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, 2007 |
Item 1. Reports to Stockholders
Fidelity®
Convertible Securities
Fund
Semiannual Report
May 31, 2007
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Stocks are currently on pace to register their fifth-straight year of positive returns, although gains could be trimmed if the U.S. economy continues to slow. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2006 to May 31, 2007).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Semiannual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Beginning | Ending | Expenses Paid | |
Actual | $ 1,000.00 | $ 1,157.40 | $ 4.30 |
Hypothetical (5% return per year before expenses) | $ 1,000.00 | $ 1,020.94 | $ 4.03 |
* Expenses are equal to the Fund's annualized expense ratio of .80%; multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes
Top Ten Investments as of May 31, 2007 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
El Paso Corp. 4.99% | 7.8 | 8.5 |
Celanese Corp. 4.25% | 5.0 | 4.2 |
Freeport-McMoRan Copper & Gold, Inc. 6.75% | 3.5 | 0.0 |
Halliburton Co. 3.125% 7/15/23 | 3.1 | 3.8 |
Charter Communications, Inc. 5.875% 11/16/09 | 2.7 | 2.6 |
Valero Energy Corp. | 2.4 | 2.2 |
Teekay Shipping Corp. | 2.1 | 1.8 |
Celanese Corp. Class A | 1.9 | 2.0 |
Itron, Inc. 2.5% 8/1/26 | 1.7 | 0.3 |
Advanced Micro Devices, Inc. 6% 5/1/15 | 1.7 | 0.0 |
31.9 | ||
Top Five Market Sectors as of May 31, 2007 | ||
% of fund's | % of fund's net assets | |
Energy | 26.7 | 27.4 |
Information Technology | 19.9 | 20.0 |
Materials | 13.5 | 9.7 |
Consumer Discretionary | 11.1 | 12.1 |
Health Care | 8.0 | 6.1 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2007* | As of November 30, 2006** | ||||||
![]() | Convertible | ![]() | Convertible | ||||
![]() | Stocks 15.0% | ![]() | Stocks 14.9% | ||||
![]() | Nonconvertible | ![]() | Nonconvertible | ||||
![]() | Short-Term | ![]() | Short-Term | ||||
* Foreign investments | 5.5% | ** Foreign investments | 10.5% |
Semiannual Report
Investments May 31, 2007 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 52.1% | ||||
Principal Amount (000s) | Value (000s) | |||
Convertible Bonds - 51.8% | ||||
CONSUMER DISCRETIONARY - 5.9% | ||||
Automobiles - 0.2% | ||||
Ford Motor Co. 4.25% 12/15/36 | $ 4,300 | $ 4,957 | ||
Hotels, Restaurants & Leisure - 1.8% | ||||
Six Flags, Inc. 4.5% 5/15/15 | 27,700 | 32,755 | ||
WMS Industries, Inc.: | ||||
2.75% 7/15/10 (g) | 4,000 | 8,770 | ||
2.75% 7/15/10 | 2,800 | 6,139 | ||
47,664 | ||||
Media - 3.2% | ||||
Charter Communications, Inc.: | ||||
5.875% 11/16/09 (g) | 1,127 | 2,006 | ||
5.875% 11/16/09 | 39,074 | 69,552 | ||
Lamar Advertising Co. 2.875% 12/31/10 | 8,200 | 11,727 | ||
83,285 | ||||
Specialty Retail - 0.7% | ||||
Asbury Automotive Group, Inc. 3% 9/15/12 (g) | 3,000 | 2,920 | ||
Eddie Bauer Holdings, Inc. 5.25% 4/1/14 (g) | 4,000 | 5,025 | ||
United Auto Group, Inc. 3.5% 4/1/26 (g) | 10,000 | 11,135 | ||
19,080 | ||||
TOTAL CONSUMER DISCRETIONARY | 154,986 | |||
CONSUMER STAPLES - 0.4% | ||||
Food & Staples Retailing - 0.4% | ||||
Nash-Finch Co. 1.6314% 3/15/35 (e) | 18,480 | 9,937 | ||
ENERGY - 8.1% | ||||
Energy Equipment & Services - 4.5% | ||||
Grey Wolf, Inc. 5.2994% 4/1/24 (h) | 3,880 | 5,442 | ||
Halliburton Co. 3.125% 7/15/23 | 42,400 | 81,779 | ||
Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (e)(g) | 5,000 | 5,244 | ||
Maverick Tube Corp.: | ||||
1.875% 11/15/25 (g) | 3,000 | 3,633 | ||
1.875% 11/15/25 | 7,000 | 8,477 | ||
Oil States International, Inc. 2.375% 7/1/25 (g) | 4,500 | 6,334 | ||
SESI LLC 1.5% 12/15/26 (e)(g) | 7,000 | 7,567 | ||
118,476 | ||||
Corporate Bonds - continued | ||||
Principal Amount (000s) | Value (000s) | |||
Convertible Bonds - continued | ||||
ENERGY - continued | ||||
Oil, Gas & Consumable Fuels - 3.6% | ||||
Chesapeake Energy Corp. 2.75% 11/15/35 | $ 2,860 | $ 3,141 | ||
McMoRan Exploration Co.: | ||||
6% 7/2/08 (g) | 1,000 | 1,189 | ||
6% 7/2/08 | 12,900 | 15,341 | ||
Peabody Energy Corp. 4.75% 12/15/66 | 31,000 | 35,185 | ||
Quicksilver Resources, Inc. 1.875% 11/1/24 (g) | 24,500 | 38,971 | ||
93,827 | ||||
TOTAL ENERGY | 212,303 | |||
FINANCIALS - 0.5% | ||||
Real Estate Investment Trusts - 0.5% | ||||
Ventas, Inc. 3.875% 11/15/11 (g) | 12,000 | 12,810 | ||
HEALTH CARE - 6.9% | ||||
Biotechnology - 1.6% | ||||
Amgen, Inc.: | ||||
0.375% 2/1/13 (g) | 25,000 | 22,470 | ||
0.375% 2/1/13 | 18,000 | 16,200 | ||
BioMarin Pharmaceutical, Inc. 2.5% 3/29/13 | 2,510 | 3,204 | ||
41,874 | ||||
Health Care Equipment & Supplies - 2.4% | ||||
Bausch & Lomb, Inc. 5.9006% 8/1/23 (h) | 10,000 | 12,740 | ||
Beckman Coulter, Inc. 2.5% 12/15/36 (g) | 18,000 | 19,166 | ||
Inverness Medical Innovations, Inc. 3% 5/15/16 (g) | 21,000 | 22,890 | ||
Medtronic, Inc. 1.625% 4/15/13 | 8,000 | 8,523 | ||
63,319 | ||||
Life Sciences Tools & Services - 2.6% | ||||
Charles River Laboratories International, Inc. 2.25% 6/15/13 (g) | 4,000 | 4,957 | ||
Fisher Scientific International, Inc.: | ||||
2.5% 10/1/23 (g) | 15,600 | 36,677 | ||
2.5% 10/1/23 | 7,400 | 17,398 | ||
Nektar Therapeutics 3.25% 9/28/12 | 9,000 | 8,236 | ||
67,268 | ||||
Corporate Bonds - continued | ||||
Principal Amount (000s) | Value (000s) | |||
Convertible Bonds - continued | ||||
HEALTH CARE - continued | ||||
Pharmaceuticals - 0.3% | ||||
Alpharma, Inc. 2.125% 3/15/27 | $ 9,000 | $ 8,900 | ||
TOTAL HEALTH CARE | 181,361 | |||
INDUSTRIALS - 6.0% | ||||
Aerospace & Defense - 0.8% | ||||
AAR Corp. 1.75% 2/1/26 (g) | 2,500 | 3,154 | ||
Alliant Techsystems, Inc. 3% 8/15/24 | 12,400 | 17,727 | ||
20,881 | ||||
Airlines - 1.4% | ||||
AirTran Holdings, Inc. 7% 7/1/23 | 10,000 | 13,482 | ||
UAL Corp. 4.5% 6/30/21 (g) | 10,500 | 13,927 | ||
US Airways Group, Inc. 7% 9/30/20 (g) | 4,810 | 8,622 | ||
36,031 | ||||
Commercial Services & Supplies - 0.6% | ||||
FTI Consulting, Inc. 3.75% 7/15/12 (g) | 11,995 | 16,705 | ||
Construction & Engineering - 1.8% | ||||
Fluor Corp. 1.5% 2/15/24 | 18,700 | 35,058 | ||
Quanta Services, Inc. 3.75% 4/30/26 (g) | 7,000 | 10,439 | ||
45,497 | ||||
Electrical Equipment - 0.6% | ||||
C&D Technologies, Inc. 5.25% 11/1/25 (g) | 4,400 | 4,444 | ||
GrafTech International Ltd. 1.625% 1/15/24 | 11,280 | 12,041 | ||
16,485 | ||||
Machinery - 0.8% | ||||
Greenbrier Companies, Inc.: | ||||
2.375% 5/15/26 (g) | 5,500 | 5,063 | ||
2.375% 5/15/26 | 8,000 | 7,365 | ||
Trinity Industries, Inc. 3.875% 6/1/36 | 7,000 | 8,190 | ||
20,618 | ||||
TOTAL INDUSTRIALS | 156,217 | |||
INFORMATION TECHNOLOGY - 18.5% | ||||
Communications Equipment - 2.0% | ||||
AudioCodes Ltd. 2% 11/9/24 (g) | 5,000 | 4,474 | ||
Ciena Corp. 0.25% 5/1/13 | 2,650 | 2,684 | ||
Corporate Bonds - continued | ||||
Principal Amount (000s) | Value (000s) | |||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Communications Equipment - continued | ||||
Finisar Corp. 2.5% 10/15/10 | $ 15,760 | $ 19,858 | ||
JDS Uniphase Corp. 1% 5/15/26 (g) | 15,000 | 12,029 | ||
L-3 Communications Corp. 3% 8/1/35 | 3,000 | 3,341 | ||
Symmetricom, Inc. 3.25% 6/15/25 | 11,000 | 10,693 | ||
53,079 | ||||
Computers & Peripherals - 2.2% | ||||
EMC Corp. 1.75% 12/1/13 (g) | 17,000 | 20,719 | ||
Hutchinson Technology, Inc. 3.25% 1/15/26 | 12,000 | 10,295 | ||
Maxtor Corp. 2.375% 8/15/12 | 7,500 | 9,934 | ||
SanDisk Corp. 1% 5/15/13 | 18,000 | 15,197 | ||
56,145 | ||||
Electronic Equipment & Instruments - 4.3% | ||||
Anixter International, Inc. 1% 2/15/13 (g) | 4,540 | 5,800 | ||
Coherent, Inc. 2.75% 3/1/11 (g) | 1,890 | 1,983 | ||
Flextronics International Ltd. 1% 8/1/10 | 30,580 | 29,430 | ||
Itron, Inc. 2.5% 8/1/26 | 37,250 | 45,475 | ||
Merix Corp. 4% 5/15/13 (g) | 11,250 | 9,752 | ||
Newport Corp. 2.5% 2/15/12 (g) | 3,750 | 3,513 | ||
Solectron Corp. 0.5% 2/15/34 | 9,000 | 7,474 | ||
Vishay Intertechnology, Inc. 3.625% 8/1/23 | 9,000 | 9,447 | ||
112,874 | ||||
IT Services - 2.0% | ||||
BearingPoint, Inc. 3.1% 12/15/24 (g) | 8,000 | 7,639 | ||
DST Systems, Inc.: | ||||
Series A, 4.125% 8/15/23 (g) | 8,300 | 14,799 | ||
4.125% 8/15/23 | 16,800 | 29,955 | ||
52,393 | ||||
Semiconductors & Semiconductor Equipment - 6.8% | ||||
Advanced Micro Devices, Inc. 6% 5/1/15 (g) | 45,000 | 44,325 | ||
Amkor Technology, Inc. 2.5% 5/15/11 | 5,000 | 5,952 | ||
Conexant Systems, Inc. 4% 3/1/26 | 7,000 | 6,070 | ||
Credence Systems Corp. 3.5% 5/15/10 (g) | 8,000 | 7,340 | ||
EMCORE Corp. 5.5% 5/15/11 | 7,920 | 8,326 | ||
Intel Corp.: | ||||
2.95% 12/15/35 (g) | 10,000 | 9,246 | ||
2.95% 12/15/35 | 38,000 | 35,136 | ||
Corporate Bonds - continued | ||||
Principal Amount (000s) | Value (000s) | |||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Semiconductors & Semiconductor Equipment - continued | ||||
ON Semiconductor Corp.: | ||||
0% 4/15/24 | $ 29,500 | $ 35,890 | ||
1.875% 12/15/25 (g) | 3,750 | 6,277 | ||
Photronics, Inc. 2.25% 4/15/08 | 7,000 | 7,375 | ||
PMC-Sierra, Inc. 2.25% 10/15/25 | 10,000 | 11,360 | ||
177,297 | ||||
Software - 1.2% | ||||
Borland Software Corp. 2.75% 2/15/12 (g) | 13,000 | 14,771 | ||
Cadence Design Systems, Inc. 1.5% 12/15/13 (g) | 5,500 | 6,446 | ||
Symantec Corp. 1% 6/15/13 (g) | 9,000 | 10,512 | ||
31,729 | ||||
TOTAL INFORMATION TECHNOLOGY | 483,517 | |||
MATERIALS - 0.3% | ||||
Chemicals - 0.1% | ||||
Pioneer Companies, Inc. 2.75% 3/1/27 (g) | 2,080 | 2,486 | ||
Metals & Mining - 0.2% | ||||
Coeur d'Alene Mines Corp. 1.25% 1/15/24 | 4,600 | 4,134 | ||
TOTAL MATERIALS | 6,620 | |||
TELECOMMUNICATION SERVICES - 4.4% | ||||
Diversified Telecommunication Services - 0.7% | ||||
Level 3 Communications, Inc. 3.5% 6/15/12 | 8,000 | 10,128 | ||
Time Warner Telecom, Inc. 2.375% 4/1/26 | 6,000 | 7,395 | ||
17,523 | ||||
Wireless Telecommunication Services - 3.7% | ||||
American Tower Corp.: | ||||
3.25% 8/1/10 (g) | 9,700 | 34,513 | ||
3.25% 8/1/10 | 3,935 | 14,001 | ||
ICO North America, Inc. 7.5% 8/15/09 (i) | 7,745 | 7,745 | ||
Corporate Bonds - continued | ||||
Principal Amount (000s) | Value (000s) | |||
Convertible Bonds - continued | ||||
TELECOMMUNICATION SERVICES - continued | ||||
Wireless Telecommunication Services - continued | ||||
NII Holdings, Inc.: | ||||
2.875% 2/1/34 (g) | $ 2,000 | $ 6,220 | ||
2.875% 2/1/34 | 11,500 | 35,766 | ||
98,245 | ||||
TOTAL TELECOMMUNICATION SERVICES | 115,768 | |||
UTILITIES - 0.8% | ||||
Multi-Utilities - 0.8% | ||||
CMS Energy Corp. 3.375% 7/15/23 | 11,800 | 20,543 | ||
TOTAL CONVERTIBLE BONDS | 1,354,062 | |||
Nonconvertible Bonds - 0.3% | ||||
CONSUMER DISCRETIONARY - 0.3% | ||||
Auto Components - 0.3% | ||||
IdleAire Technologies Corp. 0% 12/15/12 unit (d)(g) | 12,510 | 8,569 | ||
TOTAL CORPORATE BONDS (Cost $1,114,187) | 1,362,631 |
Common Stocks - 15.0% | |||
Shares | |||
CONSUMER DISCRETIONARY - 1.4% | |||
Diversified Consumer Services - 0.8% | |||
Coinmach Service Corp. Class A | 359,400 | 3,953 | |
Service Corp. International | 1,143,000 | 15,979 | |
19,932 | |||
Media - 0.6% | |||
Charter Communications, Inc. Class A (a) | 3,793,900 | 15,214 | |
TOTAL CONSUMER DISCRETIONARY | 35,146 | ||
ENERGY - 6.2% | |||
Energy Equipment & Services - 1.2% | |||
National Oilwell Varco, Inc. (a) | 320,900 | 30,309 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - 5.0% | |||
Sasol Ltd. sponsored ADR | 412,600 | $ 15,006 | |
Teekay Shipping Corp. | 895,625 | 54,508 | |
Valero Energy Corp. | 839,072 | 62,612 | |
132,126 | |||
TOTAL ENERGY | 162,435 | ||
HEALTH CARE - 1.1% | |||
Pharmaceuticals - 1.1% | |||
Roche Holding AG ADR (g) | 320,340 | 29,423 | |
INDUSTRIALS - 1.0% | |||
Building Products - 0.8% | |||
American Standard Companies, Inc. | 353,600 | 21,138 | |
Machinery - 0.2% | |||
FreightCar America, Inc. (f) | 76,700 | 3,791 | |
TOTAL INDUSTRIALS | 24,929 | ||
INFORMATION TECHNOLOGY - 1.4% | |||
IT Services - 0.0% | |||
Global Cash Access Holdings, Inc. (a) | 71,600 | 1,164 | |
Semiconductors & Semiconductor Equipment - 1.4% | |||
Amkor Technology, Inc. (a) | 859,200 | 12,218 | |
ON Semiconductor Corp. (a) | 2,169,500 | 23,300 | |
35,518 | |||
TOTAL INFORMATION TECHNOLOGY | 36,682 | ||
MATERIALS - 3.3% | |||
Chemicals - 2.4% | |||
Celanese Corp. Class A | 1,413,500 | 51,437 | |
Monsanto Co. | 200,000 | 12,320 | |
63,757 | |||
Paper & Forest Products - 0.9% | |||
Aracruz Celulose SA (PN-B) sponsored ADR (non-vtg.) | 200,000 | 12,034 | |
Weyerhaeuser Co. | 141,800 | 11,622 | |
23,656 | |||
TOTAL MATERIALS | 87,413 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
TELECOMMUNICATION SERVICES - 0.3% | |||
Diversified Telecommunication Services - 0.3% | |||
Level 3 Communications, Inc. (a) | 1,149,096 | $ 6,688 | |
UTILITIES - 0.3% | |||
Independent Power Producers & Energy Traders - 0.3% | |||
Mirant Corp. (a) | 190,060 | 8,819 | |
TOTAL COMMON STOCKS (Cost $220,124) | 391,535 | ||
Convertible Preferred Stocks - 27.2% | |||
CONSUMER DISCRETIONARY - 3.5% | |||
Automobiles - 3.1% | |||
Ford Motor Co. Capital Trust II 6.50% | 650,000 | 23,992 | |
General Motors Corp.: | |||
Series B, 5.25% | 1,750,000 | 36,803 | |
Series C, 6.25% | 901,500 | 20,707 | |
81,502 | |||
Media - 0.4% | |||
Interpublic Group of Companies, Inc. Series B, 5.25% (g) | 10,000 | 11,025 | |
TOTAL CONSUMER DISCRETIONARY | 92,527 | ||
