's Web Site
www.fidelity.com
* 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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California
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405 Cochituate Road
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416 Belmont Street
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Semiannual Report
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Michigan
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North Carolina
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Ohio
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Semiannual Report
Semiannual Report
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity International Investment Advisors
Fidelity Investments Japan Limited
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Shareholder
Servicing Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
Fidelity's Growth and Income Funds
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity® Fund
Global Balanced Fund
Growth & Income Portfolio
Growth & Income II Portfolio
Puritan® Fund
Real Estate Income Fund
Real Estate Investment Portfolio
Utilities Fund
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®) (automated graphic) 1-800-544-5555
(automated graphic) Automated line for quickest service
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
CVS-USAN-0704
1.786810.101
Fidelity Advisor
Strategic Dividend & Income
Fund - Class A, Class T,
Class B and Class C
Semiannual Report
May 31, 2004
(2_fidelity_logos) (Registered_Trademark)
Class A, Class T, Class B,
and Class C are classes
of Fidelity® Strategic
Dividend & IncomeSM Fund
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Investment Summary | A summary of the fund's investments. | |
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, | |
Notes | Notes to the financial statements. | |
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
For a free copy of the fund's proxy voting guidelines call 1-877-208-0098 or visit the Securities and Exchange Commission (SEC)'s web site at www.sec.gov.
(Recycle graphic) This report is printed on recycled paper using soy-based inks.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.
Neither the fund nor Fidelity Distributors Corporation is a bank.
For more information on any Fidelity Advisor fund, including charges and expenses, contact your investment professional for a free prospectus. Read it carefully before you invest or send money.
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Many of you have read or heard news stories recently that were critical of mutual funds and made allegations that the mutual fund industry has been less than forthright. I find these reports unsettling and not necessarily an accurate picture of the overall industry, and I would like you to know where we at Fidelity stand.
With specific regard to allegations that certain mutual fund companies were violating the Securities and Exchange Commission's forward pricing rules or were involved in so-called "market timing" activities, I want to say two things:
First, Fidelity does not have agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not to say that someone could not deceive the company through fraudulent acts. But I underscore that we have no so-called "agreements" which would permit this illegal practice.
Second, Fidelity has been on record for years opposing predatory short-term trading which adversely affects other shareholders in a mutual fund. In fact, in the 1980s, we began charging a fee - which is returned to the fund and, therefore, to investors - to discourage this activity. What's more, several years ago we took the industry lead in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. It is reasonable to assume that another structure can be developed that would alter the system to make it much more difficult for predatory traders to operate. This, however, will only be achieved through close cooperation among regulators, legislators and the industry.
Certainly no industry is perfect, and there have been instances of unethical and illegal activity from time to time within the mutual fund industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. Clearly, every system can be improved. We applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors' holdings. But we remain concerned about the risk of over-regulation and the quick application of simplistic solutions to intricate problems.
For more than 57 years, Fidelity Investments has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Many of them were family and friends. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Investment Summary
Top Ten Investments as of May 31, 2004 | ||
(excluding cash equivalents) | % of fund's | |
El Paso Tennessee Pipeline Co. Series A, 8.25% | 1.8 | |
Bank of America Corp. | 1.7 | |
Exxon Mobil Corp. | 1.6 | |
American International Group, Inc. | 1.6 | |
Tyco International Ltd. | 1.5 | |
CenturyTel, Inc. 6.875% ACES | 1.3 | |
Citigroup, Inc. | 1.3 | |
ChevronTexaco Corp. | 1.0 | |
Fannie Mae Series L, 5.125% | 1.0 | |
SBC Communications, Inc. | 1.0 | |
13.8 | ||
Top Five Market Sectors as of May 31, 2004 | ||
% of fund's | ||
Financials | 33.5 | |
Health Care | 10.5 | |
Energy | 9.8 | |
Consumer Discretionary | 9.5 | |
Information Technology | 8.8 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2004 * | |||||||
Convertible | |||||||
Common Stocks 67.5% | |||||||
Preferred Stocks 17.7% | |||||||
Short-Term | |||||||
* Foreign | 3.3% |
Semiannual Report
Investments May 31, 2004 (Unaudited)
Showing Percentage of Net Assets
Convertible Bonds - 13.4% | ||||
Principal | Value | |||
CONSUMER DISCRETIONARY - 0.4% | ||||
Media - 0.4% | ||||
Interpublic Group of Companies, Inc. 4.5% 3/15/23 | $ 1,200,000 | $ 1,697,520 | ||
ENERGY - 1.1% | ||||
Oil & Gas - 1.1% | ||||
El Paso Corp. 0% 2/28/21 | 4,470,000 | 2,095,313 | ||
Evergreen Resources, Inc. 4.75% 12/15/21 | 1,430,000 | 2,237,950 | ||
4,333,263 | ||||
FINANCIALS - 1.5% | ||||
Capital Markets - 0.5% | ||||
Merrill Lynch & Co., Inc. liquid yield option note 0% 3/13/32 | 2,110,000 | 2,160,218 | ||
Consumer Finance - 0.5% | ||||
American Express Co. 1.85% 12/1/33 (c)(d) | 1,800,000 | 1,953,000 | ||
Diversified Financial Services - 0.5% | ||||
Tyco International Group SA yankee 3.125% 1/15/23 | 1,310,000 | 2,002,073 | ||
TOTAL FINANCIALS | 6,115,291 | |||
HEALTH CARE - 5.4% | ||||
Biotechnology - 2.6% | ||||
BioMarin Pharmaceutical, Inc. 3.5% 6/15/08 | 2,190,000 | 1,938,150 | ||
Enzon Pharmaceuticals, Inc. 4.5% 7/1/08 | 2,160,000 | 1,998,000 | ||
IDEC Pharmaceuticals Corp. liquid yield option note 0% 2/16/19 | 1,030,000 | 2,586,588 | ||
Invitrogen Corp. 2.25% 12/15/06 | 2,630,000 | 2,741,775 | ||
Serologicals Corp. 4.75% 8/15/33 (d) | 770,000 | 1,087,471 | ||
10,351,984 | ||||
Health Care Equipment & Supplies - 1.4% | ||||
Bausch & Lomb, Inc. 1.71% 8/1/23 (e) | 1,200,000 | 1,579,020 | ||
Cooper Companies, Inc. 2.625% 7/1/23 | 1,480,000 | 2,052,612 | ||
Fisher Scientific International, Inc.: | ||||
2.5% 10/1/23 (d) | 995,000 | 1,399,607 | ||
2.5% 10/1/23 | 380,000 | 534,523 | ||
5,565,762 | ||||
Health Care Providers & Services - 0.5% | ||||
Health Management Associates, Inc. 1.5% 8/1/23 | 1,900,000 | 2,020,840 | ||
Convertible Bonds - continued | ||||
Principal | Value | |||
HEALTH CARE - continued | ||||
Pharmaceuticals - 0.9% | ||||
IVAX Corp. 1.5% 3/1/24 (d) | $ 1,750,000 | $ 1,812,475 | ||
MGI Pharma, Inc. 1.6821% 3/2/24 (c)(d) | 2,040,000 | 1,814,172 | ||
3,626,647 | ||||
TOTAL HEALTH CARE | 21,565,233 | |||
INFORMATION TECHNOLOGY - 2.8% | ||||
Communications Equipment - 0.5% | ||||
Comverse Technology, Inc. 0% 5/15/23 | 800,000 | 927,000 | ||
Juniper Networks, Inc. 0% 6/15/08 | 730,000 | 910,018 | ||
1,837,018 | ||||
Internet Software & Services - 0.7% | ||||
Yahoo!, Inc. 0% 4/1/08 | 1,740,000 | 2,817,713 | ||
IT Services - 0.6% | ||||
DST Systems, Inc.: | ||||
4.125% 8/15/23 (d) | 1,240,000 | 1,561,532 | ||
4.125% 8/15/23 | 790,000 | 994,847 | ||
2,556,379 | ||||
Semiconductors & Semiconductor Equipment - 0.5% | ||||
Agere Systems, Inc. 6.5% 12/15/09 | 1,600,000 | 1,951,744 | ||
Software - 0.5% | ||||
Concord Communications, Inc. 3% 12/15/23 (d) | 2,180,000 | 1,885,700 | ||
TOTAL INFORMATION TECHNOLOGY | 11,048,554 | |||
MATERIALS - 0.5% | ||||
Metals & Mining - 0.5% | ||||
Inco Ltd. yankee 3.5% 3/14/52 | 1,290,000 | 1,773,750 | ||
TELECOMMUNICATION SERVICES - 1.2% | ||||
Wireless Telecommunication Services - 1.2% | ||||
Crown Castle International Corp. 4% 7/15/10 | 1,390,000 | 2,237,900 | ||
Nextel Partners, Inc. 1.5% 11/15/08 | 1,025,000 | 2,305,020 | ||
4,542,920 | ||||
Convertible Bonds - continued | ||||
Principal | Value | |||
UTILITIES - 0.5% | ||||
Multi-Utilities & Unregulated Power - 0.5% | ||||
AES Corp. 4.5% 8/15/05 | $ 2,190,000 | $ 2,162,012 | ||
TOTAL CONVERTIBLE BONDS (Cost $53,408,604) | 53,238,543 |
Common Stocks - 67.5% | |||
Shares | |||
CONSUMER DISCRETIONARY - 7.9% | |||
Auto Components - 0.0% | |||
TRW Automotive Holdings Corp. | 9,900 | 194,436 | |
Automobiles - 0.1% | |||
Harley-Davidson, Inc. | 5,000 | 287,450 | |
Hotels, Restaurants & Leisure - 1.6% | |||
Caesars Entertainment, Inc. (a) | 28,000 | 385,560 | |
McDonald's Corp. | 76,900 | 2,030,160 | |
Orbitz, Inc. Class A | 5,500 | 111,375 | |
Royal Caribbean Cruises Ltd. | 8,500 | 332,520 | |
Starwood Hotels & Resorts Worldwide, Inc. unit | 3,330 | 140,459 | |
Volume Services America Holdings, Inc. Income Deposit Security | 220,300 | 3,176,726 | |
6,176,800 | |||
Household Durables - 0.4% | |||
LG Electronics, Inc. | 4,250 | 246,715 | |
Newell Rubbermaid, Inc. | 24,300 | 572,751 | |
Pulte Homes, Inc. | 3,600 | 189,900 | |
Sony Corp. sponsored ADR | 19,600 | 722,652 | |
1,732,018 | |||
Internet & Catalog Retail - 0.1% | |||
Amazon.com, Inc. (a) | 7,900 | 381,491 | |
Leisure Equipment & Products - 0.3% | |||
Brunswick Corp. | 6,000 | 243,000 | |
Eastman Kodak Co. | 24,900 | 651,882 | |
Leapfrog Enterprises, Inc. Class A (a) | 21,000 | 448,770 | |
1,343,652 | |||
Media - 3.6% | |||
Cablevision Systems Corp. - NY Group Class A (a) | 35,700 | 782,544 | |
Clear Channel Communications, Inc. | 33,200 | 1,318,040 | |
Cumulus Media, Inc. Class A (a) | 51,700 | 958,518 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
CONSUMER DISCRETIONARY - continued | |||
Media - continued | |||
EchoStar Communications Corp. Class A (a) | 3,100 | $ 99,696 | |
Emmis Communications Corp. Class A (a) | 36,200 | 789,160 | |
Fox Entertainment Group, Inc. Class A (a) | 20,100 | 541,695 | |
Grupo Televisa SA de CV sponsored ADR | 14,000 | 591,640 | |
Lamar Advertising Co. Class A (a) | 31,700 | 1,295,579 | |
Liberty Media Corp. Class A (a) | 98,000 | 1,076,040 | |
News Corp. Ltd. sponsored ADR | 9,200 | 313,352 | |
Salem Communications Corp. Class A (a) | 14,900 | 447,000 | |
Spanish Broadcasting System, Inc. Class A (a) | 14,100 | 136,065 | |
The DIRECTV Group, Inc. (a) | 40,600 | 714,966 | |
Time Warner, Inc. (a) | 95,400 | 1,625,616 | |
Viacom, Inc. Class B (non-vtg.) | 41,800 | 1,542,002 | |
Walt Disney Co. | 73,300 | 1,720,351 | |
XM Satellite Radio Holdings, Inc. Class A (a) | 10,600 | 266,908 | |
14,219,172 | |||
Multiline Retail - 0.4% | |||
99 Cents Only Stores (a) | 12,000 | 232,920 | |
JCPenney Co., Inc. | 18,000 | 644,040 | |
Kohl's Corp. (a) | 4,600 | 218,776 | |
Saks, Inc. | 22,700 | 340,727 | |
1,436,463 | |||
Specialty Retail - 1.4% | |||
American Eagle Outfitters, Inc. (a) | 18,466 | 534,775 | |
Gap, Inc. | 48,800 | 1,178,520 | |
Home Depot, Inc. | 50,700 | 1,821,144 | |
Office Depot, Inc. (a) | 42,600 | 696,084 | |
Sonic Automotive, Inc. Class A | 8,498 | 186,531 | |
Toys 'R' Us, Inc. (a) | 55,400 | 870,888 | |
Weight Watchers International, Inc. (a) | 7,000 | 243,950 | |
5,531,892 | |||
TOTAL CONSUMER DISCRETIONARY | 31,303,374 | ||
CONSUMER STAPLES - 2.4% | |||
Beverages - 0.5% | |||
Anheuser-Busch Companies, Inc. | 10,200 | 543,354 | |
PepsiCo, Inc. | 24,000 | 1,280,880 | |
The Coca-Cola Co. | 5,200 | 267,020 | |
2,091,254 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
CONSUMER STAPLES - continued | |||
Food & Staples Retailing - 0.4% | |||
Safeway, Inc. (a) | 30,000 | $ 676,800 | |
Wal-Mart Stores, Inc. | 14,500 | 808,085 | |
1,484,885 | |||
Food Products - 0.2% | |||
Del Monte Foods Co. (a) | 16,000 | 164,320 | |
Interstate Bakeries Corp. | 30,200 | 317,100 | |
McCormick & Co., Inc. (non-vtg.) | 3,300 | 116,985 | |
598,405 | |||
Household Products - 0.9% | |||
Clorox Co. | 4,300 | 225,148 | |
Colgate-Palmolive Co. | 11,500 | 657,800 | |
Procter & Gamble Co. | 24,900 | 2,684,718 | |
3,567,666 | |||
Personal Products - 0.3% | |||
Gillette Co. | 28,200 | 1,215,138 | |
Tobacco - 0.1% | |||
Altria Group, Inc. | 11,100 | 532,467 | |
TOTAL CONSUMER STAPLES | 9,489,815 | ||
ENERGY - 6.1% | |||
Energy Equipment & Services - 2.0% | |||
Baker Hughes, Inc. | 46,500 | 1,582,395 | |
BJ Services Co. (a) | 13,900 | 582,271 | |
ENSCO International, Inc. | 63,100 | 1,680,984 | |
GlobalSantaFe Corp. | 30,000 | 753,900 | |
Halliburton Co. | 21,000 | 609,840 | |
Pride International, Inc. (a) | 21,000 | 330,120 | |
Rowan Companies, Inc. (a) | 11,100 | 243,978 | |
Transocean, Inc. (a) | 43,100 | 1,152,063 | |
Varco International, Inc. (a) | 18,598 | 375,680 | |
Weatherford International Ltd. (a) | 15,600 | 647,556 | |
7,958,787 | |||
Oil & Gas - 4.1% | |||
Amerada Hess Corp. | 6,500 | 458,835 | |
Apache Corp. | 7,000 | 282,520 | |
Burlington Resources, Inc. | 10,800 | 722,952 | |
ChevronTexaco Corp. | 45,900 | 4,149,360 | |
ConocoPhillips | 17,400 | 1,275,942 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
ENERGY - continued | |||
Oil & Gas - continued | |||
Encore Acquisition Co. (a) | 15,000 | $ 421,500 | |
Exxon Mobil Corp. | 146,800 | 6,349,100 | |
Giant Industries, Inc. (a) | 6,000 | 112,320 | |
Occidental Petroleum Corp. | 23,700 | 1,047,540 | |
Pioneer Natural Resources Co. | 8,500 | 263,075 | |
Premcor, Inc. (a) | 16,500 | 604,395 | |
Valero Energy Corp. | 7,500 | 495,825 | |
16,183,364 | |||
TOTAL ENERGY | 24,142,151 | ||
FINANCIALS - 24.1% | |||
Capital Markets - 2.6% | |||
Bear Stearns Companies, Inc. | 10,200 | 826,812 | |
J.P. Morgan Chase & Co. | 35,700 | 1,315,188 | |
Lehman Brothers Holdings, Inc. | 14,100 | 1,066,665 | |
Merrill Lynch & Co., Inc. | 68,100 | 3,868,080 | |
Morgan Stanley | 63,100 | 3,376,481 | |
10,453,226 | |||
Commercial Banks - 4.2% | |||
Bank of America Corp. | 80,057 | 6,655,138 | |
Bank One Corp. | 57,200 | 2,771,340 | |
East West Bancorp, Inc. | 9,400 | 570,298 | |
Fifth Third Bancorp | 18,000 | 977,220 | |
National Commerce Financial Corp. | 10,000 | 325,400 | |
UCBH Holdings, Inc. | 14,400 | 546,336 | |
Valley National Bancorp | 2,315 | 59,056 | |
Wachovia Corp. | 58,900 | 2,780,669 | |
Wells Fargo & Co. | 30,000 | 1,764,000 | |
16,449,457 | |||
Consumer Finance - 0.2% | |||
Capital One Financial Corp. | 8,080 | 566,085 | |
MBNA Corp. | 12,200 | 309,880 | |
875,965 | |||
Diversified Financial Services - 1.4% | |||
CIT Group, Inc. | 10,500 | 393,435 | |
Citigroup, Inc. | 110,900 | 5,149,087 | |
5,542,522 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
FINANCIALS - continued | |||
Insurance - 3.6% | |||
ACE Ltd. | 25,400 | $ 1,045,972 | |
AFLAC, Inc. | 10,400 | 422,240 | |
Allianz AG sponsored ADR | 55,500 | 581,640 | |
AMBAC Financial Group, Inc. | 18,500 | 1,279,275 | |
American International Group, Inc. | 85,400 | 6,259,820 | |
Bristol West Holdings, Inc. | 3,300 | 69,135 | |
Conseco, Inc. (a) | 10,000 | 189,400 | |
Hartford Financial Services Group, Inc. | 11,900 | 786,828 | |
Marsh & McLennan Companies, Inc. | 4,700 | 207,364 | |
MetLife, Inc. | 22,300 | 792,765 | |
Scottish Re Group Ltd. | 15,000 | 330,000 | |
St. Paul Travelers Companies, Inc. | 7,367 | 292,323 | |
UICI (a) | 10,700 | 212,716 | |
UnumProvident Corp. | 37,300 | 543,088 | |
W.R. Berkley Corp. | 20,900 | 870,485 | |
XL Capital Ltd. Class A | 7,100 | 530,015 | |
14,413,066 | |||
Real Estate - 11.1% | |||
Apartment Investment & Management Co. Class A | 34,090 | 984,519 | |
Archstone-Smith Trust | 14,550 | 422,678 | |
AvalonBay Communities, Inc. | 15,330 | 834,719 | |
Boston Properties, Inc. | 34,860 | 1,720,690 | |
CarrAmerica Realty Corp. | 20,880 | 612,202 | |
Catellus Development Corp. | 25,070 | 612,460 | |
CBL & Associates Properties, Inc. | 12,560 | 669,699 | |
CenterPoint Properties Trust (SBI) | 8,180 | 602,457 | |
Chelsea Property Group, Inc. | 4,100 | 225,418 | |
Cornerstone Realty Income Trust, Inc. | 25,300 | 207,713 | |
Correctional Properties Trust | 38,660 | 1,090,212 | |
Duke Realty Corp. | 42,190 | 1,365,268 | |
Equity Office Properties Trust | 59,510 | 1,603,795 | |
Equity One, Inc. | 36,550 | 650,590 | |
Equity Residential (SBI) | 85,670 | 2,522,125 | |
Federal Realty Investment Trust (SBI) | 22,380 | 892,962 | |
General Growth Properties, Inc. | 66,190 | 1,944,662 | |
Health Care Property Investors, Inc. | 33,650 | 808,610 | |
Health Care REIT, Inc. | 22,910 | 743,430 | |
Hersha Hospitality Trust | 46,700 | 465,132 | |
Highwoods Properties, Inc. (SBI) | 46,850 | 1,064,901 | |
Home Properties of New York, Inc. | 12,430 | 491,979 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
FINANCIALS - continued | |||
Real Estate - continued | |||
Host Marriott Corp. (a) | 67,410 | $ 826,447 | |
Kilroy Realty Corp. | 13,920 | 474,950 | |
Kimco Realty Corp. | 35,470 | 1,629,847 | |
Liberty Property Trust (SBI) | 18,650 | 743,949 | |
Manufactured Home Communities, Inc. | 25,050 | 777,803 | |
MeriStar Hospitality Corp. (a) | 156,420 | 993,267 | |
Newcastle Investment Corp. | 7,000 | 195,580 | |
Omega Healthcare Investors, Inc. | 21,330 | 204,341 | |
Pan Pacific Retail Properties, Inc. | 22,630 | 1,040,980 | |
Plum Creek Timber Co., Inc. | 29,130 | 912,352 | |
Post Properties, Inc. | 7,600 | 221,160 | |
ProLogis | 71,940 | 2,306,396 | |
Public Storage, Inc. | 31,020 | 1,426,610 | |
Rayonier, Inc. | 9,380 | 393,960 | |
Reckson Associates Realty Corp. | 63,250 | 1,645,765 | |
Shurgard Storage Centers, Inc. Class A | 9,400 | 352,500 | |
Simon Property Group, Inc. | 43,380 | 2,237,107 | |
SL Green Realty Corp. | 21,690 | 986,895 | |
Taubman Centers, Inc. | 15,230 | 339,629 | |
The Mills Corp. | 3,450 | 151,628 | |
The Rouse Co. | 34,490 | 1,574,469 | |
Trizec Properties, Inc. | 34,310 | 566,458 | |
United Dominion Realty Trust, Inc. (SBI) | 32,480 | 647,651 | |
Ventas, Inc. | 25,560 | 596,059 | |
Vornado Realty Trust | 42,040 | 2,297,486 | |
44,079,510 | |||
Thrifts & Mortgage Finance - 1.0% | |||
Fannie Mae | 16,100 | 1,089,970 | |
Freddie Mac | 11,500 | 671,485 | |
Golden West Financial Corp., Delaware | 3,400 | 369,818 | |
New York Community Bancorp, Inc. | 18,200 | 426,244 | |
Sovereign Bancorp, Inc. | 24,200 | 526,350 | |
The PMI Group, Inc. | 3,000 | 129,510 | |
Washington Mutual, Inc. | 12,000 | 524,160 | |
3,737,537 | |||
TOTAL FINANCIALS | 95,551,283 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
HEALTH CARE - 5.1% | |||
Biotechnology - 0.8% | |||
Biogen Idec, Inc. (a) | 11,000 | $ 683,650 | |
BioMarin Pharmaceutical, Inc. (a) | 72,000 | 439,920 | |
Cephalon, Inc. (a) | 4,200 | 226,254 | |
ConjuChem, Inc. (a) | 27,700 | 259,411 | |
Genentech, Inc. (a) | 12,000 | 717,720 | |
MedImmune, Inc. (a) | 22,900 | 551,203 | |
Millennium Pharmaceuticals, Inc. (a) | 22,700 | 338,457 | |
3,216,615 | |||
Health Care Equipment & Supplies - 1.2% | |||
Arrow International, Inc. | 8,200 | 247,394 | |
Baxter International, Inc. | 88,400 | 2,779,296 | |
Dade Behring Holdings, Inc. (a) | 11,700 | 522,405 | |
Immucor, Inc. (a) | 14,500 | 450,660 | |
Medtronic, Inc. | 3,500 | 167,650 | |
St. Jude Medical, Inc. (a) | 7,500 | 571,950 | |
4,739,355 | |||
Health Care Providers & Services - 0.8% | |||
Community Health Systems, Inc. (a) | 10,000 | 255,000 | |
Covance, Inc. (a) | 9,900 | 358,578 | |
Lincare Holdings, Inc. (a) | 4,300 | 144,523 | |
Odyssey Healthcare, Inc. (a) | 17,000 | 288,150 | |
Tenet Healthcare Corp. (a) | 51,000 | 607,920 | |
UnitedHealth Group, Inc. | 22,400 | 1,461,600 | |
WebMD Corp. (a) | 25,000 | 221,500 | |
3,337,271 | |||
Pharmaceuticals - 2.3% | |||
Barr Pharmaceuticals, Inc. (a) | 7,000 | 305,340 | |
Forest Laboratories, Inc. (a) | 4,450 | 282,086 | |
Johnson & Johnson | 31,400 | 1,749,294 | |