CONSUMER STAPLES - 0.5% | |||
Food & Staples Retailing - 0.5% | |||
Rite Aid Corp. 5.50% | 370,000 | 11,825 | |
ENERGY - 12.4% | |||
Energy Equipment & Services - 0.4% | |||
Bristow Group, Inc. 5.50% | 160,000 | 10,100 | |
Oil, Gas & Consumable Fuels - 12.0% | |||
Chesapeake Energy Corp.: | |||
4.50% | 170,000 | 17,255 | |
5.00% (a)(g) | 55,000 | 8,119 | |
5.00% (a) | 275,100 | 40,612 | |
5.00% (g) | 149,600 | 16,815 | |
El Paso Corp. 4.99% | 139,770 | 203,052 | |
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - continued | |||
EXCO Resources, Inc. Series A1: | |||
7.00% (i) | 488 | $ 5,212 | |
11.00% (i) | 2,012 | 22,136 | |
313,201 | |||
TOTAL ENERGY | 323,301 | ||
INDUSTRIALS - 0.5% | |||
Commercial Services & Supplies - 0.5% | |||
Allied Waste Industries, Inc. Series D, 6.25% | 40,000 | 14,067 | |
MATERIALS - 9.9% | |||
Chemicals - 5.2% | |||
Celanese Corp. 4.25% | 2,767,500 | 131,069 | |
Huntsman Corp. 5.00% | 125,000 | 5,295 | |
136,364 | |||
Metals & Mining - 4.7% | |||
Freeport-McMoRan Copper & Gold, Inc.: | |||
5.50% | 18,400 | 32,030 | |
6.75% | 731,500 | 90,039 | |
122,069 | |||
TOTAL MATERIALS | 258,433 | ||
UTILITIES - 0.4% | |||
Independent Power Producers & Energy Traders - 0.4% | |||
NRG Energy, Inc. Series A, 5.75% | 26,800 | 10,263 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $555,205) | 710,416 | ||
Money Market Funds - 5.9% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 5.33% (b) | 153,047,307 | $ 153,047 | |
Fidelity Securities Lending Cash Central Fund, 5.36% (b)(c) | 1,776,250 | 1,776 | |
TOTAL MONEY MARKET FUNDS (Cost $154,823) | 154,823 | ||
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $2,044,339) | 2,619,405 | ||
NET OTHER ASSETS - (0.2)% | (5,917) | ||
NET ASSETS - 100% | $ 2,613,488 |
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security initially issued in zero coupon form which converts to coupon form at a specified rate and date. The rate shown is the rate at period end. |
(e) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(f) Security or a portion of the security is on loan at period end. |
(g) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $570,913,000 or 21.8% of net assets. |
(h) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
(i) 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 $35,093,000 or 1.3% of net assets. |
Additional information on each holding is as follows: |
Security | Acquisition Date | Acquisition Cost (000s) |
EXCO Resources, Inc. Series A1, 7.00% | 3/28/07 | $ 4,880 |
EXCO Resources, Inc. Series A1, 11.00% | 3/28/07 | $ 20,120 |
ICO North America, Inc. 7.5% 8/15/09 | 8/12/05 - 2/14/07 | $ 7,809 |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 1,107 |
Fidelity Securities Lending Cash Central Fund | 169 |
Total | $ 1,276 |
Other Information |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 7.5% |
BBB | 2.2% |
BB | 10.9% |
B | 10.6% |
CCC,CC,C | 6.7% |
Not Rated | 14.2% |
Equities | 42.2% |
Short-Term Investments and Net Other Assets | 5.7% |
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. |
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, 2007 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $1,730) - See accompanying schedule: Unaffiliated issuers (cost $1,889,516) | $ 2,464,582 | |
Fidelity Central Funds (cost $154,823) | 154,823 | |
Total Investments (cost $2,044,339) | $ 2,619,405 | |
Receivable for investments sold | 10,147 | |
Receivable for fund shares sold | 5,311 | |
Dividends receivable | 792 | |
Interest receivable | 7,869 | |
Distributions receivable from Fidelity Central Funds | 295 | |
Prepaid expenses | 6 | |
Other receivables | 12 | |
Total assets | 2,643,837 | |
Liabilities | ||
Payable for investments purchased | $ 25,630 | |
Payable for fund shares redeemed | 1,278 | |
Accrued management fee | 1,202 | |
Other affiliated payables | 417 | |
Other payables and accrued expenses | 46 | |
Collateral on securities loaned, at value | 1,776 | |
Total liabilities | 30,349 | |
Net Assets | $ 2,613,488 | |
Net Assets consist of: | ||
Paid in capital | $ 1,966,436 | |
Undistributed net investment income | 6,481 | |
Accumulated undistributed net realized gain (loss) on investments | 65,505 | |
Net unrealized appreciation (depreciation) on investments | 575,066 | |
Net Assets, for 90,451 shares outstanding | $ 2,613,488 | |
Net Asset Value, offering price and redemption price per share ($2,613,488 ÷ 90,451 shares) | $ 28.89 |
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, 2007 (Unaudited) | |
Investment Income | ||
Dividends | $ 13,581 | |
Interest | 16,418 | |
Income from Fidelity Central Funds | 1,276 | |
Total income | 31,275 | |
Expenses | ||
Management fee | $ 5,225 | |
Performance adjustment | 1,410 | |
Transfer agent fees | 2,001 | |
Accounting and security lending fees | 339 | |
Custodian fees and expenses | 16 | |
Independent trustees' compensation | 4 | |
Registration fees | 52 | |
Audit | 46 | |
Legal | 13 | |
Miscellaneous | 14 | |
Total expenses before reductions | 9,120 | |
Expense reductions | (68) | 9,052 |
Net investment income (loss) | 22,223 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 68,050 | |
Change in net unrealized appreciation (depreciation) on investment securities | 251,813 | |
Net gain (loss) | 319,863 | |
Net increase (decrease) in net assets resulting from operations | $ 342,086 |
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) | $ 22,223 | $ 41,225 |
Net realized gain (loss) | 68,050 | 74,739 |
Change in net unrealized appreciation (depreciation) | 251,813 | 175,080 |
Net increase (decrease) in net assets resulting | 342,086 | 291,044 |
Distributions to shareholders from net investment income | (20,369) | (41,398) |
Distributions to shareholders from net realized gain | (1,653) | (791) |
Total distributions | (22,022) | (42,189) |
Share transactions | 352,776 | 477,908 |
Reinvestment of distributions | 20,042 | 38,524 |
Cost of shares redeemed | (162,487) | (435,858) |
Net increase (decrease) in net assets resulting from share transactions | 210,331 | 80,574 |
Total increase (decrease) in net assets | 530,395 | 329,429 |
Net Assets | ||
Beginning of period | 2,083,093 | 1,753,664 |
End of period (including undistributed net investment income of $6,481 and undistributed net investment income of $4,627, respectively) | $ 2,613,488 | $ 2,083,093 |
Other Information Shares | ||
Sold | 13,200 | 20,180 |
Issued in reinvestment of distributions | 767 | 1,650 |
Redeemed | (6,141) | (18,421) |
Net increase (decrease) | 7,826 | 3,409 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights
Six months ended | Years ended November 30, | |||||
(Unaudited) | 2006 | 2005 | 2004 | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $ 25.21 | $ 22.14 | $ 21.06 | $ 19.71 | $ 16.88 | $ 19.50 |
Income from Investment Operations | ||||||
Net investment | .26 | .49 | .41 | .46 | .79 | .79 H |
Net realized and unrealized gain (loss) | 3.68 | 3.09 | 1.03 | 1.55 | 2.87 | (2.46) H |
Total from investment operations | 3.94 | 3.58 | 1.44 | 2.01 | 3.66 | (1.67) |
Distributions from net investment income | (.24) | (.50) | (.34) | (.66) | (.83) | (.95) |
Distributions from net realized gain | (.02) | (.01) | (.02) | - | - | - |
Total distributions | (.26) | (.51) | (.36) | (.66) | (.83) | (.95) |
Net asset value, end | $ 28.89 | $ 25.21 | $ 22.14 | $ 21.06 | $ 19.71 | $ 16.88 |
Total Return B, C | 15.74% | 16.38% | 6.91% | 10.39% | 22.48% | (8.97)% |
Ratios to Average Net Assets E, G | ||||||
Expenses before | .80% A | .83% | .70% | .67% | .84% | .88% |
Expenses net of fee waivers, if any | .80% A | .83% | .70% | .67% | .84% | .88% |
Expenses net of all | .80% A | .83% | .69% | .66% | .82% | .85% |
Net investment | 1.96% A | 2.09% | 1.95% | 2.26% | 4.46% | 4.40% H |
Supplemental Data | ||||||
Net assets, end of | $ 2,613 | $ 2,083 | $ 1,754 | $ 1,835 | $ 1,767 | $ 1,423 |
Portfolio turnover rate F | 37% A | 35% | 81% | 112% | 136% | 138% |
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the 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 fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H 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 the 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, 2007 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Convertible Securities Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request. In addition, the financial statements of the Fidelity Central Funds are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Security Valuation - continued
with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned, with any distributions receivable as of period end included in Distributions receivable from Fidelity Central Funds on the Statement of Assets and Liabilities. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Semiannual Report
3. Significant Accounting Policies - continued
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.
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. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
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, passive foreign investment companies (PFIC), defaulted bonds, market discount, deferred trustees compensation, and losses deferred due to excise tax regulations.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 601,986 | |
Unrealized depreciation | (23,898) | |
Net unrealized appreciation (depreciation) | $ 578,088 | |
Cost for federal income tax purposes | $ 2,041,317 |
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
4. Operating Policies.
Repurchase Agreements. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $512,176 and $404,660, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease.
In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .15% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the 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 .58% of the Fund's average net assets.
Semiannual Report
6. 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 .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.
7. 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, which amounted to $3 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds Net income from lending portfolio securities during the period amounted to $169.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
9. Expense Reductions.
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 $11 and $26, respectively.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
Semiannual Report
Managing Your Investments
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Fidelity Automated
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(computer_graphic)
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www.fidelity.com
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Semiannual Report
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Semiannual Report
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Florida
4400 N. Federal Highway
Boca Raton, FL
121 Alhambra Plaza
Coral Gables, FL
2948 N. Federal Highway
Ft. Lauderdale, FL
4671 Town Center Parkway
Jacksonville, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
3501 PGA Boulevard
Palm Beach Gardens, FL
3550 Tamiami Trail, South
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
2465 State Road 7
Wellington, FL
Georgia
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
Illinois
One North LaSalle Street
Chicago, IL
875 North Michigan Ave.
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1572 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
7315 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
238 Main Street
Cambridge, MA
405 Cochituate Road
Framingham, MA
416 Belmont Street
Worcester, MA
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Semiannual Report
Michigan
500 E. Eisenhower Pkwy.
Ann Arbor, MI
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
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
Shrewsbury, NJ
New York
1055 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
980 Madison Avenue
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
200 Fifth Avenue
New York, NY
733 Third Avenue
New York, NY
11 Penn Plaza
New York, NY
2070 Broadway
New York, NY
1075 Northern Blvd.
Roslyn, NY
799 Central Park Avenue
Scarsdale, NY
North Carolina
4611 Sharon Road
Charlotte, NC
7011 Fayetteville Road
Durham, NC
Ohio
3805 Edwards Road
Cincinnati, OH
1324 Polaris Parkway
Columbus, OH
28699 Chagrin Boulevard
Woodmere Village, OH
Oregon
7493 SW Bridgeport Road
Tigard, OR
Pennsylvania
600 West DeKalb Pike
King of Prussia, PA
1735 Market Street
Philadelphia, PA
12001 Perry Highway
Wexford, PA
Rhode Island
47 Providence Place
Providence, RI
Tennessee
6150 Poplar Avenue
Memphis, TN
Texas
10000 Research Boulevard
Austin, TX
4001 Northwest Parkway
Dallas, TX
12532 Memorial Drive
Houston, TX
2701 Drexel Drive
Houston, TX
6560 Fannin Street
Houston, TX
6500 N. MacArthur Blvd.
Irving, TX
6005 West Park Boulevard
Plano, TX
14100 San Pedro
San Antonio, TX
1576 East Southlake Blvd.
Southlake, TX
19740 IH 45 North
Spring, TX
Utah
279 West South Temple
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.
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(formerly Fidelity Management &
Research (Far East) Inc.)
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General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
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and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
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(Fidelity Investment logo)(registered trademark)
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www.fidelity.com
CVS-USAN-0707
1.786810.104
Fidelity®
Equity-Income II
Fund
Semiannual Report
May 31, 2007
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Stocks are currently on pace to register their fifth-straight year of positive returns, although gains could be trimmed if the U.S. economy continues to slow. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2006 to May 31, 2007).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Semiannual Report
Beginning | Ending | Expenses Paid | |
Actual | $ 1,000.00 | $ 1,117.00 | $ 3.48 |
Hypothetical (5% return per year before expenses) | $ 1,000.00 | $ 1,021.64 | $ 3.33 |
* Expenses are equal to the Fund's annualized expense ratio of .66%; multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes
Top Ten Stocks as of May 31, 2007 | ||
% of fund's | % of fund's net assets | |
Exxon Mobil Corp. | 5.4 | 5.7 |
American International Group, Inc. | 4.3 | 4.4 |
AT&T, Inc. | 3.7 | 2.3 |
Wal-Mart Stores, Inc. | 2.8 | 2.9 |
Bank of America Corp. | 2.7 | 2.7 |
Citigroup, Inc. | 2.7 | 2.9 |
General Electric Co. | 2.3 | 1.9 |
Merck & Co., Inc. | 2.3 | 2.5 |
Halliburton Co. | 2.1 | 1.1 |
JPMorgan Chase & Co. | 2.0 | 2.0 |
30.3 | ||
Top Five Market Sectors as of May 31, 2007 | ||
% of fund's | % of fund's net assets | |
Financials | 27.4 | 29.0 |
Energy | 14.6 | 13.3 |
Industrials | 12.2 | 12.6 |
Health Care | 10.3 | 12.1 |
Consumer Discretionary | 9.7 | 7.5 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2007 * | As of November 30, 2006 ** | ||||||
![]() | Stocks 99.8% | ![]() | Stocks 99.0% | ||||
![]() | Short-Term | ![]() | Short-Term | ||||
* Foreign investments | 2.5% | ** Foreign investments | 2.4% |
Semiannual Report
Investments May 31, 2007 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 9.7% | |||
Automobiles - 0.3% | |||
Harley-Davidson, Inc. | 460,000 | $ 28,101 | |
Diversified Consumer Services - 0.5% | |||
H&R Block, Inc. | 2,600,000 | 61,594 | |
Hotels, Restaurants & Leisure - 0.3% | |||
Red Robin Gourmet Burgers, Inc. (a)(e) | 860,000 | 36,920 | |
Household Durables - 1.7% | |||
Black & Decker Corp. | 380,000 | 35,883 | |
KB Home | 660,000 | 30,287 | |
Leggett & Platt, Inc. | 2,900,000 | 70,963 | |
Whirlpool Corp. | 600,000 | 66,990 | |
204,123 | |||
Media - 3.6% | |||
EchoStar Communications Corp. Class A (a)(d) | 1,300,000 | 59,878 | |
The Walt Disney Co. | 3,400,000 | 120,496 | |
Time Warner, Inc. | 5,200,000 | 111,124 | |
Viacom, Inc. Class B (non-vtg.) (a) | 2,900,000 | 130,268 | |
421,766 | |||
Multiline Retail - 0.5% | |||
Target Corp. | 940,000 | 58,684 | |
Specialty Retail - 1.6% | |||
Big 5 Sporting Goods Corp. (e) | 1,917,393 | 48,491 | |
Christopher & Banks Corp. | 1,700,000 | 32,113 | |
Home Depot, Inc. | 1,500,000 | 58,305 | |
Williams-Sonoma, Inc. (d) | 1,500,000 | 50,835 | |
189,744 | |||
Textiles, Apparel & Luxury Goods - 1.2% | |||
Adidas-Salomon AG | 1,100,000 | 70,216 | |
Quiksilver, Inc. (a) | 2,200,000 | 31,042 | |
VF Corp. | 480,000 | 45,014 | |
146,272 | |||
TOTAL CONSUMER DISCRETIONARY | 1,147,204 | ||
CONSUMER STAPLES - 8.1% | |||
Beverages - 0.8% | |||
Anheuser-Busch Companies, Inc. | 1,700,000 | 90,678 | |
Food & Staples Retailing - 3.5% | |||
CVS Caremark Corp. | 900,000 | 34,686 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Food & Staples Retailing - continued | |||
Wal-Mart Stores, Inc. | 6,900,000 | $ 328,440 | |
Whole Foods Market, Inc. (d) | 1,300,000 | 53,430 | |
416,556 | |||
Food Products - 1.8% | |||
General Mills, Inc. | 1,000,000 | 61,240 | |
Hershey Co. | 2,800,000 | 147,588 | |
208,828 | |||
Household Products - 1.0% | |||
Kimberly-Clark Corp. | 1,700,000 | 120,632 | |
Tobacco - 1.0% | |||
Altria Group, Inc. | 1,700,000 | 120,870 | |
TOTAL CONSUMER STAPLES | 957,564 | ||
ENERGY - 14.6% | |||
Energy Equipment & Services - 4.6% | |||
Baker Hughes, Inc. | 780,000 | 64,334 | |
BJ Services Co. | 1,900,000 | 55,727 | |
Halliburton Co. | 6,900,000 | 248,055 | |
Schlumberger Ltd. (NY Shares) | 1,300,000 | 101,231 | |
Smith International, Inc. | 1,400,000 | 77,714 | |
547,061 | |||
Oil, Gas & Consumable Fuels - 10.0% | |||
BP PLC sponsored ADR | 1,300,000 | 87,113 | |
Chevron Corp. | 2,300,000 | 187,427 | |
ConocoPhillips | 1,500,000 | 116,145 | |
Exxon Mobil Corp. | 7,600,000 | 632,093 | |
Massey Energy Co. | 2,600,000 | 75,348 | |
Valero Energy Corp. | 1,100,000 | 82,082 | |
1,180,208 | |||
TOTAL ENERGY | 1,727,269 | ||
FINANCIALS - 27.4% | |||
Capital Markets - 2.9% | |||
Legg Mason, Inc. | 160,000 | 16,165 | |
Merrill Lynch & Co., Inc. | 960,000 | 89,021 | |
Morgan Stanley | 1,400,000 | 119,056 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Northern Trust Corp. | 900,000 | $ 58,572 | |
State Street Corp. | 920,000 | 62,808 | |
345,622 | |||
Commercial Banks - 3.0% | |||
U.S. Bancorp, Delaware | 3,900,000 | 134,862 | |
Wachovia Corp. | 2,100,000 | 113,799 | |
Wells Fargo & Co. | 3,100,000 | 111,879 | |
360,540 | |||
Diversified Financial Services - 7.4% | |||
Bank of America Corp. | 6,300,000 | 319,473 | |
Citigroup, Inc. | 5,800,000 | 316,042 | |
JPMorgan Chase & Co. | 4,600,000 | 238,418 | |
873,933 | |||
Insurance - 10.7% | |||
AFLAC, Inc. | 3,400,000 | 179,724 | |
American International Group, Inc. | 7,000,000 | 506,380 | |
Genworth Financial, Inc. Class A (non-vtg.) | 3,100,000 | 111,910 | |
Hartford Financial Services Group, Inc. | 1,200,000 | 123,804 | |
Marsh & McLennan Companies, Inc. | 4,800,000 | 157,584 | |
MetLife, Inc. | 1,700,000 | 115,600 | |
XL Capital Ltd. Class A | 820,000 | 66,879 | |
1,261,881 | |||
Real Estate Investment Trusts - 1.4% | |||
General Growth Properties, Inc. | 2,900,000 | 171,216 | |
Thrifts & Mortgage Finance - 2.0% | |||
Fannie Mae | 2,900,000 | 185,368 | |
MGIC Investment Corp. | 700,000 | 45,500 | |
230,868 | |||
TOTAL FINANCIALS | 3,244,060 | ||
HEALTH CARE - 10.3% | |||
Biotechnology - 1.3% | |||
Amgen, Inc. (a) | 1,900,000 | 107,027 | |
Biogen Idec, Inc. (a) | 800,000 | 41,776 | |
148,803 | |||
Health Care Equipment & Supplies - 2.0% | |||
Baxter International, Inc. | 1,000,000 | 56,840 | |
Beckman Coulter, Inc. | 660,000 | 43,164 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Health Care Equipment & Supplies - continued | |||
Becton, Dickinson & Co. | 1,100,000 | $ 83,875 | |
Varian Medical Systems, Inc. (a) | 1,340,000 | 54,002 | |
237,881 | |||
Health Care Providers & Services - 1.4% | |||
Medco Health Solutions, Inc. (a) | 560,000 | 43,546 | |
UnitedHealth Group, Inc. | 2,200,000 | 120,494 | |
164,040 | |||
Life Sciences Tools & Services - 0.2% | |||
PRA International (a) | 1,100,000 | 25,388 | |
Pharmaceuticals - 5.4% | |||
Johnson & Johnson | 1,800,000 | 113,886 | |
Medicis Pharmaceutical Corp. Class A | 920,000 | 30,360 | |
Merck & Co., Inc. | 5,100,000 | 267,495 | |
Pfizer, Inc. | 8,400,000 | 230,916 | |
642,657 | |||
TOTAL HEALTH CARE | 1,218,769 | ||
INDUSTRIALS - 12.2% | |||
Aerospace & Defense - 2.3% | |||
Honeywell International, Inc. | 1,000,000 | 57,910 | |
Lockheed Martin Corp. | 560,000 | 54,936 | |
The Boeing Co. | 620,000 | 62,366 | |
United Technologies Corp. | 1,400,000 | 98,770 | |
273,982 | |||
Air Freight & Logistics - 1.5% | |||
United Parcel Service, Inc. Class B | 2,400,000 | 172,728 | |
Electrical Equipment - 0.5% | |||
Thomas & Betts Corp. (a) | 1,100,000 | 63,822 | |
Industrial Conglomerates - 4.6% | |||
3M Co. | 1,400,000 | 123,144 | |
General Electric Co. | 7,200,000 | 270,576 | |
Teleflex, Inc. | 460,000 | 36,938 | |
Tyco International Ltd. | 3,500,000 | 116,760 | |
547,418 | |||
Machinery - 1.9% | |||
Caterpillar, Inc. | 860,000 | 67,579 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Machinery - continued | |||
Illinois Tool Works, Inc. | 1,100,000 | $ 57,992 | |
SPX Corp. | 1,100,000 | 96,657 | |
222,228 | |||
Road & Rail - 1.4% | |||
Burlington Northern Santa Fe Corp. | 1,100,000 | 102,443 | |
YRC Worldwide, Inc. (a)(d) | 1,600,000 | 64,320 | |
166,763 | |||
TOTAL INDUSTRIALS | 1,446,941 | ||
INFORMATION TECHNOLOGY - 7.8% | |||
Communications Equipment - 0.5% | |||
Cisco Systems, Inc. (a) | 2,000,000 | 53,840 | |
Computers & Peripherals - 2.7% | |||
Hewlett-Packard Co. | 4,300,000 | 196,553 | |
International Business Machines Corp. | 1,200,000 | 127,920 | |
324,473 | |||
Electronic Equipment & Instruments - 0.7% | |||
Avnet, Inc. (a) | 1,400,000 | 59,976 | |
Flextronics International Ltd. (a) | 2,500,000 | 28,875 | |
88,851 | |||
Internet Software & Services - 0.4% | |||
Yahoo!, Inc. (a) | 1,800,000 | 51,660 | |
IT Services - 0.3% | |||
The Western Union Co. | 1,500,000 | 33,675 | |
Semiconductors & Semiconductor Equipment - 2.7% | |||
Applied Materials, Inc. | 3,100,000 | 59,210 | |
Intel Corp. | 5,100,000 | 113,067 | |
MKS Instruments, Inc. (a) | 2,200,000 | 59,950 | |
National Semiconductor Corp. | 2,200,000 | 59,224 | |
Verigy Ltd. | 900,000 | 25,749 | |
317,200 | |||
Software - 0.5% | |||
Microsoft Corp. | 1,900,000 | 58,273 | |
TOTAL INFORMATION TECHNOLOGY | 927,972 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - 1.6% | |||
Chemicals - 1.0% | |||
Airgas, Inc. | 1,500,000 | $ 63,960 | |
Sigma Aldrich Corp. | 1,360,000 | 58,861 | |
122,821 | |||
Metals & Mining - 0.6% | |||
Alcoa, Inc. | 1,600,000 | 66,048 | |
TOTAL MATERIALS | 188,869 | ||
TELECOMMUNICATION SERVICES - 5.6% | |||
Diversified Telecommunication Services - 5.0% | |||
AT&T, Inc. | 10,700,000 | 442,338 | |
Verizon Communications, Inc. | 3,500,000 | 152,355 | |
594,693 | |||
Wireless Telecommunication Services - 0.6% | |||
Sprint Nextel Corp. | 2,800,000 | 63,980 | |
TOTAL TELECOMMUNICATION SERVICES | 658,673 | ||
UTILITIES - 2.5% | |||
Electric Utilities - 2.5% | |||
Entergy Corp. | 540,000 | 60,966 | |
Exelon Corp. | 1,200,000 | 93,600 | |
FirstEnergy Corp. | 440,000 | 30,461 | |
PPL Corp. | 1,000,000 | 45,960 | |
Reliant Energy, Inc. (a) | 2,300,000 | 58,926 | |
289,913 | |||
TOTAL COMMON STOCKS (Cost $9,560,071) | 11,807,234 | ||
Money Market Funds - 0.6% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 5.33% (b) | 16,311,014 | $ 16,311 | |
Fidelity Securities Lending Cash Central Fund, 5.36% (b)(c) | 54,688,500 | 54,689 | |
TOTAL MONEY MARKET FUNDS (Cost $71,000) | 71,000 | ||
TOTAL INVESTMENT PORTFOLIO - 100.4% (Cost $9,631,071) | 11,878,234 | ||
NET OTHER ASSETS - (0.4)% | (46,514) | ||
NET ASSETS - 100% | $ 11,831,720 |
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Affiliated company |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 512 |
Fidelity Securities Lending Cash Central Fund | 363 |
Total | $ 875 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, |
Big 5 Sporting Goods Corp. | $ 21,376 | $ 26,389 | $ - | $ 249 | $ 48,491 |
Red Robin Gourmet Burgers, Inc. | 29,558 | - | - | - | 36,920 |
Total | $ 50,934 | $ 26,389 | $ - | $ 249 | $ 85,411 |
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, 2007 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $53,553) - See accompanying schedule: Unaffiliated issuers (cost $9,482,440) | $ 11,721,823 | |
Fidelity Central Funds (cost $71,000) | 71,000 | |
Other affiliated issuers (cost $77,631) | 85,411 | |
Total Investments (cost $9,631,071) | $ 11,878,234 | |
Receivable for investments sold | 5,748 | |
Receivable for fund shares sold | 3,472 | |
Dividends receivable | 27,500 | |
Distributions receivable from Fidelity Central Funds | 139 | |
Prepaid expenses | 31 | |
Other receivables | 334 | |
Total assets | 11,915,458 | |
Liabilities | ||
Payable for investments purchased | $ 7,750 | |
Payable for fund shares redeemed | 14,599 | |
Accrued management fee | 4,497 | |
Other affiliated payables | 1,791 | |
Other payables and accrued expenses | 412 | |
Collateral on securities loaned, at value | 54,689 | |
Total liabilities | 83,738 | |
Net Assets | $ 11,831,720 | |
Net Assets consist of: | ||
Paid in capital | $ 9,169,111 | |
Undistributed net investment income | 35,429 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 380,017 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 2,247,163 | |
Net Assets, for 463,055 shares outstanding | $ 11,831,720 | |
Net Asset Value, offering price and redemption price per share ($11,831,720 ÷ 463,055 shares) | $ 25.55 |
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, 2007 (Unaudited) | |
Investment Income | ||
Dividends (including $249 earned from other affiliated issuers) | $ 116,822 | |
Interest | 10 | |
Income from Fidelity Central Funds | 875 | |
Total income | 117,707 | |
Expenses | ||
Management fee | $ 26,703 | |
Transfer agent fees | 10,102 | |
Accounting and security lending fees | 677 | |
Custodian fees and expenses | 89 | |
Independent trustees' compensation | 19 | |
Appreciation in deferred trustee compensation account | 1 | |
Registration fees | 32 | |
Audit | 66 | |
Legal | 73 | |
Interest | 230 | |
Miscellaneous | 60 | |
Total expenses before reductions | 38,052 | |
Expense reductions | (447) | 37,605 |
Net investment income (loss) | 80,102 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 397,380 | |
Foreign currency transactions | (21) | |
Total net realized gain (loss) | 397,359 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 802,688 | |
Net gain (loss) | 1,200,047 | |
Net increase (decrease) in net assets resulting from operations | $ 1,280,149 |
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, 2007 | Year ended |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 80,102 | $ 175,428 |
Net realized gain (loss) | 397,359 | 1,068,758 |
Change in net unrealized appreciation (depreciation) | 802,688 | 106,688 |
Net increase (decrease) in net assets resulting | 1,280,149 | 1,350,874 |
Distributions to shareholders from net investment income | (97,702) | (161,449) |
Distributions to shareholders from net realized gain | (971,101) | (950,596) |
Total distributions | (1,068,803) | (1,112,045) |
Share transactions | 510,087 | 684,251 |
Reinvestment of distributions | 1,025,172 | 1,066,583 |
Cost of shares redeemed | (1,549,504) | (2,602,829) |
Net increase (decrease) in net assets resulting from share transactions | (14,245) | (851,995) |
Total increase (decrease) in net assets | 197,101 | (613,166) |
Net Assets | ||
Beginning of period | 11,634,619 | 12,247,785 |
End of period (including undistributed net investment income of $35,429 and undistributed net investment income of $53,029, respectively) | $ 11,831,720 | $ 11,634,619 |
Other Information Shares | ||
Sold | 21,406 | 28,934 |
Issued in reinvestment of distributions | 43,087 | 46,025 |
Redeemed | (64,574) | (110,366) |
Net increase (decrease) | (81) | (35,407) |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights
Six months ended | Years ended November 30, | |||||
(Unaudited) | 2006 | 2005 | 2004 | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $ 25.12 | $ 24.57 | $ 23.90 | $ 21.52 | $ 18.72 | $ 21.21 |
Income from Investment Operations | ||||||
Net investment income (loss) D | .17 | .35 | .35 | .35 G | .25 | .24 |
Net realized and | 2.54 | 2.44 | 1.36 | 2.49 | 2.78 | (1.65) |
Total from investment operations | 2.71 | 2.79 | 1.71 | 2.84 | 3.03 | (1.41) |
Distributions from net investment income | (.21) | (.33) | (.41) | (.29) | (.23) | (.23) |
Distributions from net realized gain | (2.07) | (1.91) | (.63) | (.17) | - | (.85) |
Total distributions | (2.28) | (2.24) | (1.04) | (.46) | (.23) | (1.08) |
Net asset value, | $ 25.55 | $ 25.12 | $ 24.57 | $ 23.90 | $ 21.52 | $ 18.72 |
Total Return B, C | 11.70% | 12.28% | 7.41% | 13.32% | 16.40% | (7.08)% |
Ratios to Average Net Assets E, H | ||||||
Expenses before reductions | .66% A | .67% | .68% | .68% | .70% | .70% |
Expenses net of fee waivers, if any | .66% A | .67% | .68% | .68% | .70% | .70% |
Expenses net of all reductions | .65% A | .66% | .62% | .64% | .64% | .63% |
Net investment | 1.38% A | 1.50% | 1.49% | 1.56% | 1.31% | 1.26% |
Supplemental Data | ||||||
Net assets, | $ 11,832 | $ 11,635 | $ 12,248 | $ 12,632 | $ 11,525 | $ 10,156 |
Portfolio turnover rate F | 44% A | 160% | 143% | 123% | 131% | 135% |
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.06 per share.