Merck & Co., Inc. | 53,900 | 2,549,470 | |
Pfizer, Inc. | 29,600 | 1,046,064 | |
Schering-Plough Corp. | 140,700 | 2,377,830 | |
Wyeth | 18,200 | 655,200 | |
8,965,284 | |||
TOTAL HEALTH CARE | 20,258,525 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INDUSTRIALS - 8.0% | |||
Aerospace & Defense - 2.0% | |||
Boeing Co. | 19,500 | $ 893,100 | |
Bombardier, Inc. Class B (sub. vtg.) | 29,200 | 98,016 | |
Embraer - Empresa Brasileira de Aeronautica SA sponsored ADR | 11,900 | 302,974 | |
Honeywell International, Inc. | 105,600 | 3,558,720 | |
Lockheed Martin Corp. | 23,900 | 1,184,006 | |
Northrop Grumman Corp. | 4,200 | 433,146 | |
Precision Castparts Corp. | 6,800 | 318,852 | |
Raytheon Co. | 26,000 | 864,500 | |
United Defense Industries, Inc. (a) | 10,400 | 347,360 | |
8,000,674 | |||
Air Freight & Logistics - 0.1% | |||
Expeditors International of Washington, Inc. | 13,000 | 590,720 | |
Airlines - 0.4% | |||
AirTran Holdings, Inc. (a) | 47,000 | 654,240 | |
Southwest Airlines Co. | 73,100 | 1,133,781 | |
1,788,021 | |||
Building Products - 0.4% | |||
Masco Corp. | 50,900 | 1,473,555 | |
Trex Co., Inc. (a) | 4,000 | 145,320 | |
1,618,875 | |||
Commercial Services & Supplies - 1.6% | |||
Avery Dennison Corp. | 14,500 | 856,080 | |
Casella Waste Systems, Inc. Class A (a) | 22,000 | 307,560 | |
Cendant Corp. | 77,700 | 1,782,438 | |
Cintas Corp. | 11,200 | 508,256 | |
Monster Worldwide, Inc. (a) | 8,400 | 212,604 | |
On Assignment, Inc. (a) | 20,000 | 117,400 | |
Robert Half International, Inc. | 59,800 | 1,673,204 | |
ServiceMaster Co. | 18,000 | 218,880 | |
Waste Management, Inc. | 19,800 | 569,448 | |
6,245,870 | |||
Construction & Engineering - 0.4% | |||
Chicago Bridge & Iron Co. NV | 26,671 | 770,792 | |
Fluor Corp. | 15,100 | 610,342 | |
MasTec, Inc. (a) | 20,000 | 85,400 | |
1,466,534 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INDUSTRIALS - continued | |||
Electrical Equipment - 0.2% | |||
FuelCell Energy, Inc. (a) | 15,000 | $ 238,050 | |
Rockwell Automation, Inc. | 12,000 | 406,320 | |
644,370 | |||
Industrial Conglomerates - 2.6% | |||
3M Co. | 6,800 | 575,008 | |
General Electric Co. | 123,800 | 3,852,656 | |
Tyco International Ltd. | 189,900 | 5,847,021 | |
10,274,685 | |||
Machinery - 0.2% | |||
AGCO Corp. (a) | 15,000 | 287,400 | |
SPX Corp. | 14,200 | 620,824 | |
908,224 | |||
Road & Rail - 0.1% | |||
Overnite Corp. | 10,000 | 261,400 | |
TOTAL INDUSTRIALS | 31,799,373 | ||
INFORMATION TECHNOLOGY - 6.0% | |||
Communications Equipment - 1.0% | |||
Brocade Communications Systems, Inc. (a) | 32,600 | 195,274 | |
Cisco Systems, Inc. (a) | 26,300 | 582,545 | |
Foundry Networks, Inc. (a) | 43,000 | 530,620 | |
Lucent Technologies, Inc. (a) | 170,000 | 606,900 | |
McDATA Corp. Class A (a) | 25,600 | 121,600 | |
Motorola, Inc. | 61,800 | 1,221,786 | |
Telefonaktiebolaget LM Ericsson ADR (a) | 18,600 | 519,870 | |
3,778,595 | |||
Computers & Peripherals - 1.3% | |||
Diebold, Inc. | 4,500 | 221,085 | |
Hewlett-Packard Co. | 61,900 | 1,314,756 | |
Hutchinson Technology, Inc. (a) | 14,700 | 388,227 | |
International Business Machines Corp. | 32,900 | 2,914,611 | |
Western Digital Corp. (a) | 20,200 | 184,628 | |
5,023,307 | |||
Electronic Equipment & Instruments - 1.0% | |||
Agilent Technologies, Inc. (a) | 4,000 | 102,800 | |
Flextronics International Ltd. (a) | 15,000 | 263,400 | |
PerkinElmer, Inc. | 14,600 | 284,846 | |
Solectron Corp. (a) | 134,106 | 737,583 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INFORMATION TECHNOLOGY - continued | |||
Electronic Equipment & Instruments - continued | |||
Thermo Electron Corp. (a) | 22,200 | $ 683,316 | |
Waters Corp. (a) | 43,200 | 1,990,656 | |
4,062,601 | |||
Internet Software & Services - 0.2% | |||
Yahoo!, Inc. (a) | 27,100 | 830,886 | |
IT Services - 0.2% | |||
Affiliated Computer Services, Inc. Class A (a) | 10,000 | 498,200 | |
BearingPoint, Inc. (a) | 15,900 | 136,422 | |
The BISYS Group, Inc. (a) | 14,700 | 185,955 | |
820,577 | |||
Office Electronics - 0.2% | |||
Xerox Corp. (a) | 47,000 | 636,380 | |
Semiconductors & Semiconductor Equipment - 1.3% | |||
Agere Systems, Inc.: | |||
Class A (a) | 75,000 | 190,500 | |
Class B (a) | 58,700 | 143,815 | |
Cabot Microelectronics Corp. (a) | 8,000 | 249,200 | |
FormFactor, Inc. | 5,300 | 99,640 | |
Intel Corp. | 19,800 | 565,290 | |
Intersil Corp. Class A | 7,400 | 157,250 | |
KLA-Tencor Corp. (a) | 25,000 | 1,204,500 | |
Micron Technology, Inc. (a) | 23,000 | 345,690 | |
National Semiconductor Corp. (a) | 11,000 | 238,370 | |
Novellus Systems, Inc. (a) | 50,400 | 1,677,816 | |
PMC-Sierra, Inc. (a) | 22,000 | 310,200 | |
5,182,271 | |||
Software - 0.8% | |||
BEA Systems, Inc. (a) | 38,100 | 328,803 | |
Microsoft Corp. | 107,500 | 2,832,625 | |
Siebel Systems, Inc. (a) | 20,000 | 216,000 | |
3,377,428 | |||
TOTAL INFORMATION TECHNOLOGY | 23,712,045 | ||
MATERIALS - 4.1% | |||
Chemicals - 1.7% | |||
Dow Chemical Co. | 63,500 | 2,533,650 | |
E.I. du Pont de Nemours & Co. | 45,700 | 1,974,240 | |
Ecolab, Inc. | 8,100 | 247,131 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
MATERIALS - continued | |||
Chemicals - continued | |||
Headwaters, Inc. (a) | 10,000 | $ 209,000 | |
Lyondell Chemical Co. | 38,700 | 639,324 | |
Millennium Chemicals, Inc. | 44,772 | 760,229 | |
Olin Corp. | 16,900 | 278,005 | |
6,641,579 | |||
Containers & Packaging - 0.8% | |||
Ball Corp. | 4,500 | 307,395 | |
Bemis Co., Inc. | 17,100 | 471,105 | |
Owens-Illinois, Inc. (a) | 61,500 | 912,045 | |
Packaging Corp. of America | 27,000 | 634,500 | |
Sealed Air Corp. (a) | 7,300 | 366,971 | |
Smurfit-Stone Container Corp. (a) | 33,500 | 608,360 | |
3,300,376 | |||
Metals & Mining - 1.3% | |||
Alcoa, Inc. | 18,000 | 563,400 | |
Companhia Vale do Rio Doce sponsored ADR | 5,700 | 288,990 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 15,000 | 504,450 | |
GrafTech International Ltd. (a) | 15,000 | 142,500 | |
Massey Energy Co. | 30,300 | 745,986 | |
Metals USA, Inc. (a) | 14,800 | 220,520 | |
Newmont Mining Corp. | 11,800 | 468,578 | |
Nucor Corp. | 27,800 | 1,830,630 | |
Phelps Dodge Corp. (a) | 8,000 | 543,200 | |
5,308,254 | |||
Paper & Forest Products - 0.3% | |||
Bowater, Inc. | 19,600 | 827,708 | |
Weyerhaeuser Co. | 5,000 | 302,400 | |
1,130,108 | |||
TOTAL MATERIALS | 16,380,317 | ||
TELECOMMUNICATION SERVICES - 2.4% | |||
Diversified Telecommunication Services - 2.0% | |||
Cincinnati Bell, Inc. (a) | 55,000 | 226,600 | |
Citizens Communications Co. (a) | 7,800 | 99,060 | |
Covad Communications Group, Inc. (a) | 245,800 | 528,470 | |
SBC Communications, Inc. | 164,000 | 3,886,800 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
TELECOMMUNICATION SERVICES - continued | |||
Diversified Telecommunication Services - continued | |||
Telefonos de Mexico SA de CV sponsored ADR | 14,000 | $ 470,960 | |
Verizon Communications, Inc. | 76,200 | 2,634,996 | |
7,846,886 | |||
Wireless Telecommunication Services - 0.4% | |||
Crown Castle International Corp. (a) | 37,200 | 547,956 | |
Nextel Communications, Inc. Class A (a) | 18,600 | 430,218 | |
Nextel Partners, Inc. Class A (a) | 20,000 | 326,200 | |
Western Wireless Corp. Class A (a) | 5,800 | 158,804 | |
1,463,178 | |||
TOTAL TELECOMMUNICATION SERVICES | 9,310,064 | ||
UTILITIES - 1.4% | |||
Electric Utilities - 1.1% | |||
Entergy Corp. | 20,700 | 1,130,427 | |
FirstEnergy Corp. | 18,100 | 705,900 | |
PG&E Corp. (a) | 20,300 | 578,550 | |
PPL Corp. | 7,000 | 302,050 | |
Southern Co. | 16,200 | 468,504 | |
TXU Corp. | 18,900 | 706,293 | |
Westar Energy, Inc. | 25,000 | 493,000 | |
Xcel Energy, Inc. | 7,500 | 127,425 | |
4,512,149 | |||
Multi-Utilities & Unregulated Power - 0.3% | |||
AES Corp. (a) | 53,600 | 500,624 | |
Calpine Corp. (a) | 73,500 | 278,565 | |
Public Service Enterprise Group, Inc. | 5,000 | 210,800 | |
989,989 | |||
TOTAL UTILITIES | 5,502,138 | ||
TOTAL COMMON STOCKS (Cost $269,108,644) | 267,449,085 | ||
Preferred Stocks - 17.7% | |||
Shares | Value (Note 1) | ||
Convertible Preferred Stocks - 5.4% | |||
CONSUMER DISCRETIONARY - 1.2% | |||
Hotels, Restaurants & Leisure - 0.4% | |||
Six Flags, Inc. 7.25% PIERS | 82,700 | $ 1,749,105 | |
Media - 0.3% | |||
Emmis Communications Corp. Series A, 6.25% | 10,100 | 462,782 | |
Radio One, Inc. 6.50% | 470 | 495,116 | |
957,898 | |||
Specialty Retail - 0.5% | |||
Toys 'R' US, Inc. 6.25% | 44,600 | 2,000,310 | |
TOTAL CONSUMER DISCRETIONARY | 4,707,313 | ||
ENERGY - 0.8% | |||
Oil & Gas - 0.8% | |||
Chesapeake Energy Corp. 6.75% | 11,700 | 1,031,794 | |
Valero Energy Corp. 2.00% | 61,700 | 2,020,675 | |
3,052,469 | |||
FINANCIALS - 0.9% | |||
Diversified Financial Services - 0.9% | |||
AES Trust VII 6.00% | 80,100 | 3,584,475 | |
INDUSTRIALS - 0.2% | |||
Road & Rail - 0.2% | |||
Kansas City Southern 4.25% | 1,370 | 731,553 | |
MATERIALS - 1.0% | |||
Containers & Packaging - 0.8% | |||
Owens-Illinois, Inc. 4.75% | 99,210 | 2,986,221 | |
Metals & Mining - 0.2% | |||
Freeport-McMoRan Copper & Gold, Inc. 5.50% (d) | 1,050 | 948,413 | |
TOTAL MATERIALS | 3,934,634 | ||
TELECOMMUNICATION SERVICES - 1.3% | |||
Diversified Telecommunication Services - 1.3% | |||
CenturyTel, Inc. 6.875% ACES | 210,200 | 5,243,859 | |
TOTAL CONVERTIBLE PREFERRED STOCKS | 21,254,303 | ||
Preferred Stocks - continued | |||
Shares | Value (Note 1) | ||
Nonconvertible Preferred Stocks - 12.3% | |||
ENERGY - 1.8% | |||
Oil & Gas - 1.8% | |||
El Paso Tennessee Pipeline Co. Series A, 8.25% | 164,900 | $ 7,255,592 | |
FINANCIALS - 7.0% | |||
Capital Markets - 1.3% | |||
Bear Stearns Companies, Inc.: | |||
Series E, 6.155% | 15,000 | 765,000 | |
Series G, 5.49% | 15,000 | 695,250 | |
J.P. Morgan Chase & Co. (depositary shares) Series H, 6.625% | 6,530 | 345,241 | |
Lehman Brothers Holdings, Inc. (depositary shares) Series F, 6.50% | 136,750 | 3,528,150 | |
5,333,641 | |||
Commercial Banks - 0.2% | |||
Banco Santander Central Hispano SA 6.41% (d) | 31,400 | 788,925 | |
Consumer Finance - 0.6% | |||
SLM Corp. Series A, 6.97% | 43,400 | 2,311,050 | |
Diversified Financial Services - 0.7% | |||
ABN Amro Capital Funding Trust VII 6.08% | 60,400 | 1,404,904 | |
EIX Trust II Series B, 8.60% | 19,600 | 493,920 | |
Heco Capital Trust III 6.50% | 12,000 | 298,800 | |
RC Trust I 7.00% | 9,680 | 511,913 | |
2,709,537 | |||
Real Estate - 1.1% | |||
Apartment Investment & Management Co. Series U, 7.75% | 39,000 | 910,260 | |
Duke Realty Corp. (depositary shares) Series K, 6.50% | 74,800 | 1,705,440 | |
Glimcher Realty Trust Series G, 8.125% | 51,200 | 1,262,080 | |
Host Marriott Corp. Series E, 8.875% | 20,000 | 500,000 | |
4,377,780 | |||
Thrifts & Mortgage Finance - 3.1% | |||
Fannie Mae: | |||
Series H, 5.81% | 29,200 | 1,460,000 | |
Series L, 5.125% | 90,900 | 4,081,410 | |
Series N, 5.50% | 71,650 | 3,439,200 | |
Freddie Mac: | |||
Series H, 5.10% | 10,300 | 449,595 | |
Preferred Stocks - continued | |||
Shares | Value (Note 1) | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - continued | |||
Freddie Mac: - continued | |||
Series O, 5.81% | 19,500 | $ 994,695 | |
Series R, 5.70% | 37,300 | 1,841,128 | |
12,266,028 | |||
TOTAL FINANCIALS | 27,786,961 | ||
MATERIALS - 0.3% | |||
Chemicals - 0.2% | |||
E.I. du Pont de Nemours & Co. Series B, 4.50% | 9,900 | 836,550 | |
Metals & Mining - 0.1% | |||
Alcoa, Inc. 3.75% | 6,400 | 494,400 | |
TOTAL MATERIALS | 1,330,950 | ||
UTILITIES - 3.2% | |||
Electric Utilities - 3.2% | |||
Alabama Power Co. 5.30% | 88,600 | 2,055,520 | |
Consolidated Edison Co. of New York, Inc. Series A, 5.00% | 28,705 | 2,382,515 | |
Duquesne Light Co. 6.50% | 69,950 | 3,462,525 | |
FPL Group Capital Trust I 5.875% | 20,000 | 475,000 | |
Monongahela Power Co. Series L, 7.73% | 10,800 | 1,004,400 | |
Southern California Edison Co.: | |||
4.78% | 46,500 | 836,070 | |
Series B, 4.08% | 27,271 | 455,426 | |
Series C, 4.24% | 43,300 | 742,595 | |
Series D, 4.32% | 70,000 | 1,200,500 | |
12,614,551 | |||
TOTAL NONCONVERTIBLE PREFERRED STOCKS | 48,988,054 | ||
TOTAL PREFERRED STOCKS (Cost $73,799,839) | 70,242,357 | ||
Money Market Funds - 1.6% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 1.09% (b) | 5,587,577 | $ 5,587,577 | |
Fidelity Securities Lending Cash Central Fund, 1.08% (b) | 552,075 | 552,075 | |
TOTAL MONEY MARKET FUNDS (Cost $6,139,652) | 6,139,652 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $402,456,739) | 397,069,637 | ||
NET OTHER ASSETS - (0.2)% | (617,097) | ||
NET ASSETS - 100% | $ 396,452,540 |
Security Type Abbreviations |
ACES | - | Automatic Common Exchange Securities |
PIERS | - | Preferred Income Equity Redeemable Securities |
Legend |
(a) Non-income producing |
(b) 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 listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Debt obligation initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $13,251,295 or 3.3% of net assets. |
(e) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
Other Information |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 1.0% |
BBB | 0.9% |
BB | 3.0% |
B | 2.1% |
CCC,CC,C | 1.6% |
Not Rated | 4.8% |
Equities | 85.2% |
Short-Term Investments and Net Other Assets | 1.4% |
100.0% |
We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. |
Purchases and sales of securities, other than short-term securities, aggregated $473,765,098 and $72,537,906, respectively. |
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 $29,973 for the period. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
May 31, 2004 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $553,005) (cost $402,456,739) - See accompanying schedule | $ 397,069,637 | |
Receivable for investments sold | 1,914,636 | |
Receivable for fund shares sold | 869,178 | |
Dividends receivable | 430,779 | |
Interest receivable | 418,936 | |
Prepaid expenses | 51,654 | |
Other receivables | 32,970 | |
Total assets | 400,787,790 | |
Liabilities | ||
Payable for investments purchased | $ 2,958,072 | |
Payable for fund shares redeemed | 392,768 | |
Accrued management fee | 210,584 | |
Distribution fees payable | 29,331 | |
Other affiliated payables | 81,043 | |
Other payables and accrued expenses | 111,377 | |
Collateral on securities loaned, at value | 552,075 | |
Total liabilities | 4,335,250 | |
Net Assets | $ 396,452,540 | |
Net Assets consist of: | ||
Paid in capital | $ 404,987,369 | |
Undistributed net investment income | 1,520,040 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (4,667,775) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (5,387,094) | |
Net Assets | $ 396,452,540 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
May 31, 2004 (Unaudited) | ||
Calculation of Maximum Offering Price | $ 10.21 | |
Maximum offering price per share (100/94.25 of $10.21) | $ 10.83 | |
Class T: | $ 10.20 | |
Maximum offering price per share (100/96.50 of $10.20) | $ 10.57 | |
Class B: | $ 10.19 | |
Class C: | $ 10.19 | |
Strategic Dividend & Income: | $ 10.22 | |
Institutional Class: | $ 10.21 |
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
Statement of Operations
For the period December 23, 2003 (commencement of operations) to May 31, 2004 (Unaudited) | ||
Investment Income | ||
Dividends | $ 2,768,144 | |
Interest | 424,753 | |
Security lending | 2,136 | |
Total income | 3,195,033 | |
Expenses | ||
Management fee | $ 702,706 | |
Transfer agent fees | 281,959 | |
Distribution fees | 88,195 | |
Accounting and security lending fees | 51,650 | |
Non-interested trustees' compensation | 396 | |
Custodian fees and expenses | 52,683 | |
Registration fees | 92,953 | |
Audit | 16,326 | |
Legal | 60 | |
Miscellaneous | 170 | |
Total expenses before reductions | 1,287,098 | |
Expense reductions | (71,320) | 1,215,778 |
Net investment income (loss) | 1,979,255 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | (4,669,144) | |
Foreign currency transactions | 1,369 | |
Total net realized gain (loss) | (4,667,775) | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (5,387,102) | |
Assets and liabilities in foreign currencies | 8 | |
Total change in net unrealized appreciation (depreciation) | (5,387,094) | |
Net gain (loss) | (10,054,869) | |
Net increase (decrease) in net assets resulting from operations | $ (8,075,614) |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Changes in Net Assets
For the period | |
Increase (Decrease) in Net Assets | |
Operations | |
Net investment income (loss) | $ 1,979,255 |
Net realized gain (loss) | (4,667,775) |
Change in net unrealized appreciation (depreciation) | (5,387,094) |
Net increase (decrease) in net assets resulting | (8,075,614) |
Distributions to shareholders from net investment income | (459,215) |
Share transactions - net increase (decrease) | 404,987,369 |
Total increase (decrease) in net assets | 396,452,540 |
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $1,520,040) | $ 396,452,540 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .06 |
Net realized and unrealized gain (loss) | .17 F |
Total from investment operations | .23 |
Distributions from net investment income | (.02) |
Net asset value, end of period | $ 10.21 |
Total Return B,C,D | 2.24% |
Ratios to Average Net Assets H | |
Expenses before expense reductions | 1.26%A |
Expenses net of voluntary waivers, if any | 1.20%A |
Expenses net of all reductions | 1.17% A |
Net investment income (loss) | 1.44% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 14,148 |
Portfolio turnover rate | 61% A |
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 period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)E | .05 |
Net realized and unrealized gain (loss) | .16F |
Total from investment operations | .21 |
Distributions from net investment income | (.01) |
Net asset value, end of period | $ 10.20 |
Total ReturnB,C,D | 2.10% |
Ratios to Average Net AssetsH | |
Expenses before expense reductions | 1.51%A |
Expenses net of voluntary waivers, if any | 1.45%A |
Expenses net of all reductions | 1.42%A |
Net investment income (loss) | 1.19%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 17,466 |
Portfolio turnover rate | 61%A |
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 period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)E | .03 |
Net realized and unrealized gain (loss) | .17F |
Total from investment operations | .20 |
Distributions from net investment income | (.01) |
Net asset value, end of period | $ 10.19 |
Total ReturnB,C,D | 1.95% |
Ratios to Average Net AssetsH | |
Expenses before expense reductions | 2.04%A |
Expenses net of voluntary waivers, if any | 1.95%A |
Expenses net of all reductions | 1.92%A |
Net investment income (loss) | .69%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 8,316 |
Portfolio turnover rate | 61%A |
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 period 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 The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)E | .03 |
Net realized and unrealized gain (loss) | .17F |
Total from investment operations | .20 |
Distributions from net investment income | (.01) |
Net asset value, end of period | $ 10.19 |
Total ReturnB,C,D | 1.95% |
Ratios to Average Net AssetsH | |
Expenses before expense reductions | 2.00%A |
Expenses net of voluntary waivers, if any | 1.95%A |
Expenses net of all reductions | 1.92%A |
Net investment income (loss) | .70%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 18,735 |
Portfolio turnover rate | 61%A |
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 period 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 The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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 - Strategic Dividend & Income
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)D | .07 |
Net realized and unrealized gain (loss) | .17E |
Total from investment operations | .24 |
Distributions from net investment income | (.02) |
Net asset value, end of period | $ 10.22 |
Total ReturnB,C | 2.34% |
Ratios to Average Net AssetsG | |
Expenses before expense reductions | .98%A |
Expenses net of voluntary waivers, if any | .95%A |
Expenses net of all reductions | .92%A |
Net investment income (loss) | 1.69%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 334,905 |
Portfolio turnover rate | 61%A |
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 period shown.