H 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 fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the 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, 2007 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Equity-Income II Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its' affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request. In addition, the financial statements of the Fidelity Central Funds are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM),an affiliate of FMR.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Security Valuation - continued
which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the
Semiannual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned, with any distributions receivable as of period end included in Distributions receivable from Fidelity Central Funds on the Statement of Assets and Liabilities. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), Independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing 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 the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
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.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to short-term capital gains, foreign currency transactions, passive foreign investment companies (PFIC), market discount, deferred trustees compensation, and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 2,277,606 | |
Unrealized depreciation | (39,969) | |
Net unrealized appreciation (depreciation) | $ 2,237,637 | |
Cost for federal income tax purposes | $ 9,640,597 |
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. Operating Policies.
Repurchase Agreements. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement
Semiannual Report
4. Operating Policies - continued
Repurchase Agreements - continued
(including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $2,531,483 and $3,444,834, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged ..26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .46% of the Fund's average net assets.
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 .17% 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.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $5 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
6. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program - continued
The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average | Interest |
Borrower | $ 23,209 | 5.40% | $ 230 |
7. 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, which amounted to $14 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $363.
Semiannual Report
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $16 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 $7 and $240, respectively.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
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
7001 West Ray Road
Chandler, AZ
15445 N. Scottsdale Road
Scottsdale, AZ
California
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1411 Chapin Avenue
Burlingame, CA
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Delaware
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2465 State Road 7
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Georgia
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
Illinois
One North LaSalle Street
Chicago, IL
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Chicago, IL
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1572 East Golf Road
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Indiana
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Kansas
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Maine
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Portland, ME
Maryland
7315 Wisconsin Avenue
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One W. Pennsylvania Ave.
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Massachusetts
801 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
238 Main Street
Cambridge, MA
405 Cochituate Road
Framingham, MA
416 Belmont Street
Worcester, MA
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Semiannual Report
Michigan
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Ann Arbor, MI
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43420 Grand River Avenue
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Nevada
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56 South Street
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396 Route 17, North
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3518 Route 1 North
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530 Broad Street
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New York
1055 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
980 Madison Avenue
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
200 Fifth Avenue
New York, NY
733 Third Avenue
New York, NY
11 Penn Plaza
New York, NY
2070 Broadway
New York, NY
1075 Northern Blvd.
Roslyn, NY
799 Central Park Avenue
Scarsdale, NY
North Carolina
4611 Sharon Road
Charlotte, NC
7011 Fayetteville Road
Durham, NC
Ohio
3805 Edwards Road
Cincinnati, OH
1324 Polaris Parkway
Columbus, OH
28699 Chagrin Boulevard
Woodmere Village, OH
Oregon
7493 SW Bridgeport Road
Tigard, OR
Pennsylvania
600 West DeKalb Pike
King of Prussia, PA
1735 Market Street
Philadelphia, PA
12001 Perry Highway
Wexford, PA
Rhode Island
47 Providence Place
Providence, RI
Tennessee
6150 Poplar Avenue
Memphis, TN
Texas
10000 Research Boulevard
Austin, TX
4001 Northwest Parkway
Dallas, TX
12532 Memorial Drive
Houston, TX
2701 Drexel Drive
Houston, TX
6560 Fannin Street
Houston, TX
6500 N. MacArthur Blvd.
Irving, TX
6005 West Park Boulevard
Plano, TX
14100 San Pedro
San Antonio, TX
1576 East Southlake Blvd.
Southlake, TX
19740 IH 45 North
Spring, TX
Utah
279 West South Temple
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
Semiannual Report
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
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Fidelity Research & Analysis Company
(formerly Fidelity Management &
Research (Far East) Inc.)
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General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Northern Trust Company
Chicago, IL
The Fidelity Telephone Connection
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EII-USAN-0707
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Fidelity®
Independence
Fund
Semiannual Report
May 31, 2007
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) website at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Stocks are currently on pace to register their fifth-straight year of positive returns, although gains could be trimmed if the U.S. economy continues to slow. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2006 to May 31, 2007).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Semiannual Report
Beginning | Ending | Expenses Paid | |
Actual | $ 1,000.00 | $ 1,132.60 | $ 4.63 |
Hypothetical (5% return per year before expenses) | $ 1,000.00 | $ 1,020.59 | $ 4.38 |
* Expenses are equal to the Fund's annualized expense ratio of .87%; multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes
Top Ten Stocks as of May 31, 2007 | ||
% of fund's | % of fund's net assets | |
Valero Energy Corp. | 3.1 | 2.1 |
AT&T, Inc. | 2.7 | 2.1 |
Research In Motion Ltd. | 2.7 | 1.9 |
Monsanto Co. | 2.6 | 1.1 |
Ultra Petroleum Corp. | 2.2 | 1.9 |
Celgene Corp. | 2.1 | 1.4 |
Exxon Mobil Corp. | 2.1 | 3.0 |
Apple, Inc. | 1.9 | 2.0 |
McDermott International, Inc. | 1.9 | 1.1 |
Entergy Corp. | 1.8 | 0.3 |
23.1 | ||
Top Five Market Sectors as of May 31, 2007 | ||
% of fund's | % of fund's net assets | |
Energy | 23.4 | 17.4 |
Information Technology | 14.4 | 16.1 |
Health Care | 10.2 | 9.4 |
Consumer Discretionary | 9.7 | 9.3 |
Materials | 9.1 | 4.3 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2007 * | As of November 30, 2006 ** | ||||||
![]() | Stocks 99.9% | ![]() | Stocks 99.3% | ||||
![]() | Short-Term | ![]() | Short-Term | ||||
* Foreign investments | 24.3% | ** Foreign investments | 20.2% |
Semiannual Report
Investments May 31, 2007 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 9.7% | |||
Diversified Consumer Services - 1.1% | |||
Apollo Group, Inc. Class A (non-vtg.) (a) | 409,200 | $ 19,629 | |
Sotheby's Class A (ltd. vtg.) | 700,000 | 33,229 | |
52,858 | |||
Hotels, Restaurants & Leisure - 3.2% | |||
Burger King Holdings, Inc. | 1,475,821 | 37,781 | |
Hilton Hotels Corp. | 873,100 | 31,039 | |
McDonald's Corp. | 1,002,600 | 50,681 | |
Starwood Hotels & Resorts Worldwide, Inc. | 300,000 | 21,621 | |
Vail Resorts, Inc. (a) | 303,600 | 18,201 | |
159,323 | |||
Internet & Catalog Retail - 1.2% | |||
Priceline.com, Inc. (a)(d) | 952,000 | 58,872 | |
Media - 0.5% | |||
Comcast Corp. Class A (special) (non-vtg.) (a) | 569,000 | 15,465 | |
Getty Images, Inc. (a) | 100,000 | 5,005 | |
Time Warner, Inc. | 234,000 | 5,001 | |
25,471 | |||
Multiline Retail - 1.0% | |||
Kohl's Corp. (a) | 312,800 | 23,560 | |
Saks, Inc. (d) | 1,460,900 | 29,276 | |
52,836 | |||
Specialty Retail - 0.6% | |||
PETsMART, Inc. | 600,000 | 20,532 | |
Tiffany & Co., Inc. | 200,000 | 10,514 | |
31,046 | |||
Textiles, Apparel & Luxury Goods - 2.1% | |||
Coach, Inc. (a) | 500,000 | 25,680 | |
Crocs, Inc. (a)(d) | 300,000 | 24,408 | |
Polo Ralph Lauren Corp. Class A | 200,000 | 19,506 | |
VF Corp. | 400,000 | 37,512 | |
107,106 | |||
TOTAL CONSUMER DISCRETIONARY | 487,512 | ||
CONSUMER STAPLES - 4.1% | |||
Food Products - 1.9% | |||
Nestle SA sponsored ADR | 367,400 | 35,803 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Food Products - continued | |||
Ralcorp Holdings, Inc. (a) | 300,000 | $ 17,448 | |
Tyson Foods, Inc. Class A | 1,900,000 | 42,351 | |
95,602 | |||
Personal Products - 0.8% | |||
Avon Products, Inc. | 574,700 | 22,063 | |
Bare Escentuals, Inc. | 410,600 | 17,225 | |
39,288 | |||
Tobacco - 1.4% | |||
Altria Group, Inc. | 1,030,000 | 73,233 | |
TOTAL CONSUMER STAPLES | 208,123 | ||
ENERGY - 23.4% | |||
Energy Equipment & Services - 5.8% | |||
Nabors Industries Ltd. (a) | 1,195,300 | 41,764 | |
Oceaneering International, Inc. (a) | 540,600 | 27,052 | |
Schlumberger Ltd. (NY Shares) | 790,300 | 61,541 | |
Smith International, Inc. | 750,000 | 41,633 | |
Transocean, Inc. (a) | 711,600 | 69,908 | |
W-H Energy Services, Inc. (a) | 246,300 | 15,714 | |
Weatherford International Ltd. (a) | 600,000 | 32,604 | |
290,216 | |||
Oil, Gas & Consumable Fuels - 17.6% | |||
Cabot Oil & Gas Corp. | 1,025,200 | 39,983 | |
Cameco Corp. | 1,400,000 | 72,563 | |
China Coal Energy Co. Ltd. (H Shares) | 389,000 | 502 | |
EOG Resources, Inc. | 839,100 | 64,527 | |
Exxon Mobil Corp. | 1,254,500 | 104,337 | |
Marathon Oil Corp. | 200,000 | 24,762 | |
Noble Energy, Inc. | 275,000 | 17,405 | |
Petroplus Holdings AG | 684,270 | 63,415 | |
Quicksilver Resources, Inc. (a)(d) | 1,383,900 | 61,570 | |
Range Resources Corp. | 979,500 | 37,946 | |
Sunoco, Inc. | 600,000 | 47,826 | |
SXR Uranium One, Inc. (a) | 500,000 | 7,794 | |
Tesoro Corp. | 600,000 | 37,128 | |
Ultra Petroleum Corp. (a) | 1,789,879 | 109,863 | |
Valero Energy Corp. | 2,113,700 | 157,718 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - continued | |||
Venoco, Inc. | 250,000 | $ 4,968 | |
Williams Companies, Inc. | 1,100,000 | 34,936 | |
887,243 | |||
TOTAL ENERGY | 1,177,459 | ||
FINANCIALS - 8.8% | |||
Capital Markets - 2.6% | |||
Charles Schwab Corp. | 600,000 | 13,482 | |
Franklin Resources, Inc. | 300,000 | 40,722 | |
Goldman Sachs Group, Inc. | 100,700 | 23,244 | |
Julius Baer Holding AG (Bearer) | 300,000 | 22,830 | |
Lazard Ltd. Class A | 393,700 | 21,213 | |
T. Rowe Price Group, Inc. | 200,000 | 10,270 | |
131,761 | |||
Commercial Banks - 2.7% | |||
Banco Bradesco SA (PN) sponsored ADR (d) | 1,708,000 | 43,366 | |
Banco Itau Holding Financeira SA sponsored ADR (non-vtg.) | 1,308,800 | 57,705 | |
Raiffeisen International Bank Holding AG | 104,200 | 16,292 | |
Uniao de Bancos Brasileiros SA (Unibanco) GDR | 179,100 | 20,115 | |
137,478 | |||
Insurance - 3.0% | |||
MetLife, Inc. | 950,000 | 64,600 | |
Prudential Financial, Inc. | 834,300 | 85,115 | |
149,715 | |||
Real Estate Investment Trusts - 0.5% | |||
Annaly Capital Management, Inc. | 1,600,100 | 24,706 | |
TOTAL FINANCIALS | 443,660 | ||
HEALTH CARE - 10.2% | |||
Biotechnology - 3.7% | |||
Celgene Corp. (a) | 1,724,300 | 105,596 | |
CSL Ltd. | 24,000 | 1,773 | |
Gilead Sciences, Inc. (a) | 953,500 | 78,921 | |
186,290 | |||
Health Care Equipment & Supplies - 3.0% | |||
Beckman Coulter, Inc. | 350,000 | 22,890 | |
Becton, Dickinson & Co. | 644,100 | 49,113 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Health Care Equipment & Supplies - continued | |||
Cytyc Corp. (a) | 1,200,000 | $ 50,736 | |
Nobel Biocare Holding AG (Switzerland) | 85,497 | 29,320 | |
152,059 | |||
Health Care Providers & Services - 1.7% | |||
Humana, Inc. (a) | 1,000,000 | 62,050 | |
Medco Health Solutions, Inc. (a) | 300,000 | 23,328 | |
85,378 | |||
Pharmaceuticals - 1.8% | |||
Elan Corp. PLC sponsored ADR (a) | 209,900 | 4,139 | |
Merck & Co., Inc. | 1,649,440 | 86,513 | |
90,652 | |||
TOTAL HEALTH CARE | 514,379 | ||
INDUSTRIALS - 8.3% | |||
Aerospace & Defense - 2.6% | |||
DRS Technologies, Inc. | 154,800 | 7,949 | |
General Dynamics Corp. | 469,500 | 37,673 | |
Hexcel Corp. (a)(d) | 1,309,100 | 30,279 | |
L-3 Communications Holdings, Inc. | 600,000 | 57,156 | |
133,057 | |||
Airlines - 0.6% | |||
Ryanair Holdings PLC sponsored ADR (a) | 682,600 | 28,185 | |
Electrical Equipment - 1.0% | |||
ABB Ltd. sponsored ADR | 2,342,800 | 50,300 | |
Industrial Conglomerates - 1.9% | |||
McDermott International, Inc. (a) | 1,191,788 | 92,959 | |
Machinery - 1.5% | |||
Caterpillar, Inc. | 600,000 | 47,148 | |
MAN AG | 200,000 | 29,021 | |
76,169 | |||
Road & Rail - 0.7% | |||
Burlington Northern Santa Fe Corp. | 190,600 | 17,751 | |
Kansas City Southern | 400,000 | 16,420 | |
34,171 | |||
TOTAL INDUSTRIALS | 414,841 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - 14.4% | |||
Communications Equipment - 4.5% | |||
Cisco Systems, Inc. (a) | 992,400 | $ 26,715 | |
Harris Corp. | 500,000 | 24,960 | |
QUALCOMM, Inc. | 900,000 | 38,655 | |
Research In Motion Ltd. (a) | 816,900 | 135,671 | |
226,001 | |||
Computers & Peripherals - 2.6% | |||
Apple, Inc. (a) | 782,800 | 95,157 | |
Dell, Inc. (a) | 1,400,000 | 37,618 | |
132,775 | |||
Electronic Equipment & Instruments - 0.4% | |||
IPG Photonics Corp. | 207,500 | 4,654 | |
Jabil Circuit, Inc. | 600,000 | 13,800 | |
18,454 | |||
Internet Software & Services - 2.6% | |||
Akamai Technologies, Inc. (a) | 487,200 | 21,539 | |
eBay, Inc. (a) | 900,000 | 29,304 | |
Google, Inc. Class A (sub. vtg.) (a) | 92,151 | 45,868 | |
SAVVIS, Inc. (a) | 308,900 | 15,504 | |
Yahoo!, Inc. (a) | 700,000 | 20,090 | |
132,305 | |||
IT Services - 1.9% | |||
Fidelity National Information Services, Inc. | 600,000 | 32,352 | |
Mastercard, Inc. Class A | 430,000 | 64,307 | |
96,659 | |||
Semiconductors & Semiconductor Equipment - 1.4% | |||
Applied Materials, Inc. | 2,100,000 | 40,110 | |
ASML Holding NV (NY Shares) (a) | 1,128,900 | 29,092 | |
69,202 | |||
Software - 1.0% | |||
Adobe Systems, Inc. (a) | 200,000 | 8,816 | |
Glu Mobile, Inc. | 106,700 | 1,326 | |
Nintendo Co. Ltd. | 106,700 | 37,260 | |
Solera Holdings, Inc. | 199,800 | 3,526 | |
50,928 | |||
TOTAL INFORMATION TECHNOLOGY | 726,324 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - 9.1% | |||
Chemicals - 5.2% | |||
Monsanto Co. | 2,166,901 | $ 133,481 | |
Potash Corp. of Saskatchewan, Inc. | 900,000 | 63,855 | |
The Mosaic Co. | 1,800,000 | 63,234 | |
260,570 | |||
Metals & Mining - 3.7% | |||
Arcelor Mittal | 900,000 | 53,991 | |
Companhia Vale do Rio Doce sponsored ADR | 600,000 | 27,270 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 900,000 | 70,830 | |
Goldcorp, Inc. (d) | 552,400 | 13,290 | |
Impala Platinum Holdings Ltd. | 600,000 | 18,372 | |
183,753 | |||
Paper & Forest Products - 0.2% | |||
Nine Dragons Paper (Holdings) Ltd. (a) | 6,000,000 | 12,555 | |
TOTAL MATERIALS | 456,878 | ||
TELECOMMUNICATION SERVICES - 6.3% | |||
Diversified Telecommunication Services - 2.7% | |||
AT&T, Inc. | 3,289,300 | 135,980 | |
Wireless Telecommunication Services - 3.6% | |||
America Movil SA de CV Series L sponsored ADR | 1,028,200 | 62,258 | |
American Tower Corp. Class A (a) | 1,096,200 | 47,334 | |
NII Holdings, Inc. (a) | 873,200 | 71,140 | |
180,732 | |||
TOTAL TELECOMMUNICATION SERVICES | 316,712 | ||
UTILITIES - 5.6% | |||
Electric Utilities - 2.3% | |||
Enernoc, Inc. (a) | 35,100 | 1,370 | |
Entergy Corp. | 785,700 | 88,706 | |
Reliant Energy, Inc. (a) | 1,000,000 | 25,620 | |
115,696 | |||
Independent Power Producers & Energy Traders - 3.3% | |||
Constellation Energy Group, Inc. | 743,600 | 68,240 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
UTILITIES - continued | |||
Independent Power Producers & Energy Traders - continued | |||
Dynegy, Inc. (a) | 1,000,000 | $ 9,680 | |
NRG Energy, Inc. | 1,000,000 | 87,890 | |
165,810 | |||
TOTAL UTILITIES | 281,506 | ||
TOTAL COMMON STOCKS (Cost $4,318,689) | 5,027,394 | ||
Money Market Funds - 2.9% | |||
Fidelity Cash Central Fund, 5.33% (b) | 30,574,496 | 30,574 | |
Fidelity Securities Lending Cash Central Fund, 5.36% (b)(c) | 116,790,925 | 116,791 | |
TOTAL MONEY MARKET FUNDS (Cost $147,365) | 147,365 | ||
TOTAL INVESTMENT PORTFOLIO - 102.8% (Cost $4,466,054) | 5,174,759 | ||
NET OTHER ASSETS - (2.8)% | (140,498) | ||
NET ASSETS - 100% | $ 5,034,261 |
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 1,021 |
Fidelity Securities Lending Cash Central Fund | 270 |
Total | $ 1,291 |
Other Information |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: |
United States of America | 75.7% |
Canada | 8.1% |
Switzerland | 4.0% |
Brazil | 2.9% |
Panama | 1.9% |
Netherlands | 1.7% |
Mexico | 1.2% |
Netherlands Antilles | 1.2% |
Others (individually less than 1%) | 3.3% |
100.0% |
Income Tax Information |
At November 30, 2006, the fund had a capital loss carryforward of approximately $333,464,000 all of which will expire on November 30, 2010. |
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, 2007 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $114,000) - See accompanying schedule: Unaffiliated issuers (cost $4,318,689) | $ 5,027,394 | |
Fidelity Central Funds (cost $147,365) | 147,365 | |
Total Investments (cost $4,466,054) | $ 5,174,759 | |
Receivable for investments sold | 88,890 | |
Receivable for fund shares sold | 2,521 | |
Dividends receivable | 4,594 | |
Distributions receivable from Fidelity Central Funds | 113 | |
Prepaid expenses | 12 | |
Other receivables | 178 | |
Total assets | 5,271,067 | |
Liabilities | ||
Payable for investments purchased | $ 110,269 | |
Payable for fund shares redeemed | 5,763 | |
Accrued management fee | 3,043 | |
Other affiliated payables | 755 | |
Other payables and accrued expenses | 185 | |
Collateral on securities loaned, at value | 116,791 | |
Total liabilities | 236,806 | |
Net Assets | $ 5,034,261 | |
Net Assets consist of: | ||
Paid in capital | $ 4,480,758 | |
Undistributed net investment income | 3,670 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (158,864) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 708,697 | |
Net Assets, for 202,638 shares outstanding | $ 5,034,261 | |
Net Asset Value, offering price and redemption price per share ($5,034,261 ÷ 202,638 shares) | $ 24.84 |
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, 2007 (Unaudited) | |
Investment Income | ||
Dividends | $ 22,633 | |
Special dividends | 6,483 | |
Interest | 128 | |
Income from Fidelity Central Funds | 1,291 | |
Total income | 30,535 | |
Expenses | ||
Management fee | $ 13,239 | |
Performance adjustment | 2,721 | |
Transfer agent fees | 3,876 | |
Accounting and security lending fees | 537 | |
Custodian fees and expenses | 90 | |
Independent trustees' compensation | 8 | |
Appreciation in deferred trustee compensation account | 1 | |
Registration fees | 43 | |
Audit | 47 | |
Legal | 29 | |
Interest | 18 | |
Miscellaneous | 24 | |
Total expenses before reductions | 20,633 | |
Expense reductions | (341) | 20,292 |
Net investment income (loss) | 10,243 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $5,594) | 177,484 | |
Foreign currency transactions | (18) | |
Total net realized gain (loss) | 177,466 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $5,611) | 408,808 | |
Assets and liabilities in foreign currencies | 6 | |
Total change in net unrealized appreciation (depreciation) | 408,814 | |
Net gain (loss) | 586,280 | |
Net increase (decrease) in net assets resulting from operations | $ 596,523 |
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, 2007 | Year ended |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 10,243 | $ 18,461 |
Net realized gain (loss) | 177,466 | 833,153 |
Change in net unrealized appreciation (depreciation) | 408,814 | (277,213) |
Net increase (decrease) in net assets resulting | 596,523 | 574,401 |
Distributions to shareholders from net investment income | (21,377) | (12,074) |
Share transactions | 180,052 | 430,858 |
Reinvestment of distributions | 21,162 | 11,979 |
Cost of shares redeemed | (464,775) | (936,261) |
Net increase (decrease) in net assets resulting from share transactions | (263,561) | (493,424) |
Total increase (decrease) in net assets | 311,585 | 68,903 |
Net Assets | ||
Beginning of period | 4,722,676 | 4,653,773 |
End of period (including undistributed net investment income of $3,670 and undistributed net investment income of $14,804, respectively) | $ 5,034,261 | $ 4,722,676 |
Other Information Shares | ||
Sold | 7,940 | 20,820 |
Issued in reinvestment of distributions | 955 | 605 |
Redeemed | (20,623) | (46,162) |
Net increase (decrease) | (11,728) | (24,737) |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights
Six months ended | Years ended November 30, | |||||
(Unaudited) | 2006 | 2005 | 2004 | 2003 | 2002 | |
Selected Per-Share Data | ||||||
Net asset value, beginning of period | $ 22.03 | $ 19.46 | $ 17.39 | $ 15.45 | $ 13.83 | $ 15.84 |
Income from Investment Operations | ||||||
Net investment | .05 G | .08 | .04 | .11 H, I | .14 | .21 |
Net realized and | 2.86 | 2.54 | 2.14 | 1.93 | 1.69 | (2.02) |
Total from investment operations | 2.91 | 2.62 | 2.18 | 2.04 | 1.83 | (1.81) |
Distributions from net investment income | (.10) | (.05) | (.11) | (.10) | (.21) | (.20) |
Net asset value, end of period | $ 24.84 | $ 22.03 | $ 19.46 | $ 17.39 | $ 15.45 | $ 13.83 |
Total Return B, C | 13.26% | 13.49% | 12.61% | 13.28% | 13.47% | (11.57)% |
Ratios to Average Net Assets E, J | ||||||
Expenses before | .87% A | .87% | .77% | .76% | .62% | 1.07% |
Expenses net of fee waivers, if any | .87% A | .87% | .77% | .76% | .62% | 1.07% |
Expenses net of all | .86% A | .86% | .72% | .71% | .55% | .97% |
Net investment | .43% A, G | .41% | .24% | .66% I | 1.00% | 1.41% |
Supplemental Data | ||||||
Net assets, end of | $ 5,034 | $ 4,723 | $ 4,654 | $ 4,584 | $ 4,591 | $ 4,443 |
Portfolio turnover rate F | 187% A | 169% | 119% | 119% | 166% | 191% |
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.03 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .16%.
H Investment income per share reflects a special dividend which amounted to $.07.
I As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended November 30, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended November 30, 2004 have been reduced by $.01 per share and .03%, respectively. The change in estimate has no impact on total net assets or total return of the class.
J 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 fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the 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, 2007 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Independence Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request. In addition, the financial statements of the Fidelity Central Funds are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Security Valuation - continued
which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities
Semiannual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income and income distributions from the Fidelity Central Funds are accrued as earned, with any distributions receivable as of period end included in Distributions receivable from Fidelity Central Funds on the Statement of Assets and Liabilities. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), Independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing 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 the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income 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.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to futures transactions, foreign currency transactions, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 731,279 | |
Unrealized depreciation | (27,042) | |
Net unrealized appreciation (depreciation) | $ 704,237 | |
Cost for federal income tax purposes | $ 4,470,522 |
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. Operating Policies.
Repurchase Agreements. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including
Semiannual Report
4. Operating Policies - continued
Repurchase Agreements - continued
accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $4,401,329 and $4,643,092, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged ..26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease.
In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the 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 .68% 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 .16% 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.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $20 for the period.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
6. Fees and Other Transactions with Affiliates - continued
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily | Weighted Average Interest Rate | Interest |
Borrower | $ 9,082 | 5.39% | $ 18 |
7. 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, which amounted to $6 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $270.