D Calculated based on average shares outstanding during the period.
E The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
F For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)D | .07 |
Net realized and unrealized gain (loss) | .16E |
Total from investment operations | .23 |
Distributions from net investment income | (.02) |
Net asset value, end of period | $ 10.21 |
Total ReturnB,C | 2.29% |
Ratios to Average Net AssetsG | |
Expenses before expense reductions | .97%A |
Expenses net of voluntary waivers, if any | .95%A |
Expenses net of all reductions | .92%A |
Net investment income (loss) | 1.69%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 2,882 |
Portfolio turnover rate | 61%A |
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 period shown.
D Calculated based on average shares outstanding during the period.
E The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
F For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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, 2004 (Unaudited)
1. Significant Accounting Policies.
Fidelity Strategic Dividend & Income 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, Strategic Dividend & Income, and Institutional Class 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. 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.
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. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. Debt securities for which quotations are readily available are valued at their most recent bid prices (sales prices if the principal market is an exchange) in the principal market in which such securities are normally traded, as determined by recognized dealers in such securities, or securities are valued on the basis of information provided by a pricing service. Pricing services use valuation matrices that incorporate both dealer-supplied valuations and valuation models. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
1. Significant Accounting Policies - continued
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. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 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 nontaxable distributions or capital gain distributions for income tax purposes. Interest income is 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 the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each 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
Semiannual Report
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
The federal tax cost of investments including unrealized appreciation (depreciation) as of period end was as follows:
Unrealized appreciation | $ 11,387,054 |
Unrealized depreciation | (17,358,736) |
Net unrealized appreciation (depreciation) | $ (5,971,682) |
Cost for federal income tax purposes | $ 403,041,319 |
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
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.
3. Purchases and Sales of Investments.
Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
4. 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 .28% 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 .57% 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 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 | 0% | .25% | $ 8,385 | $ 1,044 |
Class T | .25% | .25% | 19,894 | 2,134 |
Class B | .75% | .25% | 18,667 | 15,072 |
Class C | .75% | .25% | 41,249 | 33,233 |
$ 88,195 | $ 51,483 |
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, and ..25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 60,335 |
Class T | 26,761 |
Class B* | 1,657 |
Class C* | 1,693 |
$ 90,446 |
* 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.
Semiannual Report
4. 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, except for Strategic Dividend & Income. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, , is the transfer agent for Strategic Dividend & Income shares. FIIOC and FSC receive 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 and FSC pay for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class to FIIOC or FSC were as follows:
Amount | % of | |
Class A | $ 9,057 | .27* |
Class T | 10,824 | .27* |
Class B | 5,419 | .29* |
Class C | 11,107 | .27* |
Strategic Dividend & Income | 243,794 | .23* |
Institutional Class | 1,758 | .19* |
$ 281,959 |
* Annualized
Accounting and Security Lending Fees. FSC 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.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $39,008 for the period.
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 are shown under the caption "Other Information" at the end of the fund's Schedule of Investments.
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 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. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. 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. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. Expense Reductions.
Effective December 23, 2003, FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.20% | $ 1,967 |
Class T | 1.45% | 2,370 |
Class B | 1.95% | 1,696 |
Class C | 1.95% | 2,299 |
Strategic Dividend & Income | .95% | 28,989 |
Institutional Class | .95% | 184 |
$ 37,505 |
Semiannual Report
7. Expense Reductions - continued
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 $32,350 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $1,465.
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
For the period | |
From net investment income | |
Class A | $ 10,278 |
Class T | 8,648 |
Class B | 1,881 |
Class C | 4,276 |
Strategic Dividend & Income | 430,123 |
Institutional Class | 4,009 |
Total | $ 459,215 |
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |
For the period | For the period | |
Class A | ||
Shares sold | 1,470,027 | $ 15,212,108 |
Reinvestment of distributions | 671 | 7,171 |
Shares redeemed | (84,877) | (863,448) |
Net increase (decrease) | 1,385,821 | $ 14,355,831 |
Class T | ||
Shares sold | 1,734,620 | $ 17,977,006 |
Reinvestment of distributions | 584 | 6,236 |
Shares redeemed | (23,384) | (238,262) |
Net increase (decrease) | 1,711,820 | $ 17,744,980 |
Class B | ||
Shares sold | 839,815 | $ 8,642,138 |
Reinvestment of distributions | 118 | 1,255 |
Shares redeemed | (23,440) | (238,135) |
Net increase (decrease) | 816,493 | $ 8,405,258 |
Class C | ||
Shares sold | 1,863,966 | $ 19,253,693 |
Reinvestment of distributions | 266 | 2,843 |
Shares redeemed | (24,920) | (252,395) |
Net increase (decrease) | 1,839,312 | $ 19,004,141 |
Strategic Dividend & Income | ||
Shares sold | 39,208,484 | $ 408,802,215 |
Reinvestment of distributions | 36,183 | 386,431 |
Shares redeemed | (6,478,528) | (66,603,303) |
Net increase (decrease) | 32,766,139 | $ 342,585,343 |
Institutional Class | ||
Shares sold | 292,166 | $ 2,993,335 |
Reinvestment of distributions | 218 | 2,327 |
Shares redeemed | (10,202) | (103,846) |
Net increase (decrease) | 282,182 | $ 2,891,816 |
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Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity International Investment Advisors
Fidelity Investments Japan Limited
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Shareholder
Servicing Agent
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
Semiannual Report
Fidelity Advisor Aggressive Growth Fund |
Fidelity Advisor Asset Allocation Fund |
Fidelity Advisor Balanced Fund |
Fidelity Advisor Biotechnology Fund |
Fidelity Advisor California Municipal Income Fund |
Fidelity Advisor Consumer Industries Fund |
Fidelity Advisor Cyclical Industries Fund |
Fidelity Advisor Developing Communications Fund |
Fidelity Advisor Diversified International Fund |
Fidelity Advisor Dividend Growth Fund |
Fidelity Advisor Dynamic Capital |
Fidelity Advisor Electronics Fund |
Fidelity Advisor Emerging Asia Fund |
Fidelity Advisor Emerging Markets Fund |
Fidelity Advisor Emerging Markets Income Fund |
Fidelity Advisor Equity Growth Fund |
Fidelity Advisor Equity Income Fund |
Fidelity Advisor Equity Value Fund |
Fidelity Advisor Europe Capital |
Fidelity Advisor Fifty Fund |
Fidelity Advisor Financial Services Fund |
Fidelity Advisor Floating Rate High Income Fund |
Fidelity Advisor Freedom Income, 2005, 2010, 2015, 2020, 2025, 2030, 2035, 2040 FundsSM |
Fidelity Advisor Global Equity Fund |
Fidelity Advisor Government Investment Fund |
Fidelity Advisor Growth & Income Fund |
Fidelity Advisor Growth Opportunities Fund |
Fidelity Advisor Health Care Fund |
Fidelity Advisor High Income Advantage Fund |
Fidelity Advisor High Income Fund |
Fidelity Advisor Inflation-Protected Bond Fund |
Fidelity Advisor Intermediate Bond Fund |
Fidelity Advisor International Capital Appreciation Fund |
Fidelity Advisor International |
Fidelity Advisor Investment Grade Bond Fund |
Fidelity Advisor Japan Fund |
Fidelity Advisor Korea Fund |
Fidelity Advisor Large Cap Fund |
Fidelity Advisor Latin America Fund |
Fidelity Advisor Leveraged Company Stock Fund |
Fidelity Advisor Mid Cap Fund |
Fidelity Advisor Mortgage Securities Fund |
Fidelity Advisor Municipal Income Fund |
Fidelity Advisor Natural Resources Fund |
Fidelity Advisor New Insights Fund |
Fidelity Advisor New York Municipal |
Fidelity Advisor Overseas Fund |
Fidelity Advisor Real Estate Fund |
Fidelity Advisor Short Fixed-Income Fund |
Fidelity Advisor Short Intermediate Municipal Income Fund |
Fidelity Advisor Small Cap Fund |
Fidelity Advisor Strategic Dividend & |
Fidelity Advisor Strategic Growth Fund |
Fidelity Advisor Strategic Income Fund |
Fidelity Advisor Tax Managed Stock Fund |
Fidelity Advisor Technology Fund |
Fidelity Advisor Telecommunications & |
Fidelity Advisor Total Bond Fund |
Fidelity Advisor Ultra-Short Bond Fund |
Fidelity Advisor Value Fund |
Fidelity Advisor Value Leaders Fund |
Fidelity Advisor Value Strategies Fund |
Prime Fund |
Tax-Exempt Fund |
Treasury Fund |
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
ASDI-USAN-0704
1.802528.100
Fidelity Advisor
Strategic Dividend & Income
Fund - Institutional Class
Semiannual Report
May 31, 2004
(2_fidelity_logos) (Registered_Trademark)
Institutional Class
is a class of Fidelity®
Strategic Dividend &
IncomeSM Fund
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Investment Summary | A summary of the fund's investments. | |
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, | |
Notes | Notes to the financial statements. | |
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
For a free copy of the fund's proxy voting guidelines call 1-877-208-0098 or visit the Securities and Exchange Commission (SEC)'s web site at www.sec.gov.
(Recycle graphic) This report is printed on recycled paper using soy-based inks.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.
Neither the fund nor Fidelity Distributors Corporation is a bank.
For more information on any Fidelity Advisor fund, including charges and expenses, contact your investment professional for a free prospectus. Read it carefully before you invest or send money.
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Many of you have read or heard news stories recently that were critical of mutual funds and made allegations that the mutual fund industry has been less than forthright. I find these reports unsettling and not necessarily an accurate picture of the overall industry, and I would like you to know where we at Fidelity stand.
With specific regard to allegations that certain mutual fund companies were violating the Securities and Exchange Commission's forward pricing rules or were involved in so-called "market timing" activities, I want to say two things:
First, Fidelity does not have agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not to say that someone could not deceive the company through fraudulent acts. But I underscore that we have no so-called "agreements" which would permit this illegal practice.
Second, Fidelity has been on record for years opposing predatory short-term trading which adversely affects other shareholders in a mutual fund. In fact, in the 1980s, we began charging a fee - which is returned to the fund and, therefore, to investors - to discourage this activity. What's more, several years ago we took the industry lead in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. It is reasonable to assume that another structure can be developed that would alter the system to make it much more difficult for predatory traders to operate. This, however, will only be achieved through close cooperation among regulators, legislators and the industry.
Certainly no industry is perfect, and there have been instances of unethical and illegal activity from time to time within the mutual fund industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. Clearly, every system can be improved. We applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors' holdings. But we remain concerned about the risk of over-regulation and the quick application of simplistic solutions to intricate problems.
For more than 57 years, Fidelity Investments has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Many of them were family and friends. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Investment Summary
Top Ten Investments as of May 31, 2004 | ||
(excluding cash equivalents) | % of fund's | |
El Paso Tennessee Pipeline Co. Series A, 8.25% | 1.8 | |
Bank of America Corp. | 1.7 | |
Exxon Mobil Corp. | 1.6 | |
American International Group, Inc. | 1.6 | |
Tyco International Ltd. | 1.5 | |
CenturyTel, Inc. 6.875% ACES | 1.3 | |
Citigroup, Inc. | 1.3 | |
ChevronTexaco Corp. | 1.0 | |
Fannie Mae Series L, 5.125% | 1.0 | |
SBC Communications, Inc. | 1.0 | |
13.8 | ||
Top Five Market Sectors as of May 31, 2004 | ||
% of fund's | ||
Financials | 33.5 | |
Health Care | 10.5 | |
Energy | 9.8 | |
Consumer Discretionary | 9.5 | |
Information Technology | 8.8 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2004 * | |||||||
Convertible | |||||||
Common Stocks 67.5% | |||||||
Preferred Stocks 17.7% | |||||||
Short-Term | |||||||
* Foreign | 3.3% |
Semiannual Report
Investments May 31, 2004 (Unaudited)
Showing Percentage of Net Assets
Convertible Bonds - 13.4% | ||||
Principal | Value | |||
CONSUMER DISCRETIONARY - 0.4% | ||||
Media - 0.4% | ||||
Interpublic Group of Companies, Inc. 4.5% 3/15/23 | $ 1,200,000 | $ 1,697,520 | ||
ENERGY - 1.1% | ||||
Oil & Gas - 1.1% | ||||
El Paso Corp. 0% 2/28/21 | 4,470,000 | 2,095,313 | ||
Evergreen Resources, Inc. 4.75% 12/15/21 | 1,430,000 | 2,237,950 | ||
4,333,263 | ||||
FINANCIALS - 1.5% | ||||
Capital Markets - 0.5% | ||||
Merrill Lynch & Co., Inc. liquid yield option note 0% 3/13/32 | 2,110,000 | 2,160,218 | ||
Consumer Finance - 0.5% | ||||
American Express Co. 1.85% 12/1/33 (c)(d) | 1,800,000 | 1,953,000 | ||
Diversified Financial Services - 0.5% | ||||
Tyco International Group SA yankee 3.125% 1/15/23 | 1,310,000 | 2,002,073 | ||
TOTAL FINANCIALS | 6,115,291 | |||
HEALTH CARE - 5.4% | ||||
Biotechnology - 2.6% | ||||
BioMarin Pharmaceutical, Inc. 3.5% 6/15/08 | 2,190,000 | 1,938,150 | ||
Enzon Pharmaceuticals, Inc. 4.5% 7/1/08 | 2,160,000 | 1,998,000 | ||
IDEC Pharmaceuticals Corp. liquid yield option note 0% 2/16/19 | 1,030,000 | 2,586,588 | ||
Invitrogen Corp. 2.25% 12/15/06 | 2,630,000 | 2,741,775 | ||
Serologicals Corp. 4.75% 8/15/33 (d) | 770,000 | 1,087,471 | ||
10,351,984 | ||||
Health Care Equipment & Supplies - 1.4% | ||||
Bausch & Lomb, Inc. 1.71% 8/1/23 (e) | 1,200,000 | 1,579,020 | ||
Cooper Companies, Inc. 2.625% 7/1/23 | 1,480,000 | 2,052,612 | ||
Fisher Scientific International, Inc.: | ||||
2.5% 10/1/23 (d) | 995,000 | 1,399,607 | ||
2.5% 10/1/23 | 380,000 | 534,523 | ||
5,565,762 | ||||
Health Care Providers & Services - 0.5% | ||||
Health Management Associates, Inc. 1.5% 8/1/23 | 1,900,000 | 2,020,840 | ||
Convertible Bonds - continued | ||||
Principal | Value | |||
HEALTH CARE - continued | ||||
Pharmaceuticals - 0.9% | ||||
IVAX Corp. 1.5% 3/1/24 (d) | $ 1,750,000 | $ 1,812,475 | ||
MGI Pharma, Inc. 1.6821% 3/2/24 (c)(d) | 2,040,000 | 1,814,172 | ||
3,626,647 | ||||
TOTAL HEALTH CARE | 21,565,233 | |||
INFORMATION TECHNOLOGY - 2.8% | ||||
Communications Equipment - 0.5% | ||||
Comverse Technology, Inc. 0% 5/15/23 | 800,000 | 927,000 | ||
Juniper Networks, Inc. 0% 6/15/08 | 730,000 | 910,018 | ||
1,837,018 | ||||
Internet Software & Services - 0.7% | ||||
Yahoo!, Inc. 0% 4/1/08 | 1,740,000 | 2,817,713 | ||
IT Services - 0.6% | ||||
DST Systems, Inc.: | ||||
4.125% 8/15/23 (d) | 1,240,000 | 1,561,532 | ||
4.125% 8/15/23 | 790,000 | 994,847 | ||
2,556,379 | ||||
Semiconductors & Semiconductor Equipment - 0.5% | ||||
Agere Systems, Inc. 6.5% 12/15/09 | 1,600,000 | 1,951,744 | ||
Software - 0.5% | ||||
Concord Communications, Inc. 3% 12/15/23 (d) | 2,180,000 | 1,885,700 | ||
TOTAL INFORMATION TECHNOLOGY | 11,048,554 | |||
MATERIALS - 0.5% | ||||
Metals & Mining - 0.5% | ||||
Inco Ltd. yankee 3.5% 3/14/52 | 1,290,000 | 1,773,750 | ||
TELECOMMUNICATION SERVICES - 1.2% | ||||
Wireless Telecommunication Services - 1.2% | ||||
Crown Castle International Corp. 4% 7/15/10 | 1,390,000 | 2,237,900 | ||
Nextel Partners, Inc. 1.5% 11/15/08 | 1,025,000 | 2,305,020 | ||
4,542,920 | ||||
Convertible Bonds - continued | ||||
Principal | Value | |||
UTILITIES - 0.5% | ||||
Multi-Utilities & Unregulated Power - 0.5% | ||||
AES Corp. 4.5% 8/15/05 | $ 2,190,000 | $ 2,162,012 | ||
TOTAL CONVERTIBLE BONDS (Cost $53,408,604) | 53,238,543 |
Common Stocks - 67.5% | |||
Shares | |||
CONSUMER DISCRETIONARY - 7.9% | |||
Auto Components - 0.0% | |||
TRW Automotive Holdings Corp. | 9,900 | 194,436 | |
Automobiles - 0.1% | |||
Harley-Davidson, Inc. | 5,000 | 287,450 | |
Hotels, Restaurants & Leisure - 1.6% | |||
Caesars Entertainment, Inc. (a) | 28,000 | 385,560 | |
McDonald's Corp. | 76,900 | 2,030,160 | |
Orbitz, Inc. Class A | 5,500 | 111,375 | |
Royal Caribbean Cruises Ltd. | 8,500 | 332,520 | |
Starwood Hotels & Resorts Worldwide, Inc. unit | 3,330 | 140,459 | |
Volume Services America Holdings, Inc. Income Deposit Security | 220,300 | 3,176,726 | |
6,176,800 | |||
Household Durables - 0.4% | |||
LG Electronics, Inc. | 4,250 | 246,715 | |
Newell Rubbermaid, Inc. | 24,300 | 572,751 | |
Pulte Homes, Inc. | 3,600 | 189,900 | |
Sony Corp. sponsored ADR | 19,600 | 722,652 | |
1,732,018 | |||
Internet & Catalog Retail - 0.1% | |||
Amazon.com, Inc. (a) | 7,900 | 381,491 | |
Leisure Equipment & Products - 0.3% | |||
Brunswick Corp. | 6,000 | 243,000 | |
Eastman Kodak Co. | 24,900 | 651,882 | |
Leapfrog Enterprises, Inc. Class A (a) | 21,000 | 448,770 | |
1,343,652 | |||
Media - 3.6% | |||
Cablevision Systems Corp. - NY Group Class A (a) | 35,700 | 782,544 | |
Clear Channel Communications, Inc. | 33,200 | 1,318,040 | |
Cumulus Media, Inc. Class A (a) | 51,700 | 958,518 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
CONSUMER DISCRETIONARY - continued | |||
Media - continued | |||
EchoStar Communications Corp. Class A (a) | 3,100 | $ 99,696 | |
Emmis Communications Corp. Class A (a) | 36,200 | 789,160 | |
Fox Entertainment Group, Inc. Class A (a) | 20,100 | 541,695 | |
Grupo Televisa SA de CV sponsored ADR | 14,000 | 591,640 | |
Lamar Advertising Co. Class A (a) | 31,700 | 1,295,579 | |
Liberty Media Corp. Class A (a) | 98,000 | 1,076,040 | |
News Corp. Ltd. sponsored ADR | 9,200 | 313,352 | |
Salem Communications Corp. Class A (a) | 14,900 | 447,000 | |
Spanish Broadcasting System, Inc. Class A (a) | 14,100 | 136,065 | |
The DIRECTV Group, Inc. (a) | 40,600 | 714,966 | |
Time Warner, Inc. (a) | 95,400 | 1,625,616 | |
Viacom, Inc. Class B (non-vtg.) | 41,800 | 1,542,002 | |
Walt Disney Co. | 73,300 | 1,720,351 | |
XM Satellite Radio Holdings, Inc. Class A (a) | 10,600 | 266,908 | |
14,219,172 | |||
Multiline Retail - 0.4% | |||
99 Cents Only Stores (a) | 12,000 | 232,920 | |
JCPenney Co., Inc. | 18,000 | 644,040 | |
Kohl's Corp. (a) | 4,600 | 218,776 | |
Saks, Inc. | 22,700 | 340,727 | |
1,436,463 | |||
Specialty Retail - 1.4% | |||
American Eagle Outfitters, Inc. (a) | 18,466 | 534,775 | |
Gap, Inc. | 48,800 | 1,178,520 | |
Home Depot, Inc. | 50,700 | 1,821,144 | |
Office Depot, Inc. (a) | 42,600 | 696,084 | |
Sonic Automotive, Inc. Class A | 8,498 | 186,531 | |
Toys 'R' Us, Inc. (a) | 55,400 | 870,888 | |
Weight Watchers International, Inc. (a) | 7,000 | 243,950 | |
5,531,892 | |||
TOTAL CONSUMER DISCRETIONARY | 31,303,374 | ||
CONSUMER STAPLES - 2.4% | |||
Beverages - 0.5% | |||
Anheuser-Busch Companies, Inc. | 10,200 | 543,354 | |
PepsiCo, Inc. | 24,000 | 1,280,880 | |
The Coca-Cola Co. | 5,200 | 267,020 | |
2,091,254 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
CONSUMER STAPLES - continued | |||
Food & Staples Retailing - 0.4% | |||