Semiannual Report
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $182 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 $6 and $83, respectively.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
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
7001 West Ray Road
Chandler, AZ
15445 N. Scottsdale Road
Scottsdale, AZ
California
815 East Birch Street
Brea, CA
1411 Chapin Avenue
Burlingame, CA
851 East Hamilton Avenue
Campbell, 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
123 South Lake Avenue
Pasadena, CA
16995 Bernardo Ctr. Drive
Rancho Bernardo, CA
1220 Roseville Parkway
Roseville, CA
1740 Arden Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
11943 El Camino Real
San Diego, CA
8 Montgomery Street
San Francisco, CA
3793 State Street
Santa Barbara, CA
1200 Wilshire Boulevard
Santa Monica, 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 Westview Road
Lone Tree, 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
400 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
4671 Town Center Parkway
Jacksonville, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
3501 PGA Boulevard
Palm Beach Gardens, FL
3550 Tamiami Trail, South
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
2465 State Road 7
Wellington, FL
Georgia
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
Illinois
One North LaSalle Street
Chicago, IL
875 North Michigan Ave.
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1572 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
7315 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
238 Main Street
Cambridge, MA
405 Cochituate Road
Framingham, MA
416 Belmont Street
Worcester, MA
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Semiannual Report
Michigan
500 E. Eisenhower Pkwy.
Ann Arbor, MI
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
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
Henderson, NV
New Jersey
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
Shrewsbury, NJ
New York
1055 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
980 Madison Avenue
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
200 Fifth Avenue
New York, NY
733 Third Avenue
New York, NY
11 Penn Plaza
New York, NY
2070 Broadway
New York, NY
1075 Northern Blvd.
Roslyn, NY
799 Central Park Avenue
Scarsdale, NY
North Carolina
4611 Sharon Road
Charlotte, NC
7011 Fayetteville Road
Durham, NC
Ohio
3805 Edwards Road
Cincinnati, OH
1324 Polaris Parkway
Columbus, OH
28699 Chagrin Boulevard
Woodmere Village, OH
Oregon
7493 SW Bridgeport Road
Tigard, OR
Pennsylvania
600 West DeKalb Pike
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Semiannual Report
Semiannual Report
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
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FRE-USAN-0707
1.786813.104
Fidelity®
Strategic Dividend & Income®
Fund
Semiannual Report
May 31, 2007
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Stocks are currently on pace to register their fifth-straight year of positive returns, although gains could be trimmed if the U.S. economy continues to slow. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2006 to May 31, 2007).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Semiannual Report
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 1,090.50 | $ 5.73 |
HypotheticalA | $ 1,000.00 | $ 1,019.45 | $ 5.54 |
Class T | |||
Actual | $ 1,000.00 | $ 1,089.50 | $ 6.88 |
HypotheticalA | $ 1,000.00 | $ 1,018.35 | $ 6.64 |
Class B | |||
Actual | $ 1,000.00 | $ 1,085.90 | $ 9.93 |
HypotheticalA | $ 1,000.00 | $ 1,015.41 | $ 9.60 |
Class C | |||
Actual | $ 1,000.00 | $ 1,086.90 | $ 9.63 |
HypotheticalA | $ 1,000.00 | $ 1,015.71 | $ 9.30 |
Strategic Dividend and Income | |||
Actual | $ 1,000.00 | $ 1,091.80 | $ 4.12 |
HypotheticalA | $ 1,000.00 | $ 1,020.99 | $ 3.98 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,092.80 | $ 4.17 |
HypotheticalA | $ 1,000.00 | $ 1,020.94 | $ 4.03 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.10% |
Class T | 1.32% |
Class B | 1.91% |
Class C | 1.85% |
Strategic Dividend and Income | .79% |
Institutional Class | .80% |
Semiannual Report
Investment Changes
Top Ten Investments as of May 31, 2007 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
Valero Energy Corp. | 2.0 | 1.7 |
AT&T, Inc. | 1.5 | 1.0 |
JPMorgan Chase & Co. | 1.4 | 1.4 |
National Oilwell Varco, Inc. | 1.1 | 1.2 |
Citigroup, Inc. | 1.1 | 0.0 |
General Growth Properties, Inc. | 0.9 | 1.2 |
Transocean, Inc. | 0.9 | 0.0 |
Diamond Offshore Drilling, Inc. | 0.8 | 0.0 |
El Paso Corp. 4.99% | 0.8 | 0.9 |
American International Group, Inc. | 0.8 | 1.0 |
11.3 | ||
Top Five Market Sectors as of May 31, 2007 | ||
% of fund's | % of fund's net assets | |
Financials | 33.1 | 34.2 |
Information Technology | 14.6 | 14.8 |
Energy | 12.2 | 13.4 |
Utilities | 6.5 | 5.4 |
Industrials | 6.4 | 6.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2007* | As of November 30, 2006** | ||||||
![]() | Common Stocks 63.3% | ![]() | Common Stocks 66.8% | ||||
![]() | Preferred Stocks 15.3% | ![]() | Preferred Stocks 13.0% | ||||
![]() | Convertible Bonds 13.4% | ![]() | Convertible Bonds 13.5% | ||||
![]() | Other Investments 1.5% | ![]() | Other Investments 0.9% | ||||
![]() | Short-Term | ![]() | Short-Term | ||||
* Foreign investments | 8.5% | ** Foreign investments | 10.8% |
Semiannual Report
Investments May 31, 2007 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 14.5% | ||||
Principal Amount | Value | |||
Convertible Bonds - 13.4% | ||||
CONSUMER DISCRETIONARY - 1.0% | ||||
Automobiles - 0.1% | ||||
Ford Motor Co. 4.25% 12/15/36 | $ 970,000 | $ 1,118,216 | ||
Hotels, Restaurants & Leisure - 0.4% | ||||
Carnival Corp. 1.132% 4/29/33 (d) | 5,820,000 | 4,104,148 | ||
Six Flags, Inc. 4.5% 5/15/15 | 3,300,000 | 3,902,250 | ||
8,006,398 | ||||
Media - 0.4% | ||||
Charter Communications, Inc.: | ||||
5.875% 11/16/09 (f) | 70,000 | 124,600 | ||
5.875% 11/16/09 | 4,013,000 | 7,143,140 | ||
7,267,740 | ||||
Specialty Retail - 0.1% | ||||
Asbury Automotive Group, Inc. 3% 9/15/12 (f) | 1,000,000 | 973,400 | ||
Eddie Bauer Holdings, Inc. 5.25% 4/1/14 (f) | 1,000,000 | 1,256,250 | ||
2,229,650 | ||||
TOTAL CONSUMER DISCRETIONARY | 18,622,004 | |||
CONSUMER STAPLES - 0.0% | ||||
Food & Staples Retailing - 0.0% | ||||
Nash-Finch Co. 1.6314% 3/15/35 (d) | 1,520,000 | 817,304 | ||
ENERGY - 2.7% | ||||
Energy Equipment & Services - 1.1% | ||||
Grey Wolf, Inc. 5.2994% 4/1/24 (g) | 2,300,000 | 3,225,980 | ||
Halliburton Co. 3.125% 7/15/23 | 4,260,000 | 8,216,475 | ||
Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (d)(f) | 1,000,000 | 1,048,700 | ||
Maverick Tube Corp. 1.875% 11/15/25 | 3,000,000 | 3,633,000 | ||
SESI LLC 1.5% 12/15/26 (d)(f) | 3,000,000 | 3,243,000 | ||
19,367,155 | ||||
Oil, Gas & Consumable Fuels - 1.6% | ||||
Chesapeake Energy Corp.: | ||||
2.75% 11/15/35 (f) | 5,000,000 | 5,491,000 | ||
2.75% 11/15/35 | 10,200,000 | 11,201,640 | ||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
ENERGY - continued | ||||
Oil, Gas & Consumable Fuels - continued | ||||
McMoRan Exploration Co. 6% 7/2/08 | $ 3,000,000 | $ 3,567,600 | ||
Peabody Energy Corp. 4.75% 12/15/66 | 8,000,000 | 9,080,000 | ||
29,340,240 | ||||
TOTAL ENERGY | 48,707,395 | |||
FINANCIALS - 0.2% | ||||
Real Estate Investment Trusts - 0.2% | ||||
Ventas, Inc. 3.875% 11/15/11 (f) | 3,000,000 | 3,202,500 | ||
HEALTH CARE - 1.8% | ||||
Biotechnology - 0.6% | ||||
Amgen, Inc.: | ||||
0.375% 2/1/13 (f) | 5,000,000 | 4,494,000 | ||
0.375% 2/1/13 | 7,000,000 | 6,300,000 | ||
10,794,000 | ||||
Health Care Equipment & Supplies - 0.5% | ||||
Beckman Coulter, Inc. 2.5% 12/15/36 (f) | 2,000,000 | 2,129,600 | ||
Inverness Medical Innovations, Inc. 3% 5/15/16 (f) | 4,000,000 | 4,360,000 | ||
Medtronic, Inc. 1.625% 4/15/13 | 2,000,000 | 2,130,820 | ||
8,620,420 | ||||
Life Sciences Tools & Services - 0.5% | ||||
Charles River Laboratories International, Inc. 2.25% 6/15/13 (f) | 1,000,000 | 1,239,300 | ||
Fisher Scientific International, Inc.: | ||||
2.5% 10/1/23 (f) | 995,000 | 2,339,345 | ||
2.5% 10/1/23 | 2,400,000 | 5,642,640 | ||
Nektar Therapeutics 3.25% 9/28/12 | 1,000,000 | 915,100 | ||
10,136,385 | ||||
Pharmaceuticals - 0.2% | ||||
Alpharma, Inc. 2.125% 3/15/27 | 3,000,000 | 2,966,779 | ||
TOTAL HEALTH CARE | 32,517,584 | |||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
INDUSTRIALS - 1.4% | ||||
Aerospace & Defense - 0.3% | ||||
AAR Corp. 1.75% 2/1/26 (f) | $ 1,000,000 | $ 1,261,570 | ||
Alliant Techsystems, Inc. 3% 8/15/24 | 2,680,000 | 3,831,354 | ||
5,092,924 | ||||
Airlines - 0.2% | ||||
UAL Corp. 4.5% 6/30/21 (f) | 2,000,000 | 2,652,800 | ||
US Airways Group, Inc. 7% 9/30/20 (f) | 490,000 | 878,325 | ||
3,531,125 | ||||
Commercial Services & Supplies - 0.1% | ||||
FTI Consulting, Inc. 3.75% 7/15/12 (f) | 1,000,000 | 1,392,696 | ||
Construction & Engineering - 0.4% | ||||
Fluor Corp. 1.5% 2/15/24 | 2,000,000 | 3,749,476 | ||
Quanta Services, Inc. 3.75% 4/30/26 (f) | 3,000,000 | 4,474,032 | ||
8,223,508 | ||||
Electrical Equipment - 0.2% | ||||
GrafTech International Ltd. 1.625% 1/15/24 | 2,720,000 | 2,903,600 | ||
Machinery - 0.2% | ||||
Greenbrier Companies, Inc.: | ||||
2.375% 5/15/26 (f) | 1,000,000 | 920,593 | ||
2.375% 5/15/26 | 2,000,000 | 1,841,187 | ||
Trinity Industries, Inc. 3.875% 6/1/36 | 1,000,000 | 1,170,040 | ||
3,931,820 | ||||
TOTAL INDUSTRIALS | 25,075,673 | |||
INFORMATION TECHNOLOGY - 5.9% | ||||
Communications Equipment - 1.0% | ||||
Ciena Corp. 0.25% 5/1/13 | 1,560,000 | 1,579,800 | ||
Finisar Corp. 2.5% 10/15/10 | 6,920,000 | 8,719,200 | ||
JDS Uniphase Corp. 1% 5/15/26 (f) | 5,000,000 | 4,009,500 | ||
L-3 Communications Corp. 3% 8/1/35 | 2,000,000 | 2,227,500 | ||
Symmetricom, Inc. 3.25% 6/15/25 | 2,000,000 | 1,944,200 | ||
18,480,200 | ||||
Computers & Peripherals - 0.7% | ||||
EMC Corp.: | ||||
1.75% 12/1/13 (f) | 1,800,000 | 2,193,750 | ||
1.75% 12/1/13 | 930,000 | 1,133,438 | ||
Hutchinson Technology, Inc. 3.25% 1/15/26 | 3,000,000 | 2,573,700 | ||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Computers & Peripherals - continued | ||||
Maxtor Corp. 2.375% 8/15/12 | $ 600,000 | $ 794,700 | ||
SanDisk Corp. 1% 5/15/13 | 7,000,000 | 5,910,100 | ||
12,605,688 | ||||
Electronic Equipment & Instruments - 1.6% | ||||
Anixter International, Inc. 1% 2/15/13 (f) | 2,000,000 | 2,555,200 | ||
Coherent, Inc. 2.75% 3/1/11 (f) | 1,110,000 | 1,164,579 | ||
Flextronics International Ltd. 1% 8/1/10 | 8,420,000 | 8,103,408 | ||
Itron, Inc. 2.5% 8/1/26 | 10,000,000 | 12,208,000 | ||
Merix Corp. 4% 5/15/13 (f) | 1,000,000 | 866,875 | ||
Newport Corp. 2.5% 2/15/12 (f) | 1,000,000 | 936,920 | ||
Solectron Corp. 0.5% 2/15/34 | 1,000,000 | 830,400 | ||
Vishay Intertechnology, Inc. 3.625% 8/1/23 | 2,600,000 | 2,729,047 | ||
29,394,429 | ||||
IT Services - 0.5% | ||||
BearingPoint, Inc. 3.1% 12/15/24 (f) | 2,000,000 | 1,909,715 | ||
DST Systems, Inc. 4.125% 8/15/23 | 3,470,000 | 6,187,180 | ||
8,096,895 | ||||
Semiconductors & Semiconductor Equipment - 1.8% | ||||
Advanced Micro Devices, Inc. 6% 5/1/15 (f) | 5,000,000 | 4,925,000 | ||
Amkor Technology, Inc. 2.5% 5/15/11 | 2,000,000 | 2,380,800 | ||
Conexant Systems, Inc. 4% 3/1/26 | 3,000,000 | 2,601,600 | ||
Credence Systems Corp. 3.5% 5/15/10 (f) | 2,000,000 | 1,835,000 | ||
EMCORE Corp. 5.5% 5/15/11 | 880,000 | 925,100 | ||
Intel Corp. 2.95% 12/15/35 | 6,000,000 | 5,547,780 | ||
ON Semiconductor Corp.: | ||||
0% 4/15/24 | 6,500,000 | 7,907,900 | ||
1.875% 12/15/25 (f) | 1,250,000 | 2,092,375 | ||
Photronics, Inc. 2.25% 4/15/08 | 3,000,000 | 3,160,500 | ||
31,376,055 | ||||
Software - 0.3% | ||||
Borland Software Corp. 2.75% 2/15/12 (f) | 2,000,000 | 2,272,500 | ||
Cadence Design Systems, Inc. 1.5% 12/15/13 (f) | 2,000,000 | 2,344,000 | ||
Symantec Corp. 1% 6/15/13 (f) | 1,000,000 | 1,168,000 | ||
5,784,500 | ||||
TOTAL INFORMATION TECHNOLOGY | 105,737,767 | |||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
MATERIALS - 0.1% | ||||
Chemicals - 0.1% | ||||
Pioneer Companies, Inc. 2.75% 3/1/27 (f) | $ 1,420,000 | $ 1,696,900 | ||
TELECOMMUNICATION SERVICES - 0.3% | ||||
Diversified Telecommunication Services - 0.3% | ||||
Level 3 Communications, Inc. 3.5% 6/15/12 | 2,000,000 | 2,531,900 | ||
Time Warner Telecom, Inc. 2.375% 4/1/26 | 2,000,000 | 2,465,000 | ||
4,996,900 | ||||
TOTAL CONVERTIBLE BONDS | 241,374,027 | |||
Nonconvertible Bonds - 1.1% | ||||
FINANCIALS - 0.8% | ||||
Capital Markets - 0.4% | ||||
Goldman Sachs Group, Inc. 5.793% | 2,000,000 | 1,972,000 | ||
JPMorgan Chase Capital XXII 6.45% 2/2/37 | 3,000,000 | 2,916,543 | ||
Lehman Brothers Holdings, Inc.: | ||||
5.857% (g) | 1,000,000 | 989,421 | ||
6.19% (g) | 1,000,000 | 1,001,250 | ||
6,879,214 | ||||
Commercial Banks - 0.4% | ||||
Capital One Capital IV 6.745% 2/17/37 (g) | 2,000,000 | 1,907,220 | ||
HBOS plc 6.657% (f)(g) | 5,000,000 | 4,900,000 | ||
Wells Fargo Capital X 5.95% 12/15/36 | 1,000,000 | 953,980 | ||
7,761,200 | ||||
TOTAL FINANCIALS | 14,640,414 | |||
UTILITIES - 0.3% | ||||
Multi-Utilities - 0.3% | ||||
Wisconsin Energy Corp. 6.25% 5/15/67 (g) | 5,000,000 | 4,869,360 | ||
TOTAL NONCONVERTIBLE BONDS | 19,509,774 | |||
TOTAL CORPORATE BONDS (Cost $238,807,078) | 260,883,801 |
Common Stocks - 63.3% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 4.9% | |||
Automobiles - 0.1% | |||
Winnebago Industries, Inc. | 78,400 | $ 2,430,400 | |
Diversified Consumer Services - 0.5% | |||
Coinmach Service Corp. unit | 156,800 | 2,993,312 | |
Service Corp. International | 339,000 | 4,739,220 | |
Stewart Enterprises, Inc. Class A | 225,800 | 1,747,692 | |
9,480,224 | |||
Hotels, Restaurants & Leisure - 1.4% | |||
Accor SA | 23,500 | 2,185,288 | |
Aristocrat Leisure Ltd. | 229,600 | 2,928,206 | |
Centerplate, Inc. unit | 268,800 | 4,381,440 | |
Hilton Hotels Corp. | 27,700 | 984,735 | |
Jollibee Food Corp. | 409,500 | 491,400 | |
McDonald's Corp. | 105,849 | 5,350,667 | |
Minor International PCL (For. Reg.) | 1,212,900 | 416,552 | |
Starwood Hotels & Resorts Worldwide, Inc. | 65,500 | 4,720,585 | |
WMS Industries, Inc. (a) | 66,400 | 2,812,704 | |
24,271,577 | |||
Household Durables - 1.0% | |||
Bassett Furniture Industries, Inc. | 80,957 | 1,161,733 | |
Beazer Homes USA, Inc. | 21,600 | 772,632 | |
Black & Decker Corp. | 27,900 | 2,634,597 | |
KB Home | 35,600 | 1,633,684 | |
La-Z-Boy, Inc. | 95,477 | 1,122,810 | |
The Stanley Works | 43,910 | 2,776,429 | |
Urbi, Desarrollos Urbanos, SA de CV (a) | 243,500 | 1,040,932 | |
Whirlpool Corp. | 56,600 | 6,319,390 | |
17,462,207 | |||
Internet & Catalog Retail - 0.1% | |||
FTD Group, Inc. | 30,500 | 540,765 | |
Submarino SA | 15,200 | 645,585 | |
1,186,350 | |||
Leisure Equipment & Products - 0.3% | |||
Brunswick Corp. | 71,900 | 2,475,517 | |
Eastman Kodak Co. | 111,600 | 2,830,176 | |
MarineMax, Inc. (a) | 18,300 | 380,274 | |
5,685,967 | |||
Media - 0.8% | |||
Charter Communications, Inc. Class A (a) | 977,700 | 3,920,577 | |
Getty Images, Inc. (a) | 47,700 | 2,387,385 | |
Common Stocks - continued | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - continued | |||
Media - continued | |||
Grupo Televisa SA de CV (CPO) sponsored ADR | 21,500 | $ 618,770 | |
News Corp.: | |||
Class A | 86,700 | 1,915,203 | |
Class B | 8,400 | 198,492 | |
R.H. Donnelley Corp. | 49,200 | 3,834,648 | |
Viacom, Inc. Class B (non-vtg.) (a) | 41,865 | 1,880,576 | |
14,755,651 | |||
Multiline Retail - 0.4% | |||
JCPenney Co., Inc. | 36,600 | 2,945,568 | |
Retail Ventures, Inc. (a) | 39,791 | 771,547 | |
Sears Holdings Corp. (a) | 16,200 | 2,916,324 | |
Tuesday Morning Corp. | 90,385 | 1,259,967 | |
7,893,406 | |||
Specialty Retail - 0.1% | |||
AutoZone, Inc. (a) | 6,500 | 836,095 | |
Circuit City Stores, Inc. | 51,200 | 822,784 | |
Truworths International Ltd. | 78,600 | 458,132 | |
2,117,011 | |||
Textiles, Apparel & Luxury Goods - 0.2% | |||
G-III Apparel Group Ltd. (a) | 83,500 | 1,728,450 | |
VF Corp. | 22,000 | 2,063,160 | |
3,791,610 | |||
TOTAL CONSUMER DISCRETIONARY | 89,074,403 | ||
CONSUMER STAPLES - 3.2% | |||
Beverages - 0.1% | |||
Anadolu Efes Biracilk Ve Malt Sanyii AS | 11,000 | 455,028 | |
Remy Cointreau SA | 23,200 | 1,679,462 | |
2,134,490 | |||
Food & Staples Retailing - 0.5% | |||
Rite Aid Corp. | 380,200 | 2,402,864 | |
Safeway, Inc. | 154,900 | 5,340,952 | |
Wal-Mart de Mexico SA de CV Series V | 219,926 | 832,235 | |
8,576,051 | |||
Food Products - 1.4% | |||
B&G Foods, Inc. unit | 156,900 | 3,426,696 | |
BioMar Holding AS | 49,200 | 2,933,095 | |
Bunge Ltd. | 30,000 | 2,343,600 | |
Common Stocks - continued | |||
Shares | Value | ||
CONSUMER STAPLES - continued | |||
Food Products - continued | |||
Cermaq ASA (e) | 143,100 | $ 2,455,868 | |
Chaoda Modern Agriculture (Holdings) Ltd. | 1,024,000 | 889,118 | |
Chiquita Brands International, Inc. (e) | 234,337 | 4,297,741 | |
Kraft Foods, Inc. Class A | 70,794 | 2,395,669 | |
Marine Harvest ASA (a) | 2,180,000 | 2,414,671 | |
Ralcorp Holdings, Inc. (a) | 22,800 | 1,326,048 | |
Tyson Foods, Inc. Class A | 158,000 | 3,521,820 | |
26,004,326 | |||
Household Products - 0.1% | |||
Central Garden & Pet Co. (a) | 108,600 | 1,558,410 | |
Personal Products - 0.6% | |||
Avon Products, Inc. | 148,000 | 5,681,720 | |
Playtex Products, Inc. (a) | 312,100 | 4,650,290 | |
10,332,010 | |||
Tobacco - 0.5% | |||
Altria Group, Inc. | 102,300 | 7,273,530 | |
Japan Tobacco, Inc. | 484 | 2,521,206 | |
9,794,736 | |||
TOTAL CONSUMER STAPLES | 58,400,023 | ||
ENERGY - 8.2% | |||
Energy Equipment & Services - 2.8% | |||
Diamond Offshore Drilling, Inc. | 155,700 | 14,693,409 | |
National Oilwell Varco, Inc. (a) | 211,589 | 19,984,581 | |
Transocean, Inc. (a) | 158,600 | 15,580,864 | |
50,258,854 | |||
Oil, Gas & Consumable Fuels - 5.4% | |||
Cabot Oil & Gas Corp. | 220,400 | 8,595,600 | |
Canadian Natural Resources Ltd. | 105,300 | 6,999,651 | |
Chesapeake Energy Corp. | 55,800 | 1,945,188 | |
CONSOL Energy, Inc. | 110,700 | 5,378,913 | |
EOG Resources, Inc. | 67,900 | 5,221,510 | |
Noble Energy, Inc. | 67,900 | 4,297,391 | |
Peabody Energy Corp. | 96,300 | 5,204,052 | |
Plains Exploration & Production Co. (a) | 193,400 | 10,234,728 | |
Range Resources Corp. | 113,022 | 4,378,472 | |
Spectra Energy Corp. | 1,733 | 46,150 | |
Common Stocks - continued | |||
Shares | Value | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - continued | |||
Teekay Shipping Corp. | 142,050 | $ 8,645,163 | |
Valero Energy Corp. | 484,861 | 36,180,324 | |
97,127,142 | |||
TOTAL ENERGY | 147,385,996 | ||
FINANCIALS - 23.4% | |||
Capital Markets - 1.8% | |||
Ares Capital Corp. | 126,600 | 2,345,898 | |
Bank of New York Co., Inc. | 73,500 | 2,981,160 | |
Franklin Resources, Inc. | 17,600 | 2,389,024 | |
Janus Capital Group, Inc. | 96,800 | 2,679,424 | |
Merrill Lynch & Co., Inc. | 74,500 | 6,908,385 | |
Merrill Lynch & Co., Inc. (depositary shares) Series 1, unit | 277,700 | 7,039,695 | |
Morgan Stanley | 95,700 | 8,138,328 | |
32,481,914 | |||
Commercial Banks - 1.4% | |||
Cathay General Bancorp | 61,246 | 2,075,014 | |
Commerce Bancorp, Inc. | 72,400 | 2,499,248 | |
East West Bancorp, Inc. | 100,131 | 4,059,311 | |
Hanmi Financial Corp. | 150,600 | 2,630,982 | |
PNC Financial Services Group, Inc. | 32,700 | 2,413,260 | |
UCBH Holdings, Inc. | 125,600 | 2,337,416 | |
Wachovia Corp. | 91,809 | 4,975,130 | |
Wells Fargo & Co. | 115,900 | 4,182,831 | |
25,173,192 | |||
Consumer Finance - 0.1% | |||
Advance America Cash Advance Centers, Inc. | 98,400 | 1,736,760 | |
Diversified Financial Services - 3.3% | |||
Bank of America Corp. | 275,614 | 13,976,386 | |
Citigroup, Inc. | 350,400 | 19,093,296 | |
JPMorgan Chase & Co. | 490,904 | 25,443,554 | |
58,513,236 | |||
Insurance - 3.9% | |||
AFLAC, Inc. | 73,100 | 3,864,066 | |
American International Group, Inc. | 195,200 | 14,120,768 | |
Aspen Insurance Holdings Ltd. | 365,018 | 9,899,288 | |
Axis Capital Holdings Ltd. | 218,795 | 8,657,718 | |
Endurance Specialty Holdings Ltd. | 213,995 | 8,523,421 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Insurance - continued | |||
Everest Re Group Ltd. | 16,500 | $ 1,769,295 | |
Hartford Financial Services Group, Inc. | 37,600 | 3,879,192 | |
MetLife, Inc. | 49,500 | 3,366,000 | |
Platinum Underwriters Holdings Ltd. | 290,666 | 10,010,537 | |
Prudential Financial, Inc. | 42,500 | 4,335,850 | |
Universal American Financial Corp. (a) | 101,900 | 2,163,337 | |
70,589,472 | |||
Real Estate Investment Trusts - 11.8% | |||
Alexandria Real Estate Equities, Inc. | 66,800 | 7,027,360 | |
American Financial Realty Trust (SBI) | 215,500 | 2,430,840 | |
AvalonBay Communities, Inc. | 46,560 | 6,070,958 | |
Boston Properties, Inc. | 60,314 | 6,977,124 | |
BRE Properties, Inc. Class A | 112,400 | 7,105,928 | |
British Land Co. PLC | 22,800 | 653,234 | |
Capital Lease Funding, Inc. | 47,300 | 528,341 | |
CBL & Associates Properties, Inc. | 44,555 | 1,828,537 | |
Corporate Office Properties Trust (SBI) | 187,900 | 8,464,895 | |
DCT Industrial Trust, Inc. | 278,351 | 3,075,779 | |
Developers Diversified Realty Corp. | 165,500 | 10,203,075 | |
Duke Realty LP | 164,370 | 6,594,524 | |
Equity Lifestyle Properties, Inc. | 33,660 | 1,833,124 | |
Equity One, Inc. | 16,900 | 495,170 | |
Equity Residential (SBI) | 165,580 | 8,389,939 | |
General Growth Properties, Inc. | 282,125 | 16,656,660 | |
GMH Communities Trust | 107,200 | 1,089,152 | |
Health Care Property Investors, Inc. | 119,500 | 3,904,065 | |
Healthcare Realty Trust, Inc. | 79,100 | 2,592,107 | |
Hersha Hospitality Trust | 80,500 | 977,270 | |
Highwoods Properties, Inc. (SBI) | 101,800 | 4,462,912 | |
Home Properties, Inc. | 93,100 | 5,362,560 | |
HomeBanc Mortgage Corp., Georgia | 139,500 | 284,580 | |
Host Hotels & Resorts, Inc. | 302,645 | 7,723,500 | |
Inland Real Estate Corp. | 222,000 | 3,996,000 | |
Kilroy Realty Corp. | 65,100 | 4,838,232 | |
Kimco Realty Corp. | 103,938 | 4,811,290 | |
Mission West Properties, Inc. | 74,300 | 1,052,831 | |
Plum Creek Timber Co., Inc. | 16,200 | 677,160 | |
Potlatch Corp. | 49,530 | 2,168,423 | |
ProLogis Trust | 169,565 | 10,964,073 | |
Public Storage, Inc. | 115,536 | 10,340,472 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Real Estate Investment Trusts - continued | |||
Rayonier, Inc. | 52,520 | $ 2,361,299 | |
Simon Property Group, Inc. | 111,310 | 12,019,254 | |
SL Green Realty Corp. | 31,700 | 4,440,536 | |
Strategic Hotel & Resorts, Inc. | 193,700 | 4,517,084 | |
Tanger Factory Outlet Centers, Inc. | 126,300 | 5,298,285 | |
Taubman Centers, Inc. | 22,100 | 1,215,942 | |
UDR, Inc. | 416,040 | 12,630,974 | |
Unibail (Reg.) | 2,100 | 602,599 | |
Ventas, Inc. | 78,950 | 3,344,322 | |
Vornado Realty Trust | 111,850 | 13,534,969 | |
213,545,379 | |||
Real Estate Management & Development - 0.2% | |||
Brookfield Properties Corp. | 27,200 | 714,272 | |
Mitsubishi Estate Co. Ltd. | 101,000 | 3,103,607 | |
Thomas Properties Group, Inc. | 28,500 | 479,655 | |
4,297,534 | |||
Thrifts & Mortgage Finance - 0.9% | |||
Countrywide Financial Corp. | 45,600 | 1,775,664 | |
Fannie Mae | 58,100 | 3,713,752 | |
Hudson City Bancorp, Inc. | 192,300 | 2,536,437 | |
New York Community Bancorp, Inc. | 231,600 | 4,048,368 | |
Radian Group, Inc. | 72,100 | 4,462,990 | |
16,537,211 | |||