Safeway, Inc. (a) | 30,000 | $ 676,800 | |
Wal-Mart Stores, Inc. | 14,500 | 808,085 | |
1,484,885 | |||
Food Products - 0.2% | |||
Del Monte Foods Co. (a) | 16,000 | 164,320 | |
Interstate Bakeries Corp. | 30,200 | 317,100 | |
McCormick & Co., Inc. (non-vtg.) | 3,300 | 116,985 | |
598,405 | |||
Household Products - 0.9% | |||
Clorox Co. | 4,300 | 225,148 | |
Colgate-Palmolive Co. | 11,500 | 657,800 | |
Procter & Gamble Co. | 24,900 | 2,684,718 | |
3,567,666 | |||
Personal Products - 0.3% | |||
Gillette Co. | 28,200 | 1,215,138 | |
Tobacco - 0.1% | |||
Altria Group, Inc. | 11,100 | 532,467 | |
TOTAL CONSUMER STAPLES | 9,489,815 | ||
ENERGY - 6.1% | |||
Energy Equipment & Services - 2.0% | |||
Baker Hughes, Inc. | 46,500 | 1,582,395 | |
BJ Services Co. (a) | 13,900 | 582,271 | |
ENSCO International, Inc. | 63,100 | 1,680,984 | |
GlobalSantaFe Corp. | 30,000 | 753,900 | |
Halliburton Co. | 21,000 | 609,840 | |
Pride International, Inc. (a) | 21,000 | 330,120 | |
Rowan Companies, Inc. (a) | 11,100 | 243,978 | |
Transocean, Inc. (a) | 43,100 | 1,152,063 | |
Varco International, Inc. (a) | 18,598 | 375,680 | |
Weatherford International Ltd. (a) | 15,600 | 647,556 | |
7,958,787 | |||
Oil & Gas - 4.1% | |||
Amerada Hess Corp. | 6,500 | 458,835 | |
Apache Corp. | 7,000 | 282,520 | |
Burlington Resources, Inc. | 10,800 | 722,952 | |
ChevronTexaco Corp. | 45,900 | 4,149,360 | |
ConocoPhillips | 17,400 | 1,275,942 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
ENERGY - continued | |||
Oil & Gas - continued | |||
Encore Acquisition Co. (a) | 15,000 | $ 421,500 | |
Exxon Mobil Corp. | 146,800 | 6,349,100 | |
Giant Industries, Inc. (a) | 6,000 | 112,320 | |
Occidental Petroleum Corp. | 23,700 | 1,047,540 | |
Pioneer Natural Resources Co. | 8,500 | 263,075 | |
Premcor, Inc. (a) | 16,500 | 604,395 | |
Valero Energy Corp. | 7,500 | 495,825 | |
16,183,364 | |||
TOTAL ENERGY | 24,142,151 | ||
FINANCIALS - 24.1% | |||
Capital Markets - 2.6% | |||
Bear Stearns Companies, Inc. | 10,200 | 826,812 | |
J.P. Morgan Chase & Co. | 35,700 | 1,315,188 | |
Lehman Brothers Holdings, Inc. | 14,100 | 1,066,665 | |
Merrill Lynch & Co., Inc. | 68,100 | 3,868,080 | |
Morgan Stanley | 63,100 | 3,376,481 | |
10,453,226 | |||
Commercial Banks - 4.2% | |||
Bank of America Corp. | 80,057 | 6,655,138 | |
Bank One Corp. | 57,200 | 2,771,340 | |
East West Bancorp, Inc. | 9,400 | 570,298 | |
Fifth Third Bancorp | 18,000 | 977,220 | |
National Commerce Financial Corp. | 10,000 | 325,400 | |
UCBH Holdings, Inc. | 14,400 | 546,336 | |
Valley National Bancorp | 2,315 | 59,056 | |
Wachovia Corp. | 58,900 | 2,780,669 | |
Wells Fargo & Co. | 30,000 | 1,764,000 | |
16,449,457 | |||
Consumer Finance - 0.2% | |||
Capital One Financial Corp. | 8,080 | 566,085 | |
MBNA Corp. | 12,200 | 309,880 | |
875,965 | |||
Diversified Financial Services - 1.4% | |||
CIT Group, Inc. | 10,500 | 393,435 | |
Citigroup, Inc. | 110,900 | 5,149,087 | |
5,542,522 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
FINANCIALS - continued | |||
Insurance - 3.6% | |||
ACE Ltd. | 25,400 | $ 1,045,972 | |
AFLAC, Inc. | 10,400 | 422,240 | |
Allianz AG sponsored ADR | 55,500 | 581,640 | |
AMBAC Financial Group, Inc. | 18,500 | 1,279,275 | |
American International Group, Inc. | 85,400 | 6,259,820 | |
Bristol West Holdings, Inc. | 3,300 | 69,135 | |
Conseco, Inc. (a) | 10,000 | 189,400 | |
Hartford Financial Services Group, Inc. | 11,900 | 786,828 | |
Marsh & McLennan Companies, Inc. | 4,700 | 207,364 | |
MetLife, Inc. | 22,300 | 792,765 | |
Scottish Re Group Ltd. | 15,000 | 330,000 | |
St. Paul Travelers Companies, Inc. | 7,367 | 292,323 | |
UICI (a) | 10,700 | 212,716 | |
UnumProvident Corp. | 37,300 | 543,088 | |
W.R. Berkley Corp. | 20,900 | 870,485 | |
XL Capital Ltd. Class A | 7,100 | 530,015 | |
14,413,066 | |||
Real Estate - 11.1% | |||
Apartment Investment & Management Co. Class A | 34,090 | 984,519 | |
Archstone-Smith Trust | 14,550 | 422,678 | |
AvalonBay Communities, Inc. | 15,330 | 834,719 | |
Boston Properties, Inc. | 34,860 | 1,720,690 | |
CarrAmerica Realty Corp. | 20,880 | 612,202 | |
Catellus Development Corp. | 25,070 | 612,460 | |
CBL & Associates Properties, Inc. | 12,560 | 669,699 | |
CenterPoint Properties Trust (SBI) | 8,180 | 602,457 | |
Chelsea Property Group, Inc. | 4,100 | 225,418 | |
Cornerstone Realty Income Trust, Inc. | 25,300 | 207,713 | |
Correctional Properties Trust | 38,660 | 1,090,212 | |
Duke Realty Corp. | 42,190 | 1,365,268 | |
Equity Office Properties Trust | 59,510 | 1,603,795 | |
Equity One, Inc. | 36,550 | 650,590 | |
Equity Residential (SBI) | 85,670 | 2,522,125 | |
Federal Realty Investment Trust (SBI) | 22,380 | 892,962 | |
General Growth Properties, Inc. | 66,190 | 1,944,662 | |
Health Care Property Investors, Inc. | 33,650 | 808,610 | |
Health Care REIT, Inc. | 22,910 | 743,430 | |
Hersha Hospitality Trust | 46,700 | 465,132 | |
Highwoods Properties, Inc. (SBI) | 46,850 | 1,064,901 | |
Home Properties of New York, Inc. | 12,430 | 491,979 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
FINANCIALS - continued | |||
Real Estate - continued | |||
Host Marriott Corp. (a) | 67,410 | $ 826,447 | |
Kilroy Realty Corp. | 13,920 | 474,950 | |
Kimco Realty Corp. | 35,470 | 1,629,847 | |
Liberty Property Trust (SBI) | 18,650 | 743,949 | |
Manufactured Home Communities, Inc. | 25,050 | 777,803 | |
MeriStar Hospitality Corp. (a) | 156,420 | 993,267 | |
Newcastle Investment Corp. | 7,000 | 195,580 | |
Omega Healthcare Investors, Inc. | 21,330 | 204,341 | |
Pan Pacific Retail Properties, Inc. | 22,630 | 1,040,980 | |
Plum Creek Timber Co., Inc. | 29,130 | 912,352 | |
Post Properties, Inc. | 7,600 | 221,160 | |
ProLogis | 71,940 | 2,306,396 | |
Public Storage, Inc. | 31,020 | 1,426,610 | |
Rayonier, Inc. | 9,380 | 393,960 | |
Reckson Associates Realty Corp. | 63,250 | 1,645,765 | |
Shurgard Storage Centers, Inc. Class A | 9,400 | 352,500 | |
Simon Property Group, Inc. | 43,380 | 2,237,107 | |
SL Green Realty Corp. | 21,690 | 986,895 | |
Taubman Centers, Inc. | 15,230 | 339,629 | |
The Mills Corp. | 3,450 | 151,628 | |
The Rouse Co. | 34,490 | 1,574,469 | |
Trizec Properties, Inc. | 34,310 | 566,458 | |
United Dominion Realty Trust, Inc. (SBI) | 32,480 | 647,651 | |
Ventas, Inc. | 25,560 | 596,059 | |
Vornado Realty Trust | 42,040 | 2,297,486 | |
44,079,510 | |||
Thrifts & Mortgage Finance - 1.0% | |||
Fannie Mae | 16,100 | 1,089,970 | |
Freddie Mac | 11,500 | 671,485 | |
Golden West Financial Corp., Delaware | 3,400 | 369,818 | |
New York Community Bancorp, Inc. | 18,200 | 426,244 | |
Sovereign Bancorp, Inc. | 24,200 | 526,350 | |
The PMI Group, Inc. | 3,000 | 129,510 | |
Washington Mutual, Inc. | 12,000 | 524,160 | |
3,737,537 | |||
TOTAL FINANCIALS | 95,551,283 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
HEALTH CARE - 5.1% | |||
Biotechnology - 0.8% | |||
Biogen Idec, Inc. (a) | 11,000 | $ 683,650 | |
BioMarin Pharmaceutical, Inc. (a) | 72,000 | 439,920 | |
Cephalon, Inc. (a) | 4,200 | 226,254 | |
ConjuChem, Inc. (a) | 27,700 | 259,411 | |
Genentech, Inc. (a) | 12,000 | 717,720 | |
MedImmune, Inc. (a) | 22,900 | 551,203 | |
Millennium Pharmaceuticals, Inc. (a) | 22,700 | 338,457 | |
3,216,615 | |||
Health Care Equipment & Supplies - 1.2% | |||
Arrow International, Inc. | 8,200 | 247,394 | |
Baxter International, Inc. | 88,400 | 2,779,296 | |
Dade Behring Holdings, Inc. (a) | 11,700 | 522,405 | |
Immucor, Inc. (a) | 14,500 | 450,660 | |
Medtronic, Inc. | 3,500 | 167,650 | |
St. Jude Medical, Inc. (a) | 7,500 | 571,950 | |
4,739,355 | |||
Health Care Providers & Services - 0.8% | |||
Community Health Systems, Inc. (a) | 10,000 | 255,000 | |
Covance, Inc. (a) | 9,900 | 358,578 | |
Lincare Holdings, Inc. (a) | 4,300 | 144,523 | |
Odyssey Healthcare, Inc. (a) | 17,000 | 288,150 | |
Tenet Healthcare Corp. (a) | 51,000 | 607,920 | |
UnitedHealth Group, Inc. | 22,400 | 1,461,600 | |
WebMD Corp. (a) | 25,000 | 221,500 | |
3,337,271 | |||
Pharmaceuticals - 2.3% | |||
Barr Pharmaceuticals, Inc. (a) | 7,000 | 305,340 | |
Forest Laboratories, Inc. (a) | 4,450 | 282,086 | |
Johnson & Johnson | 31,400 | 1,749,294 | |
Merck & Co., Inc. | 53,900 | 2,549,470 | |
Pfizer, Inc. | 29,600 | 1,046,064 | |
Schering-Plough Corp. | 140,700 | 2,377,830 | |
Wyeth | 18,200 | 655,200 | |
8,965,284 | |||
TOTAL HEALTH CARE | 20,258,525 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INDUSTRIALS - 8.0% | |||
Aerospace & Defense - 2.0% | |||
Boeing Co. | 19,500 | $ 893,100 | |
Bombardier, Inc. Class B (sub. vtg.) | 29,200 | 98,016 | |
Embraer - Empresa Brasileira de Aeronautica SA sponsored ADR | 11,900 | 302,974 | |
Honeywell International, Inc. | 105,600 | 3,558,720 | |
Lockheed Martin Corp. | 23,900 | 1,184,006 | |
Northrop Grumman Corp. | 4,200 | 433,146 | |
Precision Castparts Corp. | 6,800 | 318,852 | |
Raytheon Co. | 26,000 | 864,500 | |
United Defense Industries, Inc. (a) | 10,400 | 347,360 | |
8,000,674 | |||
Air Freight & Logistics - 0.1% | |||
Expeditors International of Washington, Inc. | 13,000 | 590,720 | |
Airlines - 0.4% | |||
AirTran Holdings, Inc. (a) | 47,000 | 654,240 | |
Southwest Airlines Co. | 73,100 | 1,133,781 | |
1,788,021 | |||
Building Products - 0.4% | |||
Masco Corp. | 50,900 | 1,473,555 | |
Trex Co., Inc. (a) | 4,000 | 145,320 | |
1,618,875 | |||
Commercial Services & Supplies - 1.6% | |||
Avery Dennison Corp. | 14,500 | 856,080 | |
Casella Waste Systems, Inc. Class A (a) | 22,000 | 307,560 | |
Cendant Corp. | 77,700 | 1,782,438 | |
Cintas Corp. | 11,200 | 508,256 | |
Monster Worldwide, Inc. (a) | 8,400 | 212,604 | |
On Assignment, Inc. (a) | 20,000 | 117,400 | |
Robert Half International, Inc. | 59,800 | 1,673,204 | |
ServiceMaster Co. | 18,000 | 218,880 | |
Waste Management, Inc. | 19,800 | 569,448 | |
6,245,870 | |||
Construction & Engineering - 0.4% | |||
Chicago Bridge & Iron Co. NV | 26,671 | 770,792 | |
Fluor Corp. | 15,100 | 610,342 | |
MasTec, Inc. (a) | 20,000 | 85,400 | |
1,466,534 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INDUSTRIALS - continued | |||
Electrical Equipment - 0.2% | |||
FuelCell Energy, Inc. (a) | 15,000 | $ 238,050 | |
Rockwell Automation, Inc. | 12,000 | 406,320 | |
644,370 | |||
Industrial Conglomerates - 2.6% | |||
3M Co. | 6,800 | 575,008 | |
General Electric Co. | 123,800 | 3,852,656 | |
Tyco International Ltd. | 189,900 | 5,847,021 | |
10,274,685 | |||
Machinery - 0.2% | |||
AGCO Corp. (a) | 15,000 | 287,400 | |
SPX Corp. | 14,200 | 620,824 | |
908,224 | |||
Road & Rail - 0.1% | |||
Overnite Corp. | 10,000 | 261,400 | |
TOTAL INDUSTRIALS | 31,799,373 | ||
INFORMATION TECHNOLOGY - 6.0% | |||
Communications Equipment - 1.0% | |||
Brocade Communications Systems, Inc. (a) | 32,600 | 195,274 | |
Cisco Systems, Inc. (a) | 26,300 | 582,545 | |
Foundry Networks, Inc. (a) | 43,000 | 530,620 | |
Lucent Technologies, Inc. (a) | 170,000 | 606,900 | |
McDATA Corp. Class A (a) | 25,600 | 121,600 | |
Motorola, Inc. | 61,800 | 1,221,786 | |
Telefonaktiebolaget LM Ericsson ADR (a) | 18,600 | 519,870 | |
3,778,595 | |||
Computers & Peripherals - 1.3% | |||
Diebold, Inc. | 4,500 | 221,085 | |
Hewlett-Packard Co. | 61,900 | 1,314,756 | |
Hutchinson Technology, Inc. (a) | 14,700 | 388,227 | |
International Business Machines Corp. | 32,900 | 2,914,611 | |
Western Digital Corp. (a) | 20,200 | 184,628 | |
5,023,307 | |||
Electronic Equipment & Instruments - 1.0% | |||
Agilent Technologies, Inc. (a) | 4,000 | 102,800 | |
Flextronics International Ltd. (a) | 15,000 | 263,400 | |
PerkinElmer, Inc. | 14,600 | 284,846 | |
Solectron Corp. (a) | 134,106 | 737,583 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INFORMATION TECHNOLOGY - continued | |||
Electronic Equipment & Instruments - continued | |||
Thermo Electron Corp. (a) | 22,200 | $ 683,316 | |
Waters Corp. (a) | 43,200 | 1,990,656 | |
4,062,601 | |||
Internet Software & Services - 0.2% | |||
Yahoo!, Inc. (a) | 27,100 | 830,886 | |
IT Services - 0.2% | |||
Affiliated Computer Services, Inc. Class A (a) | 10,000 | 498,200 | |
BearingPoint, Inc. (a) | 15,900 | 136,422 | |
The BISYS Group, Inc. (a) | 14,700 | 185,955 | |
820,577 | |||
Office Electronics - 0.2% | |||
Xerox Corp. (a) | 47,000 | 636,380 | |
Semiconductors & Semiconductor Equipment - 1.3% | |||
Agere Systems, Inc.: | |||
Class A (a) | 75,000 | 190,500 | |
Class B (a) | 58,700 | 143,815 | |
Cabot Microelectronics Corp. (a) | 8,000 | 249,200 | |
FormFactor, Inc. | 5,300 | 99,640 | |
Intel Corp. | 19,800 | 565,290 | |
Intersil Corp. Class A | 7,400 | 157,250 | |
KLA-Tencor Corp. (a) | 25,000 | 1,204,500 | |
Micron Technology, Inc. (a) | 23,000 | 345,690 | |
National Semiconductor Corp. (a) | 11,000 | 238,370 | |
Novellus Systems, Inc. (a) | 50,400 | 1,677,816 | |
PMC-Sierra, Inc. (a) | 22,000 | 310,200 | |
5,182,271 | |||
Software - 0.8% | |||
BEA Systems, Inc. (a) | 38,100 | 328,803 | |
Microsoft Corp. | 107,500 | 2,832,625 | |
Siebel Systems, Inc. (a) | 20,000 | 216,000 | |
3,377,428 | |||
TOTAL INFORMATION TECHNOLOGY | 23,712,045 | ||
MATERIALS - 4.1% | |||
Chemicals - 1.7% | |||
Dow Chemical Co. | 63,500 | 2,533,650 | |
E.I. du Pont de Nemours & Co. | 45,700 | 1,974,240 | |
Ecolab, Inc. | 8,100 | 247,131 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
MATERIALS - continued | |||
Chemicals - continued | |||
Headwaters, Inc. (a) | 10,000 | $ 209,000 | |
Lyondell Chemical Co. | 38,700 | 639,324 | |
Millennium Chemicals, Inc. | 44,772 | 760,229 | |
Olin Corp. | 16,900 | 278,005 | |
6,641,579 | |||
Containers & Packaging - 0.8% | |||
Ball Corp. | 4,500 | 307,395 | |
Bemis Co., Inc. | 17,100 | 471,105 | |
Owens-Illinois, Inc. (a) | 61,500 | 912,045 | |
Packaging Corp. of America | 27,000 | 634,500 | |
Sealed Air Corp. (a) | 7,300 | 366,971 | |
Smurfit-Stone Container Corp. (a) | 33,500 | 608,360 | |
3,300,376 | |||
Metals & Mining - 1.3% | |||
Alcoa, Inc. | 18,000 | 563,400 | |
Companhia Vale do Rio Doce sponsored ADR | 5,700 | 288,990 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 15,000 | 504,450 | |
GrafTech International Ltd. (a) | 15,000 | 142,500 | |
Massey Energy Co. | 30,300 | 745,986 | |
Metals USA, Inc. (a) | 14,800 | 220,520 | |
Newmont Mining Corp. | 11,800 | 468,578 | |
Nucor Corp. | 27,800 | 1,830,630 | |
Phelps Dodge Corp. (a) | 8,000 | 543,200 | |
5,308,254 | |||
Paper & Forest Products - 0.3% | |||
Bowater, Inc. | 19,600 | 827,708 | |
Weyerhaeuser Co. | 5,000 | 302,400 | |
1,130,108 | |||
TOTAL MATERIALS | 16,380,317 | ||
TELECOMMUNICATION SERVICES - 2.4% | |||
Diversified Telecommunication Services - 2.0% | |||
Cincinnati Bell, Inc. (a) | 55,000 | 226,600 | |
Citizens Communications Co. (a) | 7,800 | 99,060 | |
Covad Communications Group, Inc. (a) | 245,800 | 528,470 | |
SBC Communications, Inc. | 164,000 | 3,886,800 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
TELECOMMUNICATION SERVICES - continued | |||
Diversified Telecommunication Services - continued | |||
Telefonos de Mexico SA de CV sponsored ADR | 14,000 | $ 470,960 | |
Verizon Communications, Inc. | 76,200 | 2,634,996 | |
7,846,886 | |||
Wireless Telecommunication Services - 0.4% | |||
Crown Castle International Corp. (a) | 37,200 | 547,956 | |
Nextel Communications, Inc. Class A (a) | 18,600 | 430,218 | |
Nextel Partners, Inc. Class A (a) | 20,000 | 326,200 | |
Western Wireless Corp. Class A (a) | 5,800 | 158,804 | |
1,463,178 | |||
TOTAL TELECOMMUNICATION SERVICES | 9,310,064 | ||
UTILITIES - 1.4% | |||
Electric Utilities - 1.1% | |||
Entergy Corp. | 20,700 | 1,130,427 | |
FirstEnergy Corp. | 18,100 | 705,900 | |
PG&E Corp. (a) | 20,300 | 578,550 | |
PPL Corp. | 7,000 | 302,050 | |
Southern Co. | 16,200 | 468,504 | |
TXU Corp. | 18,900 | 706,293 | |
Westar Energy, Inc. | 25,000 | 493,000 | |
Xcel Energy, Inc. | 7,500 | 127,425 | |
4,512,149 | |||
Multi-Utilities & Unregulated Power - 0.3% | |||
AES Corp. (a) | 53,600 | 500,624 | |
Calpine Corp. (a) | 73,500 | 278,565 | |
Public Service Enterprise Group, Inc. | 5,000 | 210,800 | |
989,989 | |||
TOTAL UTILITIES | 5,502,138 | ||
TOTAL COMMON STOCKS (Cost $269,108,644) | 267,449,085 | ||
Preferred Stocks - 17.7% | |||
Shares | Value (Note 1) | ||
Convertible Preferred Stocks - 5.4% | |||
CONSUMER DISCRETIONARY - 1.2% | |||
Hotels, Restaurants & Leisure - 0.4% | |||
Six Flags, Inc. 7.25% PIERS | 82,700 | $ 1,749,105 | |
Media - 0.3% | |||
Emmis Communications Corp. Series A, 6.25% | 10,100 | 462,782 | |
Radio One, Inc. 6.50% | 470 | 495,116 | |
957,898 | |||
Specialty Retail - 0.5% | |||
Toys 'R' US, Inc. 6.25% | 44,600 | 2,000,310 | |
TOTAL CONSUMER DISCRETIONARY | 4,707,313 | ||
ENERGY - 0.8% | |||
Oil & Gas - 0.8% | |||
Chesapeake Energy Corp. 6.75% | 11,700 | 1,031,794 | |
Valero Energy Corp. 2.00% | 61,700 | 2,020,675 | |
3,052,469 | |||
FINANCIALS - 0.9% | |||
Diversified Financial Services - 0.9% | |||
AES Trust VII 6.00% | 80,100 | 3,584,475 | |
INDUSTRIALS - 0.2% | |||
Road & Rail - 0.2% | |||
Kansas City Southern 4.25% | 1,370 | 731,553 | |
MATERIALS - 1.0% | |||
Containers & Packaging - 0.8% | |||
Owens-Illinois, Inc. 4.75% | 99,210 | 2,986,221 | |
Metals & Mining - 0.2% | |||
Freeport-McMoRan Copper & Gold, Inc. 5.50% (d) | 1,050 | 948,413 | |
TOTAL MATERIALS | 3,934,634 | ||
TELECOMMUNICATION SERVICES - 1.3% | |||
Diversified Telecommunication Services - 1.3% | |||
CenturyTel, Inc. 6.875% ACES | 210,200 | 5,243,859 | |
TOTAL CONVERTIBLE PREFERRED STOCKS | 21,254,303 | ||
Preferred Stocks - continued | |||
Shares | Value (Note 1) | ||
Nonconvertible Preferred Stocks - 12.3% | |||
ENERGY - 1.8% | |||
Oil & Gas - 1.8% | |||
El Paso Tennessee Pipeline Co. Series A, 8.25% | 164,900 | $ 7,255,592 | |
FINANCIALS - 7.0% | |||
Capital Markets - 1.3% | |||
Bear Stearns Companies, Inc.: | |||
Series E, 6.155% | 15,000 | 765,000 | |
Series G, 5.49% | 15,000 | 695,250 | |
J.P. Morgan Chase & Co. (depositary shares) Series H, 6.625% | 6,530 | 345,241 | |
Lehman Brothers Holdings, Inc. (depositary shares) Series F, 6.50% | 136,750 | 3,528,150 | |
5,333,641 | |||
Commercial Banks - 0.2% | |||
Banco Santander Central Hispano SA 6.41% (d) | 31,400 | 788,925 | |
Consumer Finance - 0.6% | |||
SLM Corp. Series A, 6.97% | 43,400 | 2,311,050 | |
Diversified Financial Services - 0.7% | |||
ABN Amro Capital Funding Trust VII 6.08% | 60,400 | 1,404,904 | |
EIX Trust II Series B, 8.60% | 19,600 | 493,920 | |
Heco Capital Trust III 6.50% | 12,000 | 298,800 | |
RC Trust I 7.00% | 9,680 | 511,913 | |
2,709,537 | |||
Real Estate - 1.1% | |||
Apartment Investment & Management Co. Series U, 7.75% | 39,000 | 910,260 | |
Duke Realty Corp. (depositary shares) Series K, 6.50% | 74,800 | 1,705,440 | |
Glimcher Realty Trust Series G, 8.125% | 51,200 | 1,262,080 | |
Host Marriott Corp. Series E, 8.875% | 20,000 | 500,000 | |
4,377,780 | |||
Thrifts & Mortgage Finance - 3.1% | |||
Fannie Mae: | |||
Series H, 5.81% | 29,200 | 1,460,000 | |
Series L, 5.125% | 90,900 | 4,081,410 | |
Series N, 5.50% | 71,650 | 3,439,200 | |
Freddie Mac: | |||
Series H, 5.10% | 10,300 | 449,595 | |
Preferred Stocks - continued | |||
Shares | Value (Note 1) | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - continued | |||
Freddie Mac: - continued | |||
Series O, 5.81% | 19,500 | $ 994,695 | |
Series R, 5.70% | 37,300 | 1,841,128 | |
12,266,028 | |||
TOTAL FINANCIALS | 27,786,961 | ||
MATERIALS - 0.3% | |||
Chemicals - 0.2% | |||
E.I. du Pont de Nemours & Co. Series B, 4.50% | 9,900 | 836,550 | |
Metals & Mining - 0.1% | |||
Alcoa, Inc. 3.75% | 6,400 | 494,400 | |
TOTAL MATERIALS | 1,330,950 | ||
UTILITIES - 3.2% | |||
Electric Utilities - 3.2% | |||
Alabama Power Co. 5.30% | 88,600 | 2,055,520 | |
Consolidated Edison Co. of New York, Inc. Series A, 5.00% | 28,705 | 2,382,515 | |
Duquesne Light Co. 6.50% | 69,950 | 3,462,525 | |
FPL Group Capital Trust I 5.875% | 20,000 | 475,000 | |
Monongahela Power Co. Series L, 7.73% | 10,800 | 1,004,400 | |
Southern California Edison Co.: | |||
4.78% | 46,500 | 836,070 | |
Series B, 4.08% | 27,271 | 455,426 | |
Series C, 4.24% | 43,300 | 742,595 | |
Series D, 4.32% | 70,000 | 1,200,500 | |
12,614,551 | |||
TOTAL NONCONVERTIBLE PREFERRED STOCKS | 48,988,054 | ||
TOTAL PREFERRED STOCKS (Cost $73,799,839) | 70,242,357 | ||
Money Market Funds - 1.6% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 1.09% (b) | 5,587,577 | $ 5,587,577 | |
Fidelity Securities Lending Cash Central Fund, 1.08% (b) | 552,075 | 552,075 | |
TOTAL MONEY MARKET FUNDS (Cost $6,139,652) | 6,139,652 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $402,456,739) | 397,069,637 | ||
NET OTHER ASSETS - (0.2)% | (617,097) | ||
NET ASSETS - 100% | $ 396,452,540 |
Security Type Abbreviations |
ACES | - | Automatic Common Exchange Securities |
PIERS | - | Preferred Income Equity Redeemable Securities |
Legend |
(a) Non-income producing |
(b) 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 listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Debt obligation initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $13,251,295 or 3.3% of net assets. |
(e) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
Other Information |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 1.0% |
BBB | 0.9% |
BB | 3.0% |
B | 2.1% |
CCC,CC,C | 1.6% |
Not Rated | 4.8% |
Equities | 85.2% |
Short-Term Investments and Net Other Assets | 1.4% |
100.0% |
We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. |
Purchases and sales of securities, other than short-term securities, aggregated $473,765,098 and $72,537,906, respectively. |
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 $29,973 for the period. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
May 31, 2004 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $553,005) (cost $402,456,739) - See accompanying schedule | $ 397,069,637 | |
Receivable for investments sold | 1,914,636 | |
Receivable for fund shares sold | 869,178 | |
Dividends receivable | 430,779 | |
Interest receivable | 418,936 | |
Prepaid expenses | 51,654 | |
Other receivables | 32,970 | |
Total assets | 400,787,790 | |
Liabilities | ||
Payable for investments purchased | $ 2,958,072 | |
Payable for fund shares redeemed | 392,768 | |
Accrued management fee | 210,584 | |
Distribution fees payable | 29,331 | |
Other affiliated payables | 81,043 | |
Other payables and accrued expenses | 111,377 | |
Collateral on securities loaned, at value | 552,075 | |
Total liabilities | 4,335,250 | |
Net Assets | $ 396,452,540 | |
Net Assets consist of: | ||
Paid in capital | $ 404,987,369 | |
Undistributed net investment income | 1,520,040 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (4,667,775) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (5,387,094) | |
Net Assets | $ 396,452,540 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
May 31, 2004 (Unaudited) | ||
Calculation of Maximum Offering Price | $ 10.21 | |
Maximum offering price per share (100/94.25 of $10.21) | $ 10.83 | |
Class T: | $ 10.20 | |
Maximum offering price per share (100/96.50 of $10.20) | $ 10.57 | |
Class B: | $ 10.19 | |
Class C: | $ 10.19 | |
Strategic Dividend & Income: | $ 10.22 | |
Institutional Class: | $ 10.21 |
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
Statement of Operations
For the period December 23, 2003 (commencement of operations) to May 31, 2004 (Unaudited) | ||
Investment Income | ||
Dividends | $ 2,768,144 | |
Interest | 424,753 | |
Security lending | 2,136 | |
Total income | 3,195,033 | |
Expenses | ||
Management fee | $ 702,706 | |
Transfer agent fees | 281,959 | |
Distribution fees | 88,195 | |
Accounting and security lending fees | 51,650 | |
Non-interested trustees' compensation | 396 | |
Custodian fees and expenses | 52,683 | |
Registration fees | 92,953 | |
Audit | 16,326 | |
Legal | 60 | |
Miscellaneous | 170 | |
Total expenses before reductions | 1,287,098 | |
Expense reductions | (71,320) | 1,215,778 |
Net investment income (loss) | 1,979,255 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | (4,669,144) | |
Foreign currency transactions | 1,369 | |
Total net realized gain (loss) | (4,667,775) | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (5,387,102) | |
Assets and liabilities in foreign currencies | 8 | |
Total change in net unrealized appreciation (depreciation) | (5,387,094) | |
Net gain (loss) | (10,054,869) | |
Net increase (decrease) in net assets resulting from operations | $ (8,075,614) |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Changes in Net Assets
For the period | |
Increase (Decrease) in Net Assets | |
Operations | |
Net investment income (loss) | $ 1,979,255 |
Net realized gain (loss) | (4,667,775) |
Change in net unrealized appreciation (depreciation) | (5,387,094) |
Net increase (decrease) in net assets resulting | (8,075,614) |
Distributions to shareholders from net investment income | (459,215) |
Share transactions - net increase (decrease) | 404,987,369 |
Total increase (decrease) in net assets | 396,452,540 |
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $1,520,040) | $ 396,452,540 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .06 |
Net realized and unrealized gain (loss) | .17 F |
Total from investment operations | .23 |
Distributions from net investment income | (.02) |
Net asset value, end of period | $ 10.21 |
Total Return B,C,D | 2.24% |
Ratios to Average Net Assets H | |
Expenses before expense reductions | 1.26%A |
Expenses net of voluntary waivers, if any | 1.20%A |
Expenses net of all reductions | 1.17% A |
Net investment income (loss) | 1.44% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 14,148 |
Portfolio turnover rate | 61% A |
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 period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)E | .05 |
Net realized and unrealized gain (loss) | .16F |
Total from investment operations | .21 |
Distributions from net investment income | (.01) |
Net asset value, end of period | $ 10.20 |
Total ReturnB,C,D | 2.10% |
Ratios to Average Net AssetsH | |
Expenses before expense reductions | 1.51%A |
Expenses net of voluntary waivers, if any | 1.45%A |
Expenses net of all reductions | 1.42%A |
Net investment income (loss) | 1.19%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 17,466 |
Portfolio turnover rate | 61%A |
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 period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)E | .03 |
Net realized and unrealized gain (loss) | .17F |
Total from investment operations | .20 |
Distributions from net investment income | (.01) |
Net asset value, end of period | $ 10.19 |
Total ReturnB,C,D | 1.95% |
Ratios to Average Net AssetsH | |
Expenses before expense reductions | 2.04%A |
Expenses net of voluntary waivers, if any | 1.95%A |
Expenses net of all reductions | 1.92%A |
Net investment income (loss) | .69%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 8,316 |
Portfolio turnover rate | 61%A |
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 period 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 The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)E | .03 |
Net realized and unrealized gain (loss) | .17F |
Total from investment operations | .20 |
Distributions from net investment income | (.01) |
Net asset value, end of period | $ 10.19 |
Total ReturnB,C,D | 1.95% |
Ratios to Average Net AssetsH | |
Expenses before expense reductions | 2.00%A |
Expenses net of voluntary waivers, if any | 1.95%A |
Expenses net of all reductions | 1.92%A |
Net investment income (loss) | .70%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 18,735 |
Portfolio turnover rate | 61%A |
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 period 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 The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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 - Strategic Dividend & Income
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)D | .07 |
Net realized and unrealized gain (loss) | .17E |
Total from investment operations | .24 |
Distributions from net investment income | (.02) |
Net asset value, end of period | $ 10.22 |
Total ReturnB,C | 2.34% |
Ratios to Average Net AssetsG | |
Expenses before expense reductions | .98%A |
Expenses net of voluntary waivers, if any | .95%A |
Expenses net of all reductions | .92%A |
Net investment income (loss) | 1.69%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 334,905 |
Portfolio turnover rate | 61%A |
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 period shown.
D Calculated based on average shares outstanding during the period.
E The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
F For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)D | .07 |
Net realized and unrealized gain (loss) | .16E |
Total from investment operations | .23 |
Distributions from net investment income | (.02) |
Net asset value, end of period | $ 10.21 |
Total ReturnB,C | 2.29% |
Ratios to Average Net AssetsG | |
Expenses before expense reductions | .97%A |
Expenses net of voluntary waivers, if any | .95%A |
Expenses net of all reductions | .92%A |
Net investment income (loss) | 1.69%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 2,882 |
Portfolio turnover rate | 61%A |
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 period shown.
D Calculated based on average shares outstanding during the period.
E The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
F For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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.
Semiannual Report
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended May 31, 2004 (Unaudited)
1. Significant Accounting Policies.
Fidelity Strategic Dividend & Income 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, Strategic Dividend & Income, and Institutional Class 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. 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.
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. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. Debt securities for which quotations are readily available are valued at their most recent bid prices (sales prices if the principal market is an exchange) in the principal market in which such securities are normally traded, as determined by recognized dealers in such securities, or securities are valued on the basis of information provided by a pricing service. Pricing services use valuation matrices that incorporate both dealer-supplied valuations and valuation models. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
1. Significant Accounting Policies - continued
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. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 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 nontaxable distributions or capital gain distributions for income tax purposes. Interest income is 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 the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each 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
Semiannual Report
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
The federal tax cost of investments including unrealized appreciation (depreciation) as of period end was as follows:
Unrealized appreciation | $ 11,387,054 |
Unrealized depreciation | (17,358,736) |
Net unrealized appreciation (depreciation) | $ (5,971,682) |
Cost for federal income tax purposes | $ 403,041,319 |
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
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.
3. Purchases and Sales of Investments.
Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
4. 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 .28% 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 .57% 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 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 | 0% | .25% | $ 8,385 | $ 1,044 |
Class T | .25% | .25% | 19,894 | 2,134 |
Class B | .75% | .25% | 18,667 | 15,072 |
Class C | .75% | .25% | 41,249 | 33,233 |
$ 88,195 | $ 51,483 |
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, and ..25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 60,335 |
Class T | 26,761 |
Class B* | 1,657 |
Class C* | 1,693 |
$ 90,446 |
* 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.
Semiannual Report
4. 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, except for Strategic Dividend & Income. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, , is the transfer agent for Strategic Dividend & Income shares. FIIOC and FSC receive 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 and FSC pay for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class to FIIOC or FSC were as follows:
Amount | % of | |
Class A | $ 9,057 | .27* |
Class T | 10,824 | .27* |
Class B | 5,419 | .29* |
Class C | 11,107 | .27* |
Strategic Dividend & Income | 243,794 | .23* |
Institutional Class | 1,758 | .19* |
$ 281,959 |
* Annualized
Accounting and Security Lending Fees. FSC 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.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $39,008 for the period.
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 are shown under the caption "Other Information" at the end of the fund's Schedule of Investments.
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 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. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. 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. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. Expense Reductions.
Effective December 23, 2003, FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.20% | $ 1,967 |
Class T | 1.45% | 2,370 |
Class B | 1.95% | 1,696 |
Class C | 1.95% | 2,299 |
Strategic Dividend & Income | .95% | 28,989 |
Institutional Class | .95% | 184 |
$ 37,505 |
Semiannual Report
7. Expense Reductions - continued
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 $32,350 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $1,465.
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
For the period | |
From net investment income | |
Class A | $ 10,278 |
Class T | 8,648 |
Class B | 1,881 |
Class C | 4,276 |
Strategic Dividend & Income | 430,123 |
Institutional Class | 4,009 |
Total | $ 459,215 |
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |
For the period | For the period | |
Class A | ||
Shares sold | 1,470,027 | $ 15,212,108 |
Reinvestment of distributions | 671 | 7,171 |
Shares redeemed | (84,877) | (863,448) |
Net increase (decrease) | 1,385,821 | $ 14,355,831 |
Class T | ||
Shares sold | 1,734,620 | $ 17,977,006 |
Reinvestment of distributions | 584 | 6,236 |
Shares redeemed | (23,384) | (238,262) |
Net increase (decrease) | 1,711,820 | $ 17,744,980 |
Class B | ||
Shares sold | 839,815 | $ 8,642,138 |
Reinvestment of distributions | 118 | 1,255 |
Shares redeemed | (23,440) | (238,135) |
Net increase (decrease) | 816,493 | $ 8,405,258 |
Class C | ||
Shares sold | 1,863,966 | $ 19,253,693 |
Reinvestment of distributions | 266 | 2,843 |
Shares redeemed | (24,920) | (252,395) |
Net increase (decrease) | 1,839,312 | $ 19,004,141 |
Strategic Dividend & Income | ||
Shares sold | 39,208,484 | $ 408,802,215 |
Reinvestment of distributions | 36,183 | 386,431 |
Shares redeemed | (6,478,528) | (66,603,303) |
Net increase (decrease) | 32,766,139 | $ 342,585,343 |
Institutional Class | ||
Shares sold | 292,166 | $ 2,993,335 |
Reinvestment of distributions | 218 | 2,327 |
Shares redeemed | (10,202) | (103,846) |
Net increase (decrease) | 282,182 | $ 2,891,816 |
Semiannual Report
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Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity International Investment Advisors
Fidelity Investments Japan Limited
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Shareholder
Servicing Agent
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
Semiannual Report
Fidelity Advisor Aggressive Growth Fund |
Fidelity Advisor Asset Allocation Fund |
Fidelity Advisor Balanced Fund |
Fidelity Advisor Biotechnology Fund |
Fidelity Advisor California Municipal Income Fund |
Fidelity Advisor Consumer Industries Fund |
Fidelity Advisor Cyclical Industries Fund |
Fidelity Advisor Developing Communications Fund |
Fidelity Advisor Diversified International Fund |
Fidelity Advisor Dividend Growth Fund |
Fidelity Advisor Dynamic Capital |
Fidelity Advisor Electronics Fund |
Fidelity Advisor Emerging Asia Fund |
Fidelity Advisor Emerging Markets Fund |
Fidelity Advisor Emerging Markets Income Fund |
Fidelity Advisor Equity Growth Fund |
Fidelity Advisor Equity Income Fund |
Fidelity Advisor Equity Value Fund |
Fidelity Advisor Europe Capital |
Fidelity Advisor Fifty Fund |
Fidelity Advisor Financial Services Fund |
Fidelity Advisor Floating Rate High Income Fund |
Fidelity Advisor Freedom Income, 2005, 2010, 2015, 2020, 2025, 2030, 2035, 2040 FundsSM |
Fidelity Advisor Global Equity Fund |
Fidelity Advisor Government Investment Fund |
Fidelity Advisor Growth & Income Fund |
Fidelity Advisor Growth Opportunities Fund |
Fidelity Advisor Health Care Fund |
Fidelity Advisor High Income Advantage Fund |
Fidelity Advisor High Income Fund |
Fidelity Advisor Inflation-Protected Bond Fund |
Fidelity Advisor Intermediate Bond Fund |
Fidelity Advisor International Capital Appreciation Fund |
Fidelity Advisor International |
Fidelity Advisor Investment Grade Bond Fund |
Fidelity Advisor Japan Fund |
Fidelity Advisor Korea Fund |
Fidelity Advisor Large Cap Fund |
Fidelity Advisor Latin America Fund |
Fidelity Advisor Leveraged Company Stock Fund |
Fidelity Advisor Mid Cap Fund |
Fidelity Advisor Mortgage Securities Fund |
Fidelity Advisor Municipal Income Fund |
Fidelity Advisor Natural Resources Fund |
Fidelity Advisor New Insights Fund |
Fidelity Advisor New York Municipal |
Fidelity Advisor Overseas Fund |
Fidelity Advisor Real Estate Fund |
Fidelity Advisor Short Fixed-Income Fund |
Fidelity Advisor Short Intermediate Municipal Income Fund |
Fidelity Advisor Small Cap Fund |
Fidelity Advisor Strategic Dividend & |
Fidelity Advisor Strategic Growth Fund |
Fidelity Advisor Strategic Income Fund |
Fidelity Advisor Tax Managed Stock Fund |
Fidelity Advisor Technology Fund |
Fidelity Advisor Telecommunications & |
Fidelity Advisor Total Bond Fund |
Fidelity Advisor Ultra-Short Bond Fund |
Fidelity Advisor Value Fund |
Fidelity Advisor Value Leaders Fund |
Fidelity Advisor Value Strategies Fund |
Prime Fund |
Tax-Exempt Fund |
Treasury Fund |
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
ASDII-USAN-0704
1.802530.100
Fidelity®
Strategic Dividend & IncomeSM
Fund
Semiannual Report
May 31, 2004
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Investment Summary | A summary of the fund's investments. | |
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, | |
Notes | Notes to the financial statements. | |
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
For a free copy of the fund's proxy voting guidelines visit www.fidelity.com/goto/proxyguidelines, call 1-800-544-8544, or visit the Securities and Exchange Commission (SEC)'s web site at www.sec.gov.
(Recycle graphic) This report is printed on recycled paper using soy-based inks.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.
Neither the fund nor Fidelity Distributors Corporation is a bank.
For more information on any Fidelity fund, including charges and expenses, call 1-800-544-6666 for a free prospectus. Read it carefully before you invest or send money.
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Many of you have read or heard news stories recently that were critical of mutual funds and made allegations that the mutual fund industry has been less than forthright. I find these reports unsettling and not necessarily an accurate picture of the overall industry, and I would like you to know where we at Fidelity stand.
With specific regard to allegations that certain mutual fund companies were violating the Securities and Exchange Commission's forward pricing rules or were involved in so-called "market timing" activities, I want to say two things:
First, Fidelity does not have agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not to say that someone could not deceive the company through fraudulent acts. But I underscore that we have no so-called "agreements" which would permit this illegal practice.
Second, Fidelity has been on record for years opposing predatory short-term trading which adversely affects other shareholders in a mutual fund. In fact, in the 1980s, we began charging a fee - which is returned to the fund and, therefore, to investors - to discourage this activity. What's more, several years ago we took the industry lead in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. It is reasonable to assume that another structure can be developed that would alter the system to make it much more difficult for predatory traders to operate. This, however, will only be achieved through close cooperation among regulators, legislators and the industry.
Certainly no industry is perfect, and there have been instances of unethical and illegal activity from time to time within the mutual fund industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. Clearly, every system can be improved. We applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors' holdings. But we remain concerned about the risk of over-regulation and the quick application of simplistic solutions to intricate problems.
For more than 57 years, Fidelity Investments has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Many of them were family and friends. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Investment Summary
Top Ten Investments as of May 31, 2004 | ||
(excluding cash equivalents) | % of fund's | |
El Paso Tennessee Pipeline Co. Series A, 8.25% | 1.8 | |
Bank of America Corp. | 1.7 | |
Exxon Mobil Corp. | 1.6 | |
American International Group, Inc. | 1.6 | |
Tyco International Ltd. | 1.5 | |
CenturyTel, Inc. 6.875% ACES | 1.3 | |
Citigroup, Inc. | 1.3 | |
ChevronTexaco Corp. | 1.0 | |
Fannie Mae Series L, 5.125% | 1.0 | |
SBC Communications, Inc. | 1.0 | |
13.8 | ||
Top Five Market Sectors as of May 31, 2004 | ||
% of fund's | ||
Financials | 33.5 | |
Health Care | 10.5 | |
Energy | 9.8 | |
Consumer Discretionary | 9.5 | |
Information Technology | 8.8 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2004 * | |||||||
Convertible | |||||||
Common Stocks 67.5% | |||||||
Preferred Stocks 17.7% | |||||||
Short-Term | |||||||
* Foreign | 3.3% |
Semiannual Report
Investments May 31, 2004 (Unaudited)
Showing Percentage of Net Assets
Convertible Bonds - 13.4% | ||||
Principal | Value | |||
CONSUMER DISCRETIONARY - 0.4% | ||||
Media - 0.4% | ||||
Interpublic Group of Companies, Inc. 4.5% 3/15/23 | $ 1,200,000 | $ 1,697,520 | ||
ENERGY - 1.1% | ||||
Oil & Gas - 1.1% | ||||
El Paso Corp. 0% 2/28/21 | 4,470,000 | 2,095,313 | ||
Evergreen Resources, Inc. 4.75% 12/15/21 | 1,430,000 | 2,237,950 | ||
4,333,263 | ||||
FINANCIALS - 1.5% | ||||
Capital Markets - 0.5% | ||||
Merrill Lynch & Co., Inc. liquid yield option note 0% 3/13/32 | 2,110,000 | 2,160,218 | ||
Consumer Finance - 0.5% | ||||
American Express Co. 1.85% 12/1/33 (c)(d) | 1,800,000 | 1,953,000 | ||
Diversified Financial Services - 0.5% | ||||
Tyco International Group SA yankee 3.125% 1/15/23 | 1,310,000 | 2,002,073 | ||
TOTAL FINANCIALS | 6,115,291 | |||
HEALTH CARE - 5.4% | ||||
Biotechnology - 2.6% | ||||
BioMarin Pharmaceutical, Inc. 3.5% 6/15/08 | 2,190,000 | 1,938,150 | ||
Enzon Pharmaceuticals, Inc. 4.5% 7/1/08 | 2,160,000 | 1,998,000 | ||
IDEC Pharmaceuticals Corp. liquid yield option note 0% 2/16/19 | 1,030,000 | 2,586,588 | ||
Invitrogen Corp. 2.25% 12/15/06 | 2,630,000 | 2,741,775 | ||
Serologicals Corp. 4.75% 8/15/33 (d) | 770,000 | 1,087,471 | ||
10,351,984 | ||||
Health Care Equipment & Supplies - 1.4% | ||||
Bausch & Lomb, Inc. 1.71% 8/1/23 (e) | 1,200,000 | 1,579,020 | ||
Cooper Companies, Inc. 2.625% 7/1/23 | 1,480,000 | 2,052,612 | ||
Fisher Scientific International, Inc.: | ||||
2.5% 10/1/23 (d) | 995,000 | 1,399,607 | ||
2.5% 10/1/23 | 380,000 | 534,523 | ||
5,565,762 | ||||
Health Care Providers & Services - 0.5% | ||||
Health Management Associates, Inc. 1.5% 8/1/23 | 1,900,000 | 2,020,840 | ||
Convertible Bonds - continued | ||||
Principal | Value | |||
HEALTH CARE - continued | ||||
Pharmaceuticals - 0.9% | ||||
IVAX Corp. 1.5% 3/1/24 (d) | $ 1,750,000 | $ 1,812,475 | ||
MGI Pharma, Inc. 1.6821% 3/2/24 (c)(d) | 2,040,000 | 1,814,172 | ||
3,626,647 | ||||
TOTAL HEALTH CARE | 21,565,233 | |||
INFORMATION TECHNOLOGY - 2.8% | ||||
Communications Equipment - 0.5% | ||||
Comverse Technology, Inc. 0% 5/15/23 | 800,000 | 927,000 | ||
Juniper Networks, Inc. 0% 6/15/08 | 730,000 | 910,018 | ||
1,837,018 | ||||
Internet Software & Services - 0.7% | ||||
Yahoo!, Inc. 0% 4/1/08 | 1,740,000 | 2,817,713 | ||
IT Services - 0.6% | ||||
DST Systems, Inc.: | ||||
4.125% 8/15/23 (d) | 1,240,000 | 1,561,532 | ||
4.125% 8/15/23 | 790,000 | 994,847 | ||
2,556,379 | ||||
Semiconductors & Semiconductor Equipment - 0.5% | ||||
Agere Systems, Inc. 6.5% 12/15/09 | 1,600,000 | 1,951,744 | ||
Software - 0.5% | ||||
Concord Communications, Inc. 3% 12/15/23 (d) | 2,180,000 | 1,885,700 | ||
TOTAL INFORMATION TECHNOLOGY | 11,048,554 | |||
MATERIALS - 0.5% | ||||
Metals & Mining - 0.5% | ||||
Inco Ltd. yankee 3.5% 3/14/52 | 1,290,000 | 1,773,750 | ||
TELECOMMUNICATION SERVICES - 1.2% | ||||
Wireless Telecommunication Services - 1.2% | ||||
Crown Castle International Corp. 4% 7/15/10 | 1,390,000 | 2,237,900 | ||
Nextel Partners, Inc. 1.5% 11/15/08 | 1,025,000 | 2,305,020 | ||
4,542,920 | ||||
Convertible Bonds - continued | ||||
Principal | Value | |||
UTILITIES - 0.5% | ||||
Multi-Utilities & Unregulated Power - 0.5% | ||||
AES Corp. 4.5% 8/15/05 | $ 2,190,000 | $ 2,162,012 | ||
TOTAL CONVERTIBLE BONDS (Cost $53,408,604) | 53,238,543 |
Common Stocks - 67.5% | |||
Shares | |||
CONSUMER DISCRETIONARY - 7.9% | |||
Auto Components - 0.0% | |||
TRW Automotive Holdings Corp. | 9,900 | 194,436 | |
Automobiles - 0.1% | |||
Harley-Davidson, Inc. | 5,000 | 287,450 | |
Hotels, Restaurants & Leisure - 1.6% | |||
Caesars Entertainment, Inc. (a) | 28,000 | 385,560 | |
McDonald's Corp. | 76,900 | 2,030,160 | |
Orbitz, Inc. Class A | 5,500 | 111,375 | |
Royal Caribbean Cruises Ltd. | 8,500 | 332,520 | |
Starwood Hotels & Resorts Worldwide, Inc. unit | 3,330 | 140,459 | |
Volume Services America Holdings, Inc. Income Deposit Security | 220,300 | 3,176,726 | |
6,176,800 | |||
Household Durables - 0.4% | |||
LG Electronics, Inc. | 4,250 | 246,715 | |
Newell Rubbermaid, Inc. | 24,300 | 572,751 | |
Pulte Homes, Inc. | 3,600 | 189,900 | |
Sony Corp. sponsored ADR | 19,600 | 722,652 | |
1,732,018 | |||
Internet & Catalog Retail - 0.1% | |||
Amazon.com, Inc. (a) | 7,900 | 381,491 | |
Leisure Equipment & Products - 0.3% | |||
Brunswick Corp. | 6,000 | 243,000 | |
Eastman Kodak Co. | 24,900 | 651,882 | |
Leapfrog Enterprises, Inc. Class A (a) | 21,000 | 448,770 | |
1,343,652 | |||
Media - 3.6% | |||
Cablevision Systems Corp. - NY Group Class A (a) | 35,700 | 782,544 | |
Clear Channel Communications, Inc. | 33,200 | 1,318,040 | |
Cumulus Media, Inc. Class A (a) | 51,700 | 958,518 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
CONSUMER DISCRETIONARY - continued | |||
Media - continued | |||
EchoStar Communications Corp. Class A (a) | 3,100 | $ 99,696 | |
Emmis Communications Corp. Class A (a) | 36,200 | 789,160 | |
Fox Entertainment Group, Inc. Class A (a) | 20,100 | 541,695 | |
Grupo Televisa SA de CV sponsored ADR | 14,000 | 591,640 | |
Lamar Advertising Co. Class A (a) | 31,700 | 1,295,579 | |
Liberty Media Corp. Class A (a) | 98,000 | 1,076,040 | |
News Corp. Ltd. sponsored ADR | 9,200 | 313,352 | |
Salem Communications Corp. Class A (a) | 14,900 | 447,000 | |
Spanish Broadcasting System, Inc. Class A (a) | 14,100 | 136,065 | |
The DIRECTV Group, Inc. (a) | 40,600 | 714,966 | |
Time Warner, Inc. (a) | 95,400 | 1,625,616 | |
Viacom, Inc. Class B (non-vtg.) | 41,800 | 1,542,002 | |
Walt Disney Co. | 73,300 | 1,720,351 | |
XM Satellite Radio Holdings, Inc. Class A (a) | 10,600 | 266,908 | |
14,219,172 | |||
Multiline Retail - 0.4% | |||
99 Cents Only Stores (a) | 12,000 | 232,920 | |
JCPenney Co., Inc. | 18,000 | 644,040 | |
Kohl's Corp. (a) | 4,600 | 218,776 | |
Saks, Inc. | 22,700 | 340,727 | |
1,436,463 | |||
Specialty Retail - 1.4% | |||
American Eagle Outfitters, Inc. (a) | 18,466 | 534,775 | |
Gap, Inc. | 48,800 | 1,178,520 | |
Home Depot, Inc. | 50,700 | 1,821,144 | |
Office Depot, Inc. (a) | 42,600 | 696,084 | |
Sonic Automotive, Inc. Class A | 8,498 | 186,531 | |
Toys 'R' Us, Inc. (a) | 55,400 | 870,888 | |
Weight Watchers International, Inc. (a) | 7,000 | 243,950 | |
5,531,892 | |||
TOTAL CONSUMER DISCRETIONARY | 31,303,374 | ||
CONSUMER STAPLES - 2.4% | |||
Beverages - 0.5% | |||
Anheuser-Busch Companies, Inc. | 10,200 | 543,354 | |
PepsiCo, Inc. | 24,000 | 1,280,880 | |
The Coca-Cola Co. | 5,200 | 267,020 | |
2,091,254 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
CONSUMER STAPLES - continued | |||
Food & Staples Retailing - 0.4% | |||
Safeway, Inc. (a) | 30,000 | $ 676,800 | |
Wal-Mart Stores, Inc. | 14,500 | 808,085 | |
1,484,885 | |||
Food Products - 0.2% | |||
Del Monte Foods Co. (a) | 16,000 | 164,320 | |
Interstate Bakeries Corp. | 30,200 | 317,100 | |
McCormick & Co., Inc. (non-vtg.) | 3,300 | 116,985 | |
598,405 | |||
Household Products - 0.9% | |||
Clorox Co. | 4,300 | 225,148 | |
Colgate-Palmolive Co. | 11,500 | 657,800 | |
Procter & Gamble Co. | 24,900 | 2,684,718 | |
3,567,666 | |||
Personal Products - 0.3% | |||
Gillette Co. | 28,200 | 1,215,138 | |
Tobacco - 0.1% | |||
Altria Group, Inc. | 11,100 | 532,467 | |
TOTAL CONSUMER STAPLES | 9,489,815 | ||
ENERGY - 6.1% | |||
Energy Equipment & Services - 2.0% | |||
Baker Hughes, Inc. | 46,500 | 1,582,395 | |
BJ Services Co. (a) | 13,900 | 582,271 | |
ENSCO International, Inc. | 63,100 | 1,680,984 | |
GlobalSantaFe Corp. | 30,000 | 753,900 | |
Halliburton Co. | 21,000 | 609,840 | |
Pride International, Inc. (a) | 21,000 | 330,120 | |
Rowan Companies, Inc. (a) | 11,100 | 243,978 | |
Transocean, Inc. (a) | 43,100 | 1,152,063 | |
Varco International, Inc. (a) | 18,598 | 375,680 | |
Weatherford International Ltd. (a) | 15,600 | 647,556 | |
7,958,787 | |||
Oil & Gas - 4.1% | |||
Amerada Hess Corp. | 6,500 | 458,835 | |
Apache Corp. | 7,000 | 282,520 | |
Burlington Resources, Inc. | 10,800 | 722,952 | |
ChevronTexaco Corp. | 45,900 | 4,149,360 | |
ConocoPhillips | 17,400 | 1,275,942 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
ENERGY - continued | |||
Oil & Gas - continued | |||
Encore Acquisition Co. (a) | 15,000 | $ 421,500 | |
Exxon Mobil Corp. | 146,800 | 6,349,100 | |
Giant Industries, Inc. (a) | 6,000 | 112,320 | |
Occidental Petroleum Corp. | 23,700 | 1,047,540 | |
Pioneer Natural Resources Co. | 8,500 | 263,075 | |
Premcor, Inc. (a) | 16,500 | 604,395 | |
Valero Energy Corp. | 7,500 | 495,825 | |
16,183,364 | |||
TOTAL ENERGY | 24,142,151 | ||
FINANCIALS - 24.1% | |||
Capital Markets - 2.6% | |||
Bear Stearns Companies, Inc. | 10,200 | 826,812 | |
J.P. Morgan Chase & Co. | 35,700 | 1,315,188 | |
Lehman Brothers Holdings, Inc. | 14,100 | 1,066,665 | |
Merrill Lynch & Co., Inc. | 68,100 | 3,868,080 | |
Morgan Stanley | 63,100 | 3,376,481 | |
10,453,226 | |||
Commercial Banks - 4.2% | |||
Bank of America Corp. | 80,057 | 6,655,138 | |
Bank One Corp. | 57,200 | 2,771,340 | |
East West Bancorp, Inc. | 9,400 | 570,298 | |
Fifth Third Bancorp | 18,000 | 977,220 | |
National Commerce Financial Corp. | 10,000 | 325,400 | |
UCBH Holdings, Inc. | 14,400 | 546,336 | |
Valley National Bancorp | 2,315 | 59,056 | |
Wachovia Corp. | 58,900 | 2,780,669 | |
Wells Fargo & Co. | 30,000 | 1,764,000 | |
16,449,457 | |||
Consumer Finance - 0.2% | |||
Capital One Financial Corp. | 8,080 | 566,085 | |
MBNA Corp. | 12,200 | 309,880 | |
875,965 | |||
Diversified Financial Services - 1.4% | |||
CIT Group, Inc. | 10,500 | 393,435 | |
Citigroup, Inc. | 110,900 | 5,149,087 | |
5,542,522 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
FINANCIALS - continued | |||
Insurance - 3.6% | |||
ACE Ltd. | 25,400 | $ 1,045,972 | |
AFLAC, Inc. | 10,400 | 422,240 | |
Allianz AG sponsored ADR | 55,500 | 581,640 | |
AMBAC Financial Group, Inc. | 18,500 | 1,279,275 | |
American International Group, Inc. | 85,400 | 6,259,820 | |
Bristol West Holdings, Inc. | 3,300 | 69,135 | |
Conseco, Inc. (a) | 10,000 | 189,400 | |
Hartford Financial Services Group, Inc. | 11,900 | 786,828 | |
Marsh & McLennan Companies, Inc. | 4,700 | 207,364 | |
MetLife, Inc. | 22,300 | 792,765 | |
Scottish Re Group Ltd. | 15,000 | 330,000 | |
St. Paul Travelers Companies, Inc. | 7,367 | 292,323 | |
UICI (a) | 10,700 | 212,716 | |
UnumProvident Corp. | 37,300 | 543,088 | |
W.R. Berkley Corp. | 20,900 | 870,485 | |
XL Capital Ltd. Class A | 7,100 | 530,015 | |
14,413,066 | |||
Real Estate - 11.1% | |||
Apartment Investment & Management Co. Class A | 34,090 | 984,519 | |
Archstone-Smith Trust | 14,550 | 422,678 | |
AvalonBay Communities, Inc. | 15,330 | 834,719 | |
Boston Properties, Inc. | 34,860 | 1,720,690 | |
CarrAmerica Realty Corp. | 20,880 | 612,202 | |
Catellus Development Corp. | 25,070 | 612,460 | |
CBL & Associates Properties, Inc. | 12,560 | 669,699 | |
CenterPoint Properties Trust (SBI) | 8,180 | 602,457 | |
Chelsea Property Group, Inc. | 4,100 | 225,418 | |
Cornerstone Realty Income Trust, Inc. | 25,300 | 207,713 | |
Correctional Properties Trust | 38,660 | 1,090,212 | |
Duke Realty Corp. | 42,190 | 1,365,268 | |
Equity Office Properties Trust | 59,510 | 1,603,795 | |
Equity One, Inc. | 36,550 | 650,590 | |
Equity Residential (SBI) | 85,670 | 2,522,125 | |
Federal Realty Investment Trust (SBI) | 22,380 | 892,962 | |
General Growth Properties, Inc. | 66,190 | 1,944,662 | |
Health Care Property Investors, Inc. | 33,650 | 808,610 | |
Health Care REIT, Inc. | 22,910 | 743,430 | |
Hersha Hospitality Trust | 46,700 | 465,132 | |
Highwoods Properties, Inc. (SBI) | 46,850 | 1,064,901 | |
Home Properties of New York, Inc. | 12,430 | 491,979 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
FINANCIALS - continued | |||
Real Estate - continued | |||
Host Marriott Corp. (a) | 67,410 | $ 826,447 | |
Kilroy Realty Corp. | 13,920 | 474,950 | |
Kimco Realty Corp. | 35,470 | 1,629,847 | |
Liberty Property Trust (SBI) | 18,650 | 743,949 | |
Manufactured Home Communities, Inc. | 25,050 | 777,803 | |
MeriStar Hospitality Corp. (a) | 156,420 | 993,267 | |
Newcastle Investment Corp. | 7,000 | 195,580 | |
Omega Healthcare Investors, Inc. | 21,330 | 204,341 | |
Pan Pacific Retail Properties, Inc. | 22,630 | 1,040,980 | |
Plum Creek Timber Co., Inc. | 29,130 | 912,352 | |
Post Properties, Inc. | 7,600 | 221,160 | |
ProLogis | 71,940 | 2,306,396 | |
Public Storage, Inc. | 31,020 | 1,426,610 | |
Rayonier, Inc. | 9,380 | 393,960 | |
Reckson Associates Realty Corp. | 63,250 | 1,645,765 | |
Shurgard Storage Centers, Inc. Class A | 9,400 | 352,500 | |
Simon Property Group, Inc. | 43,380 | 2,237,107 | |
SL Green Realty Corp. | 21,690 | 986,895 | |
Taubman Centers, Inc. | 15,230 | 339,629 | |
The Mills Corp. | 3,450 | 151,628 | |
The Rouse Co. | 34,490 | 1,574,469 | |
Trizec Properties, Inc. | 34,310 | 566,458 | |
United Dominion Realty Trust, Inc. (SBI) | 32,480 | 647,651 | |
Ventas, Inc. | 25,560 | 596,059 | |
Vornado Realty Trust | 42,040 | 2,297,486 | |
44,079,510 | |||
Thrifts & Mortgage Finance - 1.0% | |||
Fannie Mae | 16,100 | 1,089,970 | |
Freddie Mac | 11,500 | 671,485 | |
Golden West Financial Corp., Delaware | 3,400 | 369,818 | |
New York Community Bancorp, Inc. | 18,200 | 426,244 | |
Sovereign Bancorp, Inc. | 24,200 | 526,350 | |
The PMI Group, Inc. | 3,000 | 129,510 | |
Washington Mutual, Inc. | 12,000 | 524,160 | |
3,737,537 | |||
TOTAL FINANCIALS | 95,551,283 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
HEALTH CARE - 5.1% | |||
Biotechnology - 0.8% | |||
Biogen Idec, Inc. (a) | 11,000 | $ 683,650 | |
BioMarin Pharmaceutical, Inc. (a) | 72,000 | 439,920 | |
Cephalon, Inc. (a) | 4,200 | 226,254 | |
ConjuChem, Inc. (a) | 27,700 | 259,411 | |
Genentech, Inc. (a) | 12,000 | 717,720 | |
MedImmune, Inc. (a) | 22,900 | 551,203 | |
Millennium Pharmaceuticals, Inc. (a) | 22,700 | 338,457 | |
3,216,615 | |||
Health Care Equipment & Supplies - 1.2% | |||
Arrow International, Inc. | 8,200 | 247,394 | |
Baxter International, Inc. | 88,400 | 2,779,296 | |
Dade Behring Holdings, Inc. (a) | 11,700 | 522,405 | |
Immucor, Inc. (a) | 14,500 | 450,660 | |
Medtronic, Inc. | 3,500 | 167,650 | |
St. Jude Medical, Inc. (a) | 7,500 | 571,950 | |
4,739,355 | |||
Health Care Providers & Services - 0.8% | |||
Community Health Systems, Inc. (a) | 10,000 | 255,000 | |
Covance, Inc. (a) | 9,900 | 358,578 | |
Lincare Holdings, Inc. (a) | 4,300 | 144,523 | |
Odyssey Healthcare, Inc. (a) | 17,000 | 288,150 | |
Tenet Healthcare Corp. (a) | 51,000 | 607,920 | |
UnitedHealth Group, Inc. | 22,400 | 1,461,600 | |
WebMD Corp. (a) | 25,000 | 221,500 | |
3,337,271 | |||
Pharmaceuticals - 2.3% | |||
Barr Pharmaceuticals, Inc. (a) | 7,000 | 305,340 | |
Forest Laboratories, Inc. (a) | 4,450 | 282,086 | |
Johnson & Johnson | 31,400 | 1,749,294 | |
Merck & Co., Inc. | 53,900 | 2,549,470 | |
Pfizer, Inc. | 29,600 | 1,046,064 | |
Schering-Plough Corp. | 140,700 | 2,377,830 | |
Wyeth | 18,200 | 655,200 | |
8,965,284 | |||
TOTAL HEALTH CARE | 20,258,525 | ||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INDUSTRIALS - 8.0% | |||
Aerospace & Defense - 2.0% | |||
Boeing Co. | 19,500 | $ 893,100 | |
Bombardier, Inc. Class B (sub. vtg.) | 29,200 | 98,016 | |
Embraer - Empresa Brasileira de Aeronautica SA sponsored ADR | 11,900 | 302,974 | |
Honeywell International, Inc. | 105,600 | 3,558,720 | |
Lockheed Martin Corp. | 23,900 | 1,184,006 | |
Northrop Grumman Corp. | 4,200 | 433,146 | |
Precision Castparts Corp. | 6,800 | 318,852 | |
Raytheon Co. | 26,000 | 864,500 | |
United Defense Industries, Inc. (a) | 10,400 | 347,360 | |
8,000,674 | |||
Air Freight & Logistics - 0.1% | |||
Expeditors International of Washington, Inc. | 13,000 | 590,720 | |
Airlines - 0.4% | |||
AirTran Holdings, Inc. (a) | 47,000 | 654,240 | |
Southwest Airlines Co. | 73,100 | 1,133,781 | |
1,788,021 | |||
Building Products - 0.4% | |||
Masco Corp. | 50,900 | 1,473,555 | |
Trex Co., Inc. (a) | 4,000 | 145,320 | |
1,618,875 | |||
Commercial Services & Supplies - 1.6% | |||
Avery Dennison Corp. | 14,500 | 856,080 | |
Casella Waste Systems, Inc. Class A (a) | 22,000 | 307,560 | |
Cendant Corp. | 77,700 | 1,782,438 | |
Cintas Corp. | 11,200 | 508,256 | |
Monster Worldwide, Inc. (a) | 8,400 | 212,604 | |
On Assignment, Inc. (a) | 20,000 | 117,400 | |
Robert Half International, Inc. | 59,800 | 1,673,204 | |
ServiceMaster Co. | 18,000 | 218,880 | |
Waste Management, Inc. | 19,800 | 569,448 | |
6,245,870 | |||
Construction & Engineering - 0.4% | |||
Chicago Bridge & Iron Co. NV | 26,671 | 770,792 | |
Fluor Corp. | 15,100 | 610,342 | |
MasTec, Inc. (a) | 20,000 | 85,400 | |
1,466,534 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INDUSTRIALS - continued | |||
Electrical Equipment - 0.2% | |||
FuelCell Energy, Inc. (a) | 15,000 | $ 238,050 | |
Rockwell Automation, Inc. | 12,000 | 406,320 | |
644,370 | |||
Industrial Conglomerates - 2.6% | |||
3M Co. | 6,800 | 575,008 | |
General Electric Co. | 123,800 | 3,852,656 | |
Tyco International Ltd. | 189,900 | 5,847,021 | |
10,274,685 | |||
Machinery - 0.2% | |||
AGCO Corp. (a) | 15,000 | 287,400 | |
SPX Corp. | 14,200 | 620,824 | |
908,224 | |||
Road & Rail - 0.1% | |||
Overnite Corp. | 10,000 | 261,400 | |
TOTAL INDUSTRIALS | 31,799,373 | ||
INFORMATION TECHNOLOGY - 6.0% | |||
Communications Equipment - 1.0% | |||
Brocade Communications Systems, Inc. (a) | 32,600 | 195,274 | |
Cisco Systems, Inc. (a) | 26,300 | 582,545 | |
Foundry Networks, Inc. (a) | 43,000 | 530,620 | |
Lucent Technologies, Inc. (a) | 170,000 | 606,900 | |
McDATA Corp. Class A (a) | 25,600 | 121,600 | |
Motorola, Inc. | 61,800 | 1,221,786 | |
Telefonaktiebolaget LM Ericsson ADR (a) | 18,600 | 519,870 | |
3,778,595 | |||
Computers & Peripherals - 1.3% | |||
Diebold, Inc. | 4,500 | 221,085 | |
Hewlett-Packard Co. | 61,900 | 1,314,756 | |
Hutchinson Technology, Inc. (a) | 14,700 | 388,227 | |
International Business Machines Corp. | 32,900 | 2,914,611 | |
Western Digital Corp. (a) | 20,200 | 184,628 | |
5,023,307 | |||
Electronic Equipment & Instruments - 1.0% | |||
Agilent Technologies, Inc. (a) | 4,000 | 102,800 | |
Flextronics International Ltd. (a) | 15,000 | 263,400 | |
PerkinElmer, Inc. | 14,600 | 284,846 | |
Solectron Corp. (a) | 134,106 | 737,583 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
INFORMATION TECHNOLOGY - continued | |||
Electronic Equipment & Instruments - continued | |||
Thermo Electron Corp. (a) | 22,200 | $ 683,316 | |
Waters Corp. (a) | 43,200 | 1,990,656 | |
4,062,601 | |||
Internet Software & Services - 0.2% | |||
Yahoo!, Inc. (a) | 27,100 | 830,886 | |
IT Services - 0.2% | |||
Affiliated Computer Services, Inc. Class A (a) | 10,000 | 498,200 | |
BearingPoint, Inc. (a) | 15,900 | 136,422 | |
The BISYS Group, Inc. (a) | 14,700 | 185,955 | |
820,577 | |||
Office Electronics - 0.2% | |||
Xerox Corp. (a) | 47,000 | 636,380 | |
Semiconductors & Semiconductor Equipment - 1.3% | |||
Agere Systems, Inc.: | |||
Class A (a) | 75,000 | 190,500 | |
Class B (a) | 58,700 | 143,815 | |
Cabot Microelectronics Corp. (a) | 8,000 | 249,200 | |
FormFactor, Inc. | 5,300 | 99,640 | |
Intel Corp. | 19,800 | 565,290 | |
Intersil Corp. Class A | 7,400 | 157,250 | |
KLA-Tencor Corp. (a) | 25,000 | 1,204,500 | |
Micron Technology, Inc. (a) | 23,000 | 345,690 | |
National Semiconductor Corp. (a) | 11,000 | 238,370 | |
Novellus Systems, Inc. (a) | 50,400 | 1,677,816 | |
PMC-Sierra, Inc. (a) | 22,000 | 310,200 | |
5,182,271 | |||
Software - 0.8% | |||
BEA Systems, Inc. (a) | 38,100 | 328,803 | |
Microsoft Corp. | 107,500 | 2,832,625 | |
Siebel Systems, Inc. (a) | 20,000 | 216,000 | |
3,377,428 | |||
TOTAL INFORMATION TECHNOLOGY | 23,712,045 | ||
MATERIALS - 4.1% | |||
Chemicals - 1.7% | |||
Dow Chemical Co. | 63,500 | 2,533,650 | |
E.I. du Pont de Nemours & Co. | 45,700 | 1,974,240 | |
Ecolab, Inc. | 8,100 | 247,131 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
MATERIALS - continued | |||
Chemicals - continued | |||
Headwaters, Inc. (a) | 10,000 | $ 209,000 | |
Lyondell Chemical Co. | 38,700 | 639,324 | |
Millennium Chemicals, Inc. | 44,772 | 760,229 | |
Olin Corp. | 16,900 | 278,005 | |
6,641,579 | |||
Containers & Packaging - 0.8% | |||
Ball Corp. | 4,500 | 307,395 | |
Bemis Co., Inc. | 17,100 | 471,105 | |
Owens-Illinois, Inc. (a) | 61,500 | 912,045 | |
Packaging Corp. of America | 27,000 | 634,500 | |
Sealed Air Corp. (a) | 7,300 | 366,971 | |
Smurfit-Stone Container Corp. (a) | 33,500 | 608,360 | |
3,300,376 | |||
Metals & Mining - 1.3% | |||
Alcoa, Inc. | 18,000 | 563,400 | |
Companhia Vale do Rio Doce sponsored ADR | 5,700 | 288,990 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 15,000 | 504,450 | |
GrafTech International Ltd. (a) | 15,000 | 142,500 | |
Massey Energy Co. | 30,300 | 745,986 | |
Metals USA, Inc. (a) | 14,800 | 220,520 | |
Newmont Mining Corp. | 11,800 | 468,578 | |
Nucor Corp. | 27,800 | 1,830,630 | |
Phelps Dodge Corp. (a) | 8,000 | 543,200 | |
5,308,254 | |||
Paper & Forest Products - 0.3% | |||
Bowater, Inc. | 19,600 | 827,708 | |
Weyerhaeuser Co. | 5,000 | 302,400 | |
1,130,108 | |||
TOTAL MATERIALS | 16,380,317 | ||
TELECOMMUNICATION SERVICES - 2.4% | |||
Diversified Telecommunication Services - 2.0% | |||
Cincinnati Bell, Inc. (a) | 55,000 | 226,600 | |
Citizens Communications Co. (a) | 7,800 | 99,060 | |
Covad Communications Group, Inc. (a) | 245,800 | 528,470 | |
SBC Communications, Inc. | 164,000 | 3,886,800 | |
Common Stocks - continued | |||
Shares | Value (Note 1) | ||
TELECOMMUNICATION SERVICES - continued | |||
Diversified Telecommunication Services - continued | |||
Telefonos de Mexico SA de CV sponsored ADR | 14,000 | $ 470,960 | |
Verizon Communications, Inc. | 76,200 | 2,634,996 | |
7,846,886 | |||
Wireless Telecommunication Services - 0.4% | |||
Crown Castle International Corp. (a) | 37,200 | 547,956 | |
Nextel Communications, Inc. Class A (a) | 18,600 | 430,218 | |
Nextel Partners, Inc. Class A (a) | 20,000 | 326,200 | |
Western Wireless Corp. Class A (a) | 5,800 | 158,804 | |
1,463,178 | |||
TOTAL TELECOMMUNICATION SERVICES | 9,310,064 | ||
UTILITIES - 1.4% | |||
Electric Utilities - 1.1% | |||
Entergy Corp. | 20,700 | 1,130,427 | |
FirstEnergy Corp. | 18,100 | 705,900 | |
PG&E Corp. (a) | 20,300 | 578,550 | |
PPL Corp. | 7,000 | 302,050 | |
Southern Co. | 16,200 | 468,504 | |
TXU Corp. | 18,900 | 706,293 | |
Westar Energy, Inc. | 25,000 | 493,000 | |
Xcel Energy, Inc. | 7,500 | 127,425 | |
4,512,149 | |||
Multi-Utilities & Unregulated Power - 0.3% | |||
AES Corp. (a) | 53,600 | 500,624 | |
Calpine Corp. (a) | 73,500 | 278,565 | |
Public Service Enterprise Group, Inc. | 5,000 | 210,800 | |
989,989 | |||
TOTAL UTILITIES | 5,502,138 | ||
TOTAL COMMON STOCKS (Cost $269,108,644) | 267,449,085 | ||
Preferred Stocks - 17.7% | |||
Shares | Value (Note 1) | ||
Convertible Preferred Stocks - 5.4% | |||
CONSUMER DISCRETIONARY - 1.2% | |||
Hotels, Restaurants & Leisure - 0.4% | |||
Six Flags, Inc. 7.25% PIERS | 82,700 | $ 1,749,105 | |
Media - 0.3% | |||
Emmis Communications Corp. Series A, 6.25% | 10,100 | 462,782 | |
Radio One, Inc. 6.50% | 470 | 495,116 | |
957,898 | |||
Specialty Retail - 0.5% | |||
Toys 'R' US, Inc. 6.25% | 44,600 | 2,000,310 | |
TOTAL CONSUMER DISCRETIONARY | 4,707,313 | ||
ENERGY - 0.8% | |||
Oil & Gas - 0.8% | |||
Chesapeake Energy Corp. 6.75% | 11,700 | 1,031,794 | |
Valero Energy Corp. 2.00% | 61,700 | 2,020,675 | |
3,052,469 | |||
FINANCIALS - 0.9% | |||
Diversified Financial Services - 0.9% | |||
AES Trust VII 6.00% | 80,100 | 3,584,475 | |
INDUSTRIALS - 0.2% | |||
Road & Rail - 0.2% | |||
Kansas City Southern 4.25% | 1,370 | 731,553 | |
MATERIALS - 1.0% | |||
Containers & Packaging - 0.8% | |||
Owens-Illinois, Inc. 4.75% | 99,210 | 2,986,221 | |
Metals & Mining - 0.2% | |||
Freeport-McMoRan Copper & Gold, Inc. 5.50% (d) | 1,050 | 948,413 | |
TOTAL MATERIALS | 3,934,634 | ||
TELECOMMUNICATION SERVICES - 1.3% | |||
Diversified Telecommunication Services - 1.3% | |||
CenturyTel, Inc. 6.875% ACES | 210,200 | 5,243,859 | |
TOTAL CONVERTIBLE PREFERRED STOCKS | 21,254,303 | ||
Preferred Stocks - continued | |||
Shares | Value (Note 1) | ||
Nonconvertible Preferred Stocks - 12.3% | |||
ENERGY - 1.8% | |||
Oil & Gas - 1.8% | |||
El Paso Tennessee Pipeline Co. Series A, 8.25% | 164,900 | $ 7,255,592 | |
FINANCIALS - 7.0% | |||
Capital Markets - 1.3% | |||
Bear Stearns Companies, Inc.: | |||
Series E, 6.155% | 15,000 | 765,000 | |
Series G, 5.49% | 15,000 | 695,250 | |
J.P. Morgan Chase & Co. (depositary shares) Series H, 6.625% | 6,530 | 345,241 | |
Lehman Brothers Holdings, Inc. (depositary shares) Series F, 6.50% | 136,750 | 3,528,150 | |
5,333,641 | |||
Commercial Banks - 0.2% | |||
Banco Santander Central Hispano SA 6.41% (d) | 31,400 | 788,925 | |
Consumer Finance - 0.6% | |||
SLM Corp. Series A, 6.97% | 43,400 | 2,311,050 | |
Diversified Financial Services - 0.7% | |||
ABN Amro Capital Funding Trust VII 6.08% | 60,400 | 1,404,904 | |
EIX Trust II Series B, 8.60% | 19,600 | 493,920 | |
Heco Capital Trust III 6.50% | 12,000 | 298,800 | |
RC Trust I 7.00% | 9,680 | 511,913 | |
2,709,537 | |||
Real Estate - 1.1% | |||
Apartment Investment & Management Co. Series U, 7.75% | 39,000 | 910,260 | |
Duke Realty Corp. (depositary shares) Series K, 6.50% | 74,800 | 1,705,440 | |
Glimcher Realty Trust Series G, 8.125% | 51,200 | 1,262,080 | |
Host Marriott Corp. Series E, 8.875% | 20,000 | 500,000 | |
4,377,780 | |||
Thrifts & Mortgage Finance - 3.1% | |||
Fannie Mae: | |||
Series H, 5.81% | 29,200 | 1,460,000 | |
Series L, 5.125% | 90,900 | 4,081,410 | |
Series N, 5.50% | 71,650 | 3,439,200 | |
Freddie Mac: | |||
Series H, 5.10% | 10,300 | 449,595 | |
Preferred Stocks - continued | |||
Shares | Value (Note 1) | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - continued | |||
Freddie Mac: - continued | |||
Series O, 5.81% | 19,500 | $ 994,695 | |
Series R, 5.70% | 37,300 | 1,841,128 | |
12,266,028 | |||
TOTAL FINANCIALS | 27,786,961 | ||
MATERIALS - 0.3% | |||
Chemicals - 0.2% | |||
E.I. du Pont de Nemours & Co. Series B, 4.50% | 9,900 | 836,550 | |
Metals & Mining - 0.1% | |||
Alcoa, Inc. 3.75% | 6,400 | 494,400 | |
TOTAL MATERIALS | 1,330,950 | ||
UTILITIES - 3.2% | |||
Electric Utilities - 3.2% | |||
Alabama Power Co. 5.30% | 88,600 | 2,055,520 | |
Consolidated Edison Co. of New York, Inc. Series A, 5.00% | 28,705 | 2,382,515 | |
Duquesne Light Co. 6.50% | 69,950 | 3,462,525 | |
FPL Group Capital Trust I 5.875% | 20,000 | 475,000 | |
Monongahela Power Co. Series L, 7.73% | 10,800 | 1,004,400 | |
Southern California Edison Co.: | |||
4.78% | 46,500 | 836,070 | |
Series B, 4.08% | 27,271 | 455,426 | |
Series C, 4.24% | 43,300 | 742,595 | |
Series D, 4.32% | 70,000 | 1,200,500 | |
12,614,551 | |||
TOTAL NONCONVERTIBLE PREFERRED STOCKS | 48,988,054 | ||
TOTAL PREFERRED STOCKS (Cost $73,799,839) | 70,242,357 | ||
Money Market Funds - 1.6% | |||
Shares | Value (Note 1) | ||
Fidelity Cash Central Fund, 1.09% (b) | 5,587,577 | $ 5,587,577 | |
Fidelity Securities Lending Cash Central Fund, 1.08% (b) | 552,075 | 552,075 | |
TOTAL MONEY MARKET FUNDS (Cost $6,139,652) | 6,139,652 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $402,456,739) | 397,069,637 | ||
NET OTHER ASSETS - (0.2)% | (617,097) | ||
NET ASSETS - 100% | $ 396,452,540 |
Security Type Abbreviations |
ACES | - | Automatic Common Exchange Securities |
PIERS | - | Preferred Income Equity Redeemable Securities |
Legend |
(a) Non-income producing |
(b) 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 listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Debt obligation initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $13,251,295 or 3.3% of net assets. |
(e) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
Other Information |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 1.0% |
BBB | 0.9% |
BB | 3.0% |
B | 2.1% |
CCC,CC,C | 1.6% |
Not Rated | 4.8% |
Equities | 85.2% |
Short-Term Investments and Net Other Assets | 1.4% |
100.0% |
We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. |
Purchases and sales of securities, other than short-term securities, aggregated $473,765,098 and $72,537,906, respectively. |
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 $29,973 for the period. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
May 31, 2004 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $553,005) (cost $402,456,739) - See accompanying schedule | $ 397,069,637 | |
Receivable for investments sold | 1,914,636 | |
Receivable for fund shares sold | 869,178 | |
Dividends receivable | 430,779 | |
Interest receivable | 418,936 | |
Prepaid expenses | 51,654 | |
Other receivables | 32,970 | |
Total assets | 400,787,790 | |
Liabilities | ||
Payable for investments purchased | $ 2,958,072 | |
Payable for fund shares redeemed | 392,768 | |
Accrued management fee | 210,584 | |
Distribution fees payable | 29,331 | |
Other affiliated payables | 81,043 | |
Other payables and accrued expenses | 111,377 | |
Collateral on securities loaned, at value | 552,075 | |
Total liabilities | 4,335,250 | |
Net Assets | $ 396,452,540 | |
Net Assets consist of: | ||
Paid in capital | $ 404,987,369 | |
Undistributed net investment income | 1,520,040 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (4,667,775) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (5,387,094) | |
Net Assets | $ 396,452,540 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Assets and Liabilities - continued
May 31, 2004 (Unaudited) | ||
Calculation of Maximum Offering Price | $ 10.21 | |
Maximum offering price per share (100/94.25 of $10.21) | $ 10.83 | |
Class T: | $ 10.20 | |
Maximum offering price per share (100/96.50 of $10.20) | $ 10.57 | |
Class B: | $ 10.19 | |
Class C: | $ 10.19 | |
Strategic Dividend & Income: | $ 10.22 | |
Institutional Class: | $ 10.21 |
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
Statement of Operations
For the period December 23, 2003 (commencement of operations) to May 31, 2004 (Unaudited) | ||
Investment Income | ||
Dividends | $ 2,768,144 | |
Interest | 424,753 | |
Security lending | 2,136 | |
Total income | 3,195,033 | |
Expenses | ||
Management fee | $ 702,706 | |
Transfer agent fees | 281,959 | |
Distribution fees | 88,195 | |
Accounting and security lending fees | 51,650 | |
Non-interested trustees' compensation | 396 | |
Custodian fees and expenses | 52,683 | |
Registration fees | 92,953 | |
Audit | 16,326 | |
Legal | 60 | |
Miscellaneous | 170 | |
Total expenses before reductions | 1,287,098 | |
Expense reductions | (71,320) | 1,215,778 |
Net investment income (loss) | 1,979,255 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | (4,669,144) | |
Foreign currency transactions | 1,369 | |
Total net realized gain (loss) | (4,667,775) | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (5,387,102) | |
Assets and liabilities in foreign currencies | 8 | |
Total change in net unrealized appreciation (depreciation) | (5,387,094) | |
Net gain (loss) | (10,054,869) | |
Net increase (decrease) in net assets resulting from operations | $ (8,075,614) |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Changes in Net Assets
For the period | |
Increase (Decrease) in Net Assets | |
Operations | |
Net investment income (loss) | $ 1,979,255 |
Net realized gain (loss) | (4,667,775) |
Change in net unrealized appreciation (depreciation) | (5,387,094) |
Net increase (decrease) in net assets resulting | (8,075,614) |
Distributions to shareholders from net investment income | (459,215) |
Share transactions - net increase (decrease) | 404,987,369 |
Total increase (decrease) in net assets | 396,452,540 |
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $1,520,040) | $ 396,452,540 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .06 |
Net realized and unrealized gain (loss) | .17 F |
Total from investment operations | .23 |
Distributions from net investment income | (.02) |
Net asset value, end of period | $ 10.21 |
Total Return B,C,D | 2.24% |
Ratios to Average Net Assets H | |
Expenses before expense reductions | 1.26%A |
Expenses net of voluntary waivers, if any | 1.20%A |
Expenses net of all reductions | 1.17% A |
Net investment income (loss) | 1.44% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 14,148 |
Portfolio turnover rate | 61% A |
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 period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)E | .05 |
Net realized and unrealized gain (loss) | .16F |
Total from investment operations | .21 |
Distributions from net investment income | (.01) |
Net asset value, end of period | $ 10.20 |
Total ReturnB,C,D | 2.10% |
Ratios to Average Net AssetsH | |
Expenses before expense reductions | 1.51%A |
Expenses net of voluntary waivers, if any | 1.45%A |
Expenses net of all reductions | 1.42%A |
Net investment income (loss) | 1.19%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 17,466 |
Portfolio turnover rate | 61%A |
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 period shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)E | .03 |
Net realized and unrealized gain (loss) | .17F |
Total from investment operations | .20 |
Distributions from net investment income | (.01) |
Net asset value, end of period | $ 10.19 |
Total ReturnB,C,D | 1.95% |
Ratios to Average Net AssetsH | |
Expenses before expense reductions | 2.04%A |
Expenses net of voluntary waivers, if any | 1.95%A |
Expenses net of all reductions | 1.92%A |
Net investment income (loss) | .69%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 8,316 |
Portfolio turnover rate | 61%A |
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 period 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 The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)E | .03 |
Net realized and unrealized gain (loss) | .17F |
Total from investment operations | .20 |
Distributions from net investment income | (.01) |
Net asset value, end of period | $ 10.19 |
Total ReturnB,C,D | 1.95% |
Ratios to Average Net AssetsH | |
Expenses before expense reductions | 2.00%A |
Expenses net of voluntary waivers, if any | 1.95%A |
Expenses net of all reductions | 1.92%A |
Net investment income (loss) | .70%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 18,735 |
Portfolio turnover rate | 61%A |
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 period 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 The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
G For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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 - Strategic Dividend & Income
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)D | .07 |
Net realized and unrealized gain (loss) | .17E |
Total from investment operations | .24 |
Distributions from net investment income | (.02) |
Net asset value, end of period | $ 10.22 |
Total ReturnB,C | 2.34% |
Ratios to Average Net AssetsG | |
Expenses before expense reductions | .98%A |
Expenses net of voluntary waivers, if any | .95%A |
Expenses net of all reductions | .92%A |
Net investment income (loss) | 1.69%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 334,905 |
Portfolio turnover rate | 61%A |
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 period shown.
D Calculated based on average shares outstanding during the period.
E The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
F For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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
Period ended | |
(Unaudited) | |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss)D | .07 |
Net realized and unrealized gain (loss) | .16E |
Total from investment operations | .23 |
Distributions from net investment income | (.02) |
Net asset value, end of period | $ 10.21 |
Total ReturnB,C | 2.29% |
Ratios to Average Net AssetsG | |
Expenses before expense reductions | .97%A |
Expenses net of voluntary waivers, if any | .95%A |
Expenses net of all reductions | .92%A |
Net investment income (loss) | 1.69%A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 2,882 |
Portfolio turnover rate | 61%A |
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 period shown.
D Calculated based on average shares outstanding during the period.
E The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund.
F For the period December 23, 2003 (commencement of operations) to May 31, 2004.
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 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 any voluntary 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, 2004 (Unaudited)
1. Significant Accounting Policies.
Fidelity Strategic Dividend & Income 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, Strategic Dividend & Income, and Institutional Class 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. 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.
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. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. Debt securities for which quotations are readily available are valued at their most recent bid prices (sales prices if the principal market is an exchange) in the principal market in which such securities are normally traded, as determined by recognized dealers in such securities, or securities are valued on the basis of information provided by a pricing service. Pricing services use valuation matrices that incorporate both dealer-supplied valuations and valuation models. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
1. Significant Accounting Policies - continued
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. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 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 nontaxable distributions or capital gain distributions for income tax purposes. Interest income is 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 the funds in the trust.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each 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
Semiannual Report
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
The federal tax cost of investments including unrealized appreciation (depreciation) as of period end was as follows:
Unrealized appreciation | $ 11,387,054 |
Unrealized depreciation | (17,358,736) |
Net unrealized appreciation (depreciation) | $ (5,971,682) |
Cost for federal income tax purposes | $ 403,041,319 |
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
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.
3. Purchases and Sales of Investments.
Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
4. 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 .28% 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 .57% 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 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 | 0% | .25% | $ 8,385 | $ 1,044 |
Class T | .25% | .25% | 19,894 | 2,134 |
Class B | .75% | .25% | 18,667 | 15,072 |
Class C | .75% | .25% | 41,249 | 33,233 |
$ 88,195 | $ 51,483 |
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, and ..25% for certain purchases of Class A and Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 60,335 |
Class T | 26,761 |
Class B* | 1,657 |
Class C* | 1,693 |
$ 90,446 |
* 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.
Semiannual Report
4. 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, except for Strategic Dividend & Income. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, , is the transfer agent for Strategic Dividend & Income shares. FIIOC and FSC receive 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 and FSC pay for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class to FIIOC or FSC were as follows:
Amount | % of | |
Class A | $ 9,057 | .27* |
Class T | 10,824 | .27* |
Class B | 5,419 | .29* |
Class C | 11,107 | .27* |
Strategic Dividend & Income | 243,794 | .23* |
Institutional Class | 1,758 | .19* |
$ 281,959 |
* Annualized
Accounting and Security Lending Fees. FSC 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.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $39,008 for the period.
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 are shown under the caption "Other Information" at the end of the fund's Schedule of Investments.
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 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. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. 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. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. Expense Reductions.
Effective December 23, 2003, FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.
Expense | Reimbursement | |
Class A | 1.20% | $ 1,967 |
Class T | 1.45% | 2,370 |
Class B | 1.95% | 1,696 |
Class C | 1.95% | 2,299 |
Strategic Dividend & Income | .95% | 28,989 |
Institutional Class | .95% | 184 |
$ 37,505 |
Semiannual Report
7. Expense Reductions - continued
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 $32,350 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $1,465.
8. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
For the period | |
From net investment income | |
Class A | $ 10,278 |
Class T | 8,648 |
Class B | 1,881 |
Class C | 4,276 |
Strategic Dividend & Income | 430,123 |
Institutional Class | 4,009 |
Total | $ 459,215 |
Semiannual Report
Notes to Financial Statements (Unaudited)- continued
9. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |
For the period | For the period | |
Class A | ||
Shares sold | 1,470,027 | $ 15,212,108 |
Reinvestment of distributions | 671 | 7,171 |
Shares redeemed | (84,877) | (863,448) |
Net increase (decrease) | 1,385,821 | $ 14,355,831 |
Class T | ||
Shares sold | 1,734,620 | $ 17,977,006 |
Reinvestment of distributions | 584 | 6,236 |
Shares redeemed | (23,384) | (238,262) |
Net increase (decrease) | 1,711,820 | $ 17,744,980 |
Class B | ||
Shares sold | 839,815 | $ 8,642,138 |
Reinvestment of distributions | 118 | 1,255 |
Shares redeemed | (23,440) | (238,135) |
Net increase (decrease) | 816,493 | $ 8,405,258 |
Class C | ||
Shares sold | 1,863,966 | $ 19,253,693 |
Reinvestment of distributions | 266 | 2,843 |
Shares redeemed | (24,920) | (252,395) |
Net increase (decrease) | 1,839,312 | $ 19,004,141 |
Strategic Dividend & Income | ||
Shares sold | 39,208,484 | $ 408,802,215 |
Reinvestment of distributions | 36,183 | 386,431 |
Shares redeemed | (6,478,528) | (66,603,303) |
Net increase (decrease) | 32,766,139 | $ 342,585,343 |
Institutional Class | ||
Shares sold | 292,166 | $ 2,993,335 |
Reinvestment of distributions | 218 | 2,327 |
Shares redeemed | (10,202) | (103,846) |
Net increase (decrease) | 282,182 | $ 2,891,816 |
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.
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Service Telephone (FAST®)
1-800-544-5555
Press
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
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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.
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Semiannual Report
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Semiannual Report
Semiannual Report
Semiannual Report
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Fidelity®
Independence
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Semiannual Report
May 31, 2004
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
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, | |
Notes | Notes to the financial statements. | |
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
For a free copy of the fund's proxy voting guidelines visit www.fidelity.com/goto/proxyguidelines, call 1-800-544-8544, or visit the Securities and Exchange Commission (SEC)'s web site at www.sec.gov.
(Recycle graphic) This report is printed on recycled paper using soy-based inks.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.
Neither the fund nor Fidelity Distributors Corporation is a bank.
For more information on any Fidelity fund, including charges and expenses, call 1-800-544-6666 for a free prospectus. Read it carefully before you invest or send money.
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Many of you have read or heard news stories recently that were critical of mutual funds and made allegations that the mutual fund industry has been less than forthright. I find these reports unsettling and not necessarily an accurate picture of the overall industry, and I would like you to know where we at Fidelity stand.
With specific regard to allegations that certain mutual fund companies were violating the Securities and Exchange Commission's forward pricing rules or were involved in so-called "market timing" activities, I want to say two things:
First, Fidelity does not have agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not to say that someone could not deceive the company through fraudulent acts. But I underscore that we have no so-called "agreements" which would permit this illegal practice.
Second, Fidelity has been on record for years opposing predatory short-term trading which adversely affects other shareholders in a mutual fund. In fact, in the 1980s, we began charging a fee - which is returned to the fund and, therefore, to investors - to discourage this activity. What's more, several years ago we took the industry lead in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. It is reasonable to assume that another structure can be developed that would alter the system to make it much more difficult for predatory traders to operate. This, however, will only be achieved through close cooperation among regulators, legislators and the industry.
Certainly no industry is perfect, and there have been instances of unethical and illegal activity from time to time within the mutual fund industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. Clearly, every system can be improved. We applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors' holdings. But we remain concerned about the risk of over-regulation and the quick application of simplistic solutions to intricate problems.
For more than 57 years, Fidelity Investments has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Many of them were family and friends. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Investment Changes
Top Ten Stocks as of May 31, 2004 | ||
% of fund's | % of fund's net assets | |
Pfizer, Inc. | 4.1 | 0.5 |
Clear Channel Communications, Inc. | 2.8 | 2.5 |
Research in Motion Ltd. | 2.8 | 0.8 |
Viacom, Inc. Class B (non-vtg.) | 2.5 | 1.6 |
Microsoft Corp. | 2.3 | 4.1 |
Vodafone Group PLC sponsored ADR | 2.3 | 2.0 |
Siebel Systems, Inc. | 2.2 | 1.0 |
Cisco Systems, Inc. | 2.1 | 2.6 |
Yahoo!, Inc. | 2.1 | 1.5 |
Telefonaktiebolaget LM Ericsson ADR | 2.1 | 0.0 |
25.3 | ||
Top Five Market Sectors as of May 31, 2004 | ||
% of fund's | % of fund's net assets | |
Information Technology | 29.3 | 27.6 |
Health Care | 19.2 | 13.6 |
Consumer Discretionary | 17.9 | 15.0 |
Industrials | 11.2 | 11.6 |
Financials | 6.8 | 17.2 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2004* | As of November 30, 2003** | ||||||
Stocks 96.9% | Stocks 97.1% | ||||||
Short-Term | Short-Term | ||||||
* Foreign | 20.4% | ** Foreign | 14.3% |
Semiannual Report
Investments May 31, 2004 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 96.9% | |||
Shares | Value (Note 1) (000s) | ||
CONSUMER DISCRETIONARY - 17.9% | |||
Auto Components - 0.2% | |||
Gentex Corp. | 247,300 | $ 9,397 | |
Automobiles - 0.4% | |||
Harley-Davidson, Inc. | 298,500 | 17,161 | |
Hotels, Restaurants & Leisure - 3.9% | |||
Carnival Corp. unit | 1,790,500 | 76,293 | |
Kerzner International Ltd. (a) | 1,005,390 | 42,629 | |
Krispy Kreme Doughnuts, Inc. (a) | 99,999 | 2,147 | |
McDonald's Corp. | 1,270,500 | 33,541 | |
Outback Steakhouse, Inc. | 437,300 | 18,563 | |
173,173 | |||
Internet & Catalog Retail - 0.8% | |||
Amazon.com, Inc. (a) | 758,600 | 36,633 | |
Leisure Equipment & Products - 0.4% | |||
Brunswick Corp. | 440,500 | 17,840 | |
Media - 8.3% | |||
Clear Channel Communications, Inc. | 3,175,000 | 126,048 | |
EchoStar Communications Corp. Class A (a) | 1,137,700 | 36,588 | |
Lamar Advertising Co. Class A (a) | 968,400 | 39,579 | |
Pixar (a) | 305,260 | 20,712 | |
Radio One, Inc. Class D (non-vtg.) (a) | 2,299,600 | 39,737 | |
Viacom, Inc. Class B (non-vtg.) | 3,051,400 | 112,566 | |
375,230 | |||
Specialty Retail - 3.9% | |||
Best Buy Co., Inc. | 716,700 | 37,813 | |
Home Depot, Inc. | 1,177,000 | 42,278 | |
Hot Topic, Inc. (a) | 312,500 | 6,753 | |
Ross Stores, Inc. | 634,300 | 16,612 | |
The Pep Boys - Manny, Moe & Jack | 1,047,859 | 25,662 | |
Weight Watchers International, Inc. (a) | 1,355,800 | 47,250 | |
176,368 | |||
TOTAL CONSUMER DISCRETIONARY | 805,802 | ||
CONSUMER STAPLES - 0.5% | |||
Food & Staples Retailing - 0.3% | |||
Whole Foods Market, Inc. | 135,400 | 11,644 | |
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
CONSUMER STAPLES - continued | |||
Household Products - 0.2% | |||
Colgate-Palmolive Co. | 152,900 | $ 8,746 | |
TOTAL CONSUMER STAPLES | 20,390 | ||
ENERGY - 3.1% | |||
Energy Equipment & Services - 3.1% | |||
BJ Services Co. (a) | 2,178,461 | 91,256 | |
Nabors Industries Ltd. (a) | 1,157,200 | 47,908 | |
139,164 | |||
FINANCIALS - 6.8% | |||
Commercial Banks - 1.3% | |||
Fifth Third Bancorp | 506,600 | 27,503 | |
Wells Fargo & Co. | 541,000 | 31,811 | |
59,314 | |||
Consumer Finance - 1.5% | |||
American Express Co. | 1,367,200 | 69,317 | |
Diversified Financial Services - 1.3% | |||
Citigroup, Inc. | 1,221,900 | 56,733 | |
Insurance - 2.4% | |||
AFLAC, Inc. | 659,400 | 26,772 | |
AMBAC Financial Group, Inc. | 283,600 | 19,611 | |
American International Group, Inc. | 805,200 | 59,021 | |
UICI (a) | 141,800 | 2,819 | |
108,223 | |||
Thrifts & Mortgage Finance - 0.3% | |||
New York Community Bancorp, Inc. | 589,300 | 13,801 | |
TOTAL FINANCIALS | 307,388 | ||
HEALTH CARE - 19.2% | |||
Biotechnology - 3.8% | |||
Angiotech Pharmaceuticals, Inc. (a) | 1,489,500 | 32,953 | |
Biogen Idec, Inc. (a) | 957,700 | 59,521 | |
Genentech, Inc. (a) | 429,800 | 25,706 | |
QLT, Inc. (a) | 1,861,500 | 43,083 | |
SciClone Pharmaceuticals, Inc. (a) | 200,000 | 994 | |
Serologicals Corp. (a) | 629,100 | 10,776 | |
173,033 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
HEALTH CARE - continued | |||
Health Care Equipment & Supplies - 3.4% | |||
Alcon, Inc. | 366,600 | $ 28,763 | |
American Medical Systems Holdings, Inc. (a) | 264,800 | 8,296 | |
Animas Corp. | 123,300 | 2,411 | |
Becton, Dickinson & Co. | 513,800 | 25,854 | |
Cooper Companies, Inc. | 515,684 | 28,466 | |
Fisher Scientific International, Inc. (a) | 246,000 | 14,123 | |
Medtronic, Inc. | 699,900 | 33,525 | |
ResMed, Inc. (a) | 228,800 | 11,623 | |
153,061 | |||
Health Care Providers & Services - 5.1% | |||
Caremark Rx, Inc. (a) | 928,700 | 28,975 | |
Health Management Associates, Inc. Class A | 1,817,300 | 39,962 | |
Henry Schein, Inc. (a) | 570,900 | 38,342 | |
Odyssey Healthcare, Inc. (a) | 641,300 | 10,870 | |
Pediatrix Medical Group, Inc. (a) | 150,300 | 9,935 | |
Tenet Healthcare Corp. (a) | 4,844,400 | 57,745 | |
UnitedHealth Group, Inc. | 669,700 | 43,698 | |
229,527 | |||
Pharmaceuticals - 6.9% | |||
Barr Pharmaceuticals, Inc. (a) | 102,900 | 4,488 | |
Elan Corp. PLC sponsored ADR (a) | 1,593,500 | 37,431 | |
Pfizer, Inc. | 5,268,900 | 186,206 | |
Schering-Plough Corp. | 3,870,600 | 65,413 | |
Wyeth | 469,200 | 16,891 | |
310,429 | |||
TOTAL HEALTH CARE | 866,050 | ||
INDUSTRIALS - 11.2% | |||
Aerospace & Defense - 0.5% | |||
Embraer - Empresa Brasileira de Aeronautica SA sponsored ADR | 815,200 | 20,755 | |
Airlines - 1.2% | |||
AirTran Holdings, Inc. (a) | 1,628,400 | 22,667 | |
Ryanair Holdings PLC: | |||
warrants (UBS Warrant Programme) 2/25/06 (a) | 1,587,379 | 8,415 | |
sponsored ADR (a) | 706,100 | 21,670 | |
52,752 | |||
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
INDUSTRIALS - continued | |||
Commercial Services & Supplies - 3.4% | |||
Herman Miller, Inc. | 731,300 | $ 17,610 | |
HNI Corp. | 380,700 | 15,179 | |
Monster Worldwide, Inc. (a) | 1,264,081 | 31,994 | |
Robert Half International, Inc. | 1,178,200 | 32,966 | |
Sothebys Holdings, Inc. Class A (ltd. vtg.) (a)(c) | 2,770,400 | 41,307 | |
Universal Technical Institute, Inc. | 374,500 | 15,272 | |
154,328 | |||
Construction & Engineering - 0.3% | |||
Fluor Corp. | 352,700 | 14,256 | |
Industrial Conglomerates - 4.0% | |||
3M Co. | 600,700 | 50,795 | |
General Electric Co. | 1,218,300 | 37,913 | |
Tyco International Ltd. | 2,987,700 | 91,991 | |
180,699 | |||
Machinery - 1.8% | |||
Ingersoll-Rand Co. Ltd. Class A | 313,500 | 20,472 | |
Joy Global, Inc. | 1,469,100 | 40,400 | |
SPX Corp. | 209,800 | 9,172 | |
Timken Co. | 471,900 | 10,755 | |
80,799 | |||
TOTAL INDUSTRIALS | 503,589 | ||
INFORMATION TECHNOLOGY - 29.3% | |||
Communications Equipment - 8.8% | |||
Andrew Corp. (a) | 1,003,600 | 19,721 | |
Cisco Systems, Inc. (a) | 4,252,800 | 94,200 | |
Comverse Technology, Inc. (a) | 1,739,620 | 30,739 | |
Emulex Corp. (a) | 1,064,800 | 19,890 | |
QLogic Corp. (a) | 380,938 | 11,695 | |
Research in Motion Ltd. (a) | 1,044,600 | 125,279 | |
Telefonaktiebolaget LM Ericsson ADR (a) | 3,294,000 | 92,067 | |
393,591 | |||
Computers & Peripherals - 2.4% | |||
Creative Technology Ltd. (Singapore) | 11,350 | 114 | |
Diebold, Inc. | 417,600 | 20,517 | |
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Computers & Peripherals - continued | |||
Seagate Technology | 5,567,200 | $ 68,477 | |
UNOVA, Inc. (a) | 1,180,583 | 20,483 | |
109,591 | |||
Electronic Equipment & Instruments - 0.6% | |||
Ingram Micro, Inc. Class A (a) | 1,701,840 | 24,592 | |
Internet Software & Services - 3.4% | |||
Akamai Technologies, Inc. (a) | 1,624,000 | 24,133 | |
SkillSoft PLC sponsored ADR (a) | 2,562,600 | 25,626 | |
VeriSign, Inc. (a) | 554,227 | 10,054 | |
Yahoo!, Inc. (a) | 3,025,700 | 92,768 | |
152,581 | |||
IT Services - 5.1% | |||
Affiliated Computer Services, Inc. Class A (a) | 743,600 | 37,046 | |
Ceridian Corp. (a) | 861,300 | 19,293 | |
DST Systems, Inc. (a) | 213,500 | 10,257 | |
First Data Corp. | 2,071,800 | 89,688 | |
Infosys Technologies Ltd. | 351,021 | 39,111 | |
Paychex, Inc. | 510,988 | 19,167 | |
Satyam Computer Services Ltd. | 2,494,700 | 16,768 | |
231,330 | |||
Semiconductors & Semiconductor Equipment - 3.0% | |||
Analog Devices, Inc. | 1,221,000 | 60,012 | |
Sigmatel, Inc. | 1,071,800 | 27,181 | |
Silicon Laboratories, Inc. (a) | 590,300 | 30,808 | |
Texas Instruments, Inc. | 709,500 | 18,525 | |
136,526 | |||
Software - 6.0% | |||
Amdocs Ltd. (a) | 746,600 | 18,426 | |
Microsoft Corp. | 3,895,800 | 102,654 | |
Siebel Systems, Inc. (a) | 9,085,300 | 98,121 | |
Synopsys, Inc. (a) | 1,715,200 | 50,770 | |
269,971 | |||
TOTAL INFORMATION TECHNOLOGY | 1,318,182 | ||
MATERIALS - 4.2% | |||
Chemicals - 2.0% | |||
Dow Chemical Co. | 1,028,900 | 41,053 | |
Common Stocks - continued | |||
Shares | Value (Note 1) (000s) | ||
MATERIALS - continued | |||
Chemicals - continued | |||
Nitto Denko Corp. | 440,500 | $ 23,889 | |
Spartech Corp. | 1,164,907 | 26,653 | |
91,595 | |||
Metals & Mining - 2.2% | |||
Arch Coal, Inc. | 448,000 | 14,560 | |
BHP Billiton Ltd. sponsored ADR | 1,916,300 | 33,056 | |
Companhia Vale do Rio Doce sponsored ADR | 959,300 | 48,637 | |
96,253 | |||
TOTAL MATERIALS | 187,848 | ||
TELECOMMUNICATION SERVICES - 4.7% | |||
Wireless Telecommunication Services - 4.7% | |||
American Tower Corp. Class A (a) | 1,440,000 | 19,915 | |
Crown Castle International Corp. (a) | 6,046,669 | 89,067 | |
Vodafone Group PLC sponsored ADR | 4,275,000 | 101,574 | |
210,556 | |||
TOTAL COMMON STOCKS (Cost $4,002,922) | 4,358,969 | ||
Convertible Preferred Stocks - 0.0% | |||
INFORMATION TECHNOLOGY - 0.0% | |||
Communications Equipment - 0.0% | |||
Chorum Technologies, Inc. Series E (a)(d) | 41,400 | 75 | |
Procket Networks, Inc. Series C (d) | 1,721,344 | 430 | |
505 | |||
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $17,714) | 505 | ||
Money Market Funds - 3.8% | |||
Shares | Value (Note 1) (000s) | ||
Fidelity Cash Central Fund, 1.09% (b) | 116,986,060 | $ 116,986 | |
Fidelity Securities Lending Cash Central Fund, 1.08% (b) | 55,312,650 | 55,313 | |
TOTAL MONEY MARKET FUNDS (Cost $172,299) | 172,299 |
TOTAL INVESTMENT PORTFOLIO - 100.7% (Cost $4,192,935) | 4,531,773 | |
NET OTHER ASSETS - (0.7)% | (30,858) | |
NET ASSETS - 100% | $ 4,500,915 |
Legend |
(a) Non-income producing |
(b) 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 listing of the fund's holdings as of its most recent fiscal year end is available upon request. |
(c) Affiliated company |
(d) 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 $505,000 or 0.0% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
Chorum Technologies, Inc. Series E | 9/19/00 | $ 714 |
Procket Networks, Inc. Series C | 2/9/01 | $ 17,000 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 79.6% |
Canada | 4.5% |
United Kingdom | 2.7% |
Ireland | 2.1% |
Sweden | 2.1% |
Panama | 1.7% |
Brazil | 1.6% |
Cayman Islands | 1.5% |
India | 1.3% |
Bahamas (Nassau) | 1.0% |
Others (individually less than 1%) | 1.9% |
100.0% |
Purchases and sales of securities, other than short-term securities, aggregated $2,994,119,000 and $3,361,017,000, respectively. |
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 $269,000 for the period. |
The fund participated in the interfund lending program as a borrower. The average daily loan balance during the period for which loans were outstanding amounted to $10,256,000. The weighted average interest rate was 1.13%. At period end there were no interfund loans outstanding. |
Income Tax Information |
At November 30, 2003, the fund had a capital loss carryforward of approximately $2,000,656,000 of which $1,455,368,000 and $545,288,000 will expire on November 30, 2009 and 2010, respectively. |
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 amount) | May 31, 2004 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $53,991) (cost $4,192,935) - See accompanying schedule | $ 4,531,773 | |
Receivable for investments sold | 28,137 | |
Receivable for fund shares sold | 1,310 | |
Dividends receivable | 5,717 | |
Interest receivable | 159 | |
Prepaid expenses | 14 | |
Other affiliated receivables | 23 | |
Other receivables | 1,151 | |
Total assets | 4,568,284 | |
Liabilities | ||
Payable for investments purchased | $ 3,564 | |
Payable for fund shares redeemed | 5,631 | |
Accrued management fee | 1,895 | |
Other affiliated payables | 896 | |
Other payables and accrued expenses | 70 | |
Collateral on securities loaned, at value | 55,313 | |
Total liabilities | 67,369 | |
Net Assets | $ 4,500,915 | |
Net Assets consist of: | ||
Paid in capital | $ 5,891,788 | |
Distributions in excess of net investment income | (2,319) | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,727,869) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 339,315 | |
Net Assets, for 277,032 shares outstanding | $ 4,500,915 | |
Net Asset Value, offering price and redemption price per share ($4,500,915 ÷ 277,032 shares) | $ 16.25 |
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, 2004 (Unaudited) | |
Investment Income | ||
Dividends | $ 14,681 | |
Interest | 417 | |
Security lending | 460 | |
Total income | 15,558 | |
Expenses | ||
Management fee | $ 13,421 | |
Performance adjustment | (2,785) | |
Transfer agent fees | 4,183 | |
Accounting and security lending fees | 491 | |
Non-interested trustees' compensation | 16 | |
Appreciation in deferred trustee compensation account | 13 | |
Custodian fees and expenses | 114 | |
Registration fees | 26 | |
Audit | 45 | |
Legal | 12 | |
Interest | 2 | |
Miscellaneous | 31 | |
Total expenses before reductions | 15,569 | |
Expense reductions | (1,227) | 14,342 |
Net investment income (loss) | 1,216 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities | 276,956 | |
Foreign currency transactions | 686 | |
Total net realized gain (loss) | 277,642 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (10,158) | |
Assets and liabilities in foreign currencies | 58 | |
Total change in net unrealized appreciation (depreciation) | (10,100) | |
Net gain (loss) | 267,542 | |
Net increase (decrease) in net assets resulting from operations | $ 268,758 |
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 | Year ended |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 1,216 | $ 43,741 |
Net realized gain (loss) | 277,642 | 608,783 |
Change in net unrealized appreciation (depreciation) | (10,100) | (101,011) |
Net increase (decrease) in net assets resulting | 268,758 | 551,513 |
Distributions to shareholders from net investment income | (29,382) | (67,226) |
Share transactions | 164,394 | 409,847 |
Reinvestment of distributions | 29,180 | 66,756 |
Cost of shares redeemed | (523,177) | (812,268) |
Net increase (decrease) in net assets resulting from share transactions | (329,603) | (335,665) |
Total increase (decrease) in net assets | (90,227) | 148,622 |
Net Assets | ||
Beginning of period | 4,591,142 | 4,442,520 |
End of period (including distributions in excess of net investment income of $2,319 and undistributed net investment income of $25,847, respectively) | $ 4,500,915 | $ 4,591,142 |
Other Information Shares | ||
Sold | 10,455 | 29,449 |
Issued in reinvestment of distributions | 1,867 | 4,989 |
Redeemed | (32,439) | (58,519) |
Net increase (decrease) | (20,117) | (24,081) |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights
Six months ended | Years ended November 30, | |||||
(Unaudited) | 2003 | 2002 | 2001 | 2000 | 1999 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $ 15.45 | $ 13.83 | $ 15.84 | $ 24.46 | $ 23.82 | $ 21.40 |
Income from Investment Operations | ||||||
Net investment income (loss) D | -F | .14 | .21 | .17 | .05 | .05 |
Net realized and unrealized gain (loss) | .90 | 1.69 | (2.02) | (4.60) | 3.83 | 5.25 |
Total from investment operations | .90 | 1.83 | (1.81) | (4.43) | 3.88 | 5.30 |
Distributions from net investment income | (.10) | (.21) | (.20) | (.08) | (.05) | (.14) |
Distributions from net realized gain | - | - | - | (4.11) | (3.19) | (2.74) |
Total distributions | (.10) | (.21) | (.20) | (4.19) | (3.24) | (2.88) |
Net asset value, end of period | $ 16.25 | $ 15.45 | $ 13.83 | $ 15.84 | $ 24.46 | $ 23.82 |
Total Return B,C | 5.85% | 13.47% | (11.57)% | (22.86)% | 17.02% | 27.93% |
Ratios to Average Net Assets E | ||||||
Expenses before expense reductions | .67%A | .62% | 1.07% | .97% | .88% | .63% |
Expenses net of voluntary waivers, if any | .67%A | .62% | 1.07% | .97% | .88% | .63% |
Expenses net of all reductions | .62%A | .55% | .97% | .92% | .85% | .58% |
Net investment income (loss) | .05%A | 1.00% | 1.41% | .95% | .19% | .25% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $ 4,501 | $ 4,591 | $ 4,443 | $ 5,483 | $ 7,921 | $ 5,912 |
Portfolio turnover rate | 133%A | 166% | 191% | 187% | 249% | 310% |
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 Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expenses net of any voluntary 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 fund.
F Amount represents less than $.01 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, 2004 (Unaudited)
(Amounts in thousands except ratios)
1. Significant Accounting Policies.
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 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. The following summarizes the significant accounting policies of the fund:
Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
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.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
1. Significant Accounting Policies - continued
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 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 nontaxable distributions or capital gain distributions for income tax purposes. Interest income is 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 the funds in the trust.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), non-interested Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the fund or are invested in a cross-section of other Fidelity funds, and are marked-to-market. Deferred amounts remain in the fund until distributed in accordance with the Plan.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each 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 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, non-taxable dividends, capital loss carryforwards and losses deferred due to wash sales.
Semiannual Report
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investments including unrealized appreciation (depreciation) as of period end was as follows:
Unrealized appreciation | $ 508,973 | | |
Unrealized depreciation | (173,563) | |
Net unrealized appreciation (depreciation) | $ 335,410 | |
Cost for federal income tax purposes | $ 4,196,363 |
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
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.
3. Purchases and Sales of Investments.
Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.
4. 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 .28% during the period. The group fee rate is based upon the average net assets of all the mutual funds
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
4. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
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 fund's relative investment performance as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .46% of the fund's average net assets.
Transfer Agent Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annualized rate of .18% of average net assets.
Accounting and Security Lending Fees. FSC 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.
Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $410 for the period.
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 are shown under the caption "Other Information" at the end of the fund's Schedule of Investments.
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 funds. Information regarding the fund's participation in the program is included under the caption "Other Information" at the end of the fund's Schedule of Investments.
Semiannual Report
5. Committed Line of Credit.
The fund participates with other funds managed by FMR in a $4.2 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. During the period, there were no borrowings on this line of credit.
6. Security Lending.
The fund lends portfolio securities from time to time in order to earn additional income. 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. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.
7. 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 $1,218 for the period. In addition, through arrangements with the fund's transfer agent, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's transfer agent expenses by $9.
8. Transactions with Affiliated Companies.
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Companies which are affiliates of the fund at period-end are noted in the fund's Schedule of Investments. Transactions during the period with companies which are or were affiliates are as follows:
Affiliate | Value, | Purchases | Sales | Dividend | Value, |
Sothebys Holdings, Inc. Class A (ltd. vtg.) | $ 22,909 | $ 10,556 | $ - | $ - | $ 41,307 |
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
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)Fidelity's Web Site
www.fidelity.com
* 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
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Management & Research
(Far East) Inc.
Fidelity International Investment
Advisors
Fidelity Investments Japan Limited
Fidelity International Investment
Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Shareholder
Servicing Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Fidelity's Growth Funds
Aggressive Growth Fund
Blue Chip Growth Fund
Blue Chip Value Fund
Capital Appreciation Fund
Contrafund®
Disciplined Equity Fund
Discovery Fund
Dividend Growth Fund
Export and Multinational Fund
Fidelity Fifty®
Fidelity Value Discovery Fund
Focused Stock Fund
Growth Company Fund
Independence Fund
Large Cap Stock Fund
Leveraged Company Stock Fund
Low-Priced Stock Fund
Magellan® Fund
Mid-Cap Stock Fund
New Millennium Fund®
OTC Portfolio
Small Cap Independence Fund
Small Cap Stock Fund
Stock Selector
Structured Large Cap Growth Fund
Structured Large Cap Value Fund
Structured Mid Cap Growth Fund
Structured Mid Cap Value Fund
Tax Managed Stock Fund
Trend Fund
Value Fund
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®) (automated graphic) 1-800-544-5555
(automated graphic) Automated line for quickest service
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
FRE-SANN-0704
1.479485.106
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. Schedule of Investments
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 9. 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 10. 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 Trust's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.
Item 11. 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/Christine Reynolds |
Christine Reynolds | |
President and Treasurer | |
Date: | July 22, 2004 |
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/Christine Reynolds |
Christine Reynolds | |
President and Treasurer | |
Date: | July 22, 2004 |
By: | /s/Timothy F. Hayes |
Timothy F. Hayes | |
Chief Financial Officer | |
Date: | July 22, 2004 |