TOTAL FINANCIALS | 422,874,698 | ||
HEALTH CARE - 3.1% | |||
Biotechnology - 0.1% | |||
Amgen, Inc. (a) | 24,700 | 1,391,351 | |
Health Care Equipment & Supplies - 0.7% | |||
Becton, Dickinson & Co. | 72,400 | 5,520,500 | |
C.R. Bard, Inc. | 62,700 | 5,292,507 | |
Varian Medical Systems, Inc. (a) | 58,974 | 2,376,652 | |
13,189,659 | |||
Health Care Providers & Services - 0.6% | |||
Acibadem Saglik Hizmetleri AS | 57,847 | 742,022 | |
Brookdale Senior Living, Inc. | 132,580 | 6,259,102 | |
Bumrungrad Hospital PCL (For. Reg.) | 346,100 | 464,463 | |
Capital Senior Living Corp. (a) | 27,600 | 306,912 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE - continued | |||
Health Care Providers & Services - continued | |||
DaVita, Inc. (a) | 54,000 | $ 2,982,420 | |
Henry Schein, Inc. (a) | 800 | 42,824 | |
Sun Healthcare Group, Inc. (a) | 44,700 | 639,210 | |
11,436,953 | |||
Health Care Technology - 0.2% | |||
Cerner Corp. (a) | 50,000 | 2,840,500 | |
Pharmaceuticals - 1.5% | |||
Merck & Co., Inc. | 250,800 | 13,154,460 | |
MGI Pharma, Inc. (a) | 114,300 | 2,443,734 | |
Pfizer, Inc. | 295,000 | 8,109,550 | |
Wyeth | 44,400 | 2,568,096 | |
26,275,840 | |||
TOTAL HEALTH CARE | 55,134,303 | ||
INDUSTRIALS - 4.8% | |||
Aerospace & Defense - 1.3% | |||
General Dynamics Corp. | 41,900 | 3,362,056 | |
Honeywell International, Inc. | 114,900 | 6,653,859 | |
Precision Castparts Corp. | 24,500 | 2,929,220 | |
United Technologies Corp. | 158,000 | 11,146,900 | |
24,092,035 | |||
Air Freight & Logistics - 0.2% | |||
United Parcel Service, Inc. Class B | 39,100 | 2,814,027 | |
Building Products - 0.2% | |||
Masco Corp. | 82,100 | 2,480,241 | |
Commercial Services & Supplies - 0.3% | |||
Allied Waste Industries, Inc. | 135,900 | 1,829,214 | |
The Brink's Co. | 13,100 | 863,683 | |
The Geo Group, Inc. (a) | 28,450 | 1,550,525 | |
Waste Management, Inc. | 46,300 | 1,790,421 | |
6,033,843 | |||
Construction & Engineering - 0.8% | |||
Fluor Corp. | 91,335 | 9,507,974 | |
Shaw Group, Inc. (a) | 137,700 | 5,571,342 | |
15,079,316 | |||
Electrical Equipment - 0.1% | |||
Cooper Industries Ltd. Class A | 30,500 | 1,634,190 | |
Common Stocks - continued | |||
Shares | Value | ||
INDUSTRIALS - continued | |||
Industrial Conglomerates - 0.3% | |||
Tyco International Ltd. | 129,000 | $ 4,303,440 | |
Machinery - 1.0% | |||
Dover Corp. | 32,300 | 1,616,615 | |
Flowserve Corp. | 57,606 | 3,998,432 | |
Oshkosh Truck Co. | 42,300 | 2,609,487 | |
SPX Corp. | 115,400 | 10,140,198 | |
18,364,732 | |||
Road & Rail - 0.6% | |||
Con-way, Inc. | 77,600 | 4,399,920 | |
Kansas City Southern | 1,803 | 74,013 | |
Landstar System, Inc. | 39,600 | 1,926,936 | |
Union Pacific Corp. | 37,100 | 4,477,228 | |
10,878,097 | |||
TOTAL INDUSTRIALS | 85,679,921 | ||
INFORMATION TECHNOLOGY - 8.7% | |||
Communications Equipment - 0.7% | |||
Alcatel-Lucent SA sponsored ADR | 124,200 | 1,704,024 | |
Avocent Corp. (a) | 30,500 | 854,915 | |
Comverse Technology, Inc. (a) | 87,300 | 2,000,916 | |
Motorola, Inc. | 180,000 | 3,274,200 | |
Nokia Corp. sponsored ADR | 163,900 | 4,487,582 | |
12,321,637 | |||
Computers & Peripherals - 1.4% | |||
Dell, Inc. (a) | 109,700 | 2,947,639 | |
Diebold, Inc. | 54,300 | 2,692,194 | |
Hewlett-Packard Co. | 118,200 | 5,402,922 | |
Intermec, Inc. (a) | 144,900 | 3,564,540 | |
International Business Machines Corp. | 66,300 | 7,067,580 | |
NCR Corp. (a) | 51,100 | 2,742,537 | |
Sun Microsystems, Inc. (a) | 141,900 | 723,690 | |
25,141,102 | |||
Electronic Equipment & Instruments - 1.5% | |||
Agilent Technologies, Inc. (a) | 74,300 | 2,836,031 | |
Amphenol Corp. Class A | 235,000 | 8,408,300 | |
Arrow Electronics, Inc. (a) | 106,200 | 4,359,510 | |
Avnet, Inc. (a) | 103,000 | 4,412,520 | |
Flextronics International Ltd. (a) | 279,200 | 3,224,760 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Electronic Equipment & Instruments - continued | |||
Ingram Micro, Inc. Class A (a) | 87,000 | $ 1,802,640 | |
Molex, Inc. | 82,300 | 2,447,602 | |
27,491,363 | |||
Internet Software & Services - 0.4% | |||
Google, Inc. Class A (sub. vtg.) (a) | 8,100 | 4,031,775 | |
VeriSign, Inc. (a) | 128,100 | 3,821,223 | |
7,852,998 | |||
IT Services - 0.3% | |||
Mastercard, Inc. Class A | 30,700 | 4,591,185 | |
Semiconductors & Semiconductor Equipment - 3.5% | |||
Advanced Micro Devices, Inc. (a) | 182,600 | 2,605,702 | |
Analog Devices, Inc. | 49,300 | 1,785,153 | |
Applied Materials, Inc. | 195,400 | 3,732,140 | |
ASML Holding NV (NY Shares) (a) | 145,700 | 3,754,689 | |
Atmel Corp. (a) | 428,900 | 2,397,551 | |
Axcelis Technologies, Inc. (a) | 219,100 | 1,408,813 | |
Broadcom Corp. Class A (a) | 75,800 | 2,316,448 | |
Cypress Semiconductor Corp. (a) | 78,300 | 1,681,101 | |
Fairchild Semiconductor International, Inc. (a) | 131,500 | 2,422,230 | |
FormFactor, Inc. (a) | 72,500 | 2,884,050 | |
Hittite Microwave Corp. (a) | 38,800 | 1,577,220 | |
Integrated Device Technology, Inc. (a) | 268,529 | 4,030,620 | |
Intel Corp. | 158,100 | 3,505,077 | |
Intersil Corp. Class A | 78,700 | 2,368,870 | |
Lam Research Corp. (a) | 49,700 | 2,666,902 | |
Linear Technology Corp. | 70,400 | 2,526,656 | |
Maxim Integrated Products, Inc. | 87,200 | 2,681,400 | |
Microchip Technology, Inc. | 45,700 | 1,854,506 | |
National Semiconductor Corp. | 163,900 | 4,412,188 | |
ON Semiconductor Corp. (a) | 453,300 | 4,868,442 | |
Saifun Semiconductors Ltd. (a) | 140,100 | 1,490,664 | |
Silicon Motion Technology Corp. sponsored ADR (a) | 94,100 | 2,176,533 | |
Volterra Semiconductor Corp. (a) | 212,163 | 3,335,202 | |
62,482,157 | |||
Software - 0.9% | |||
Business Objects SA sponsored ADR (a) | 64,495 | 2,651,389 | |
Microsoft Corp. | 135,200 | 4,146,584 | |
Nintendo Co. Ltd. | 7,900 | 2,758,680 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Software - continued | |||
Symantec Corp. (a) | 129,800 | $ 2,594,702 | |
Ubisoft Entertainment SA (a) | 92,304 | 4,628,921 | |
16,780,276 | |||
TOTAL INFORMATION TECHNOLOGY | 156,660,718 | ||
MATERIALS - 1.4% | |||
Chemicals - 0.6% | |||
Agrium, Inc. | 65,300 | 2,518,701 | |
Arkema (a) | 27,400 | 1,795,844 | |
Celanese Corp. Class A | 61,400 | 2,234,346 | |
Monsanto Co. | 59,900 | 3,689,840 | |
10,238,731 | |||
Metals & Mining - 0.7% | |||
Alcoa, Inc. | 110,600 | 4,565,568 | |
Titanium Metals Corp. | 262,800 | 9,092,880 | |
13,658,448 | |||
Paper & Forest Products - 0.1% | |||
Neenah Paper, Inc. | 46,175 | 2,022,465 | |
TOTAL MATERIALS | 25,919,644 | ||
TELECOMMUNICATION SERVICES - 3.1% | |||
Diversified Telecommunication Services - 2.5% | |||
AT&T, Inc. | 639,915 | 26,454,086 | |
CenturyTel, Inc. | 48,689 | 2,406,210 | |
Level 3 Communications, Inc. (a) | 287,274 | 1,671,935 | |
Verizon Communications, Inc. | 315,000 | 13,711,950 | |
44,244,181 | |||
Wireless Telecommunication Services - 0.6% | |||
America Movil SA de CV Series L sponsored ADR | 37,600 | 2,276,680 | |
Bharti Airtel Ltd. (a) | 41,763 | 899,674 | |
Cellcom Israel Ltd. | 20,700 | 513,360 | |
MTN Group Ltd. | 107,100 | 1,471,121 | |
NII Holdings, Inc. (a) | 11,200 | 912,464 | |
Common Stocks - continued | |||
Shares | Value | ||
TELECOMMUNICATION SERVICES - continued | |||
Wireless Telecommunication Services - continued | |||
Partner Communications Co. Ltd. ADR (e) | 31,818 | $ 540,270 | |
Sprint Nextel Corp. | 208,200 | 4,757,370 | |
11,370,939 | |||
TOTAL TELECOMMUNICATION SERVICES | 55,615,120 | ||
UTILITIES - 2.5% | |||
Electric Utilities - 1.0% | |||
Entergy Corp. | 41,300 | 4,662,770 | |
Exelon Corp. | 56,200 | 4,383,600 | |
PPL Corp. | 192,811 | 8,861,594 | |
17,907,964 | |||
Independent Power Producers & Energy Traders - 1.1% | |||
AES Corp. (a) | 377,300 | 8,953,329 | |
Constellation Energy Group, Inc. | 105,500 | 9,681,735 | |
Mirant Corp. (a) | 38,500 | 1,786,400 | |
20,421,464 | |||
Multi-Utilities - 0.4% | |||
CMS Energy Corp. | 270,700 | 4,940,275 | |
Public Service Enterprise Group, Inc. | 23,500 | 2,090,090 | |
7,030,365 | |||
TOTAL UTILITIES | 45,359,793 | ||
TOTAL COMMON STOCKS (Cost $932,092,962) | 1,142,104,619 | ||
Preferred Stocks - 15.3% | |||
Convertible Preferred Stocks - 4.0% | |||
CONSUMER DISCRETIONARY - 0.1% | |||
Automobiles - 0.1% | |||
General Motors Corp. Series C, 6.25% | 98,500 | 2,262,545 | |
Hotels, Restaurants & Leisure - 0.0% | |||
Six Flags, Inc. 7.25% PIERS | 2,100 | 50,138 | |
Media - 0.0% | |||
Emmis Communications Corp. Series A, 6.25% | 10,100 | 478,336 | |
TOTAL CONSUMER DISCRETIONARY | 2,791,019 | ||
Preferred Stocks - continued | |||
Shares | Value | ||
Convertible Preferred Stocks - continued | |||
ENERGY - 1.1% | |||
Oil, Gas & Consumable Fuels - 1.1% | |||
Chesapeake Energy Corp.: | |||
4.50% | 20,500 | $ 2,080,750 | |
5.00% (a) | 7,500 | 1,107,188 | |
6.25% | 8,000 | 2,285,280 | |
El Paso Corp. 4.99% | 10,000 | 14,527,447 | |
20,000,665 | |||
FINANCIALS - 0.2% | |||
Diversified Financial Services - 0.1% | |||
Carriage Services Capital Trust 7.00% TIDES | 45,000 | 1,957,500 | |
Real Estate Investment Trusts - 0.1% | |||
HRPT Properties Trust 6.50% | 40,000 | 998,760 | |
TOTAL FINANCIALS | 2,956,260 | ||
INDUSTRIALS - 0.2% | |||
Road & Rail - 0.2% | |||
Kansas City Southern: | |||
4.25% | 1,370 | 1,756,979 | |
5.125% | 1,000 | 1,544,200 | |
3,301,179 | |||
MATERIALS - 1.0% | |||
Chemicals - 0.7% | |||
Celanese Corp. 4.25% | 252,600 | 11,963,136 | |
Containers & Packaging - 0.1% | |||
Owens-Illinois, Inc. 4.75% | 63,510 | 2,619,788 | |
Metals & Mining - 0.2% | |||
Freeport-McMoRan Copper & Gold, Inc. 5.50% | 2,550 | 4,438,989 | |
TOTAL MATERIALS | 19,021,913 | ||
UTILITIES - 1.4% | |||
Electric Utilities - 0.5% | |||
AES Trust VII 6.00% | 180,700 | 8,977,176 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Convertible Preferred Stocks - continued | |||
UTILITIES - continued | |||
Independent Power Producers & Energy Traders - 0.5% | |||
NRG Energy, Inc.: | |||
4.00% (f) | 3,900 | $ 8,861,970 | |
Series A, 5.75% | 1,000 | 382,960 | |
9,244,930 | |||
Multi-Utilities - 0.4% | |||
CMS Energy Corp. 4.50% | 66,000 | 6,279,900 | |
TOTAL UTILITIES | 24,502,006 | ||
TOTAL CONVERTIBLE PREFERRED STOCKS | 72,573,042 | ||
Nonconvertible Preferred Stocks - 11.3% | |||
CONSUMER DISCRETIONARY - 0.1% | |||
Household Durables - 0.0% | |||
Hovnanian Enterprises, Inc. Series A, 7.625% | 40,000 | 984,000 | |
Media - 0.1% | |||
CBS Corp. 6.75% | 40,000 | 991,200 | |
TOTAL CONSUMER DISCRETIONARY | 1,975,200 | ||
CONSUMER STAPLES - 0.1% | |||
Food Products - 0.1% | |||
H.J. Heinz Finance Co. 6.226% | 10 | 1,020,000 | |
ENERGY - 0.2% | |||
Oil, Gas & Consumable Fuels - 0.2% | |||
Apache Corp. (depositary shares) Series B, 5.68% | 29,375 | 2,930,156 | |
Devon Energy Corp. 6.49% | 13,750 | 1,379,125 | |
4,309,281 | |||
FINANCIALS - 8.1% | |||
Capital Markets - 1.5% | |||
Bear Stearns Companies, Inc.: | |||
Series E, 6.155% | 15,000 | 756,000 | |
Series G, 5.49% | 15,000 | 750,000 | |
Deutsche Bank Contingent Capital Trust II 6.55% | 80,000 | 2,025,600 | |
Goldman Sachs Group, Inc.: | |||
Series A, 3.9106% | 120,000 | 3,079,200 | |
Series B, 6.20% | 100,000 | 2,575,000 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Goldman Sachs Group, Inc.: - continued | |||
Series C, 4.9931% | 40,000 | $ 1,048,800 | |
Series D | 160,000 | 4,155,200 | |
Lehman Brothers Holdings, Inc.: | |||
(depositary shares) Series F, 6.50% | 169,015 | 4,314,953 | |
Series D, 5.67% | 34,900 | 1,708,355 | |
Merrill Lynch & Co., Inc.: | |||
Series 5, 5.86% | 80,000 | 2,019,200 | |
Series H, 3.97% | 120,000 | 3,049,200 | |
Morgan Stanley Capital Trust IV 6.60% | 80,000 | 2,008,800 | |
27,490,308 | |||
Commercial Banks - 1.5% | |||
ABN AMRO Capital Funding Trust V 5.90% | 20,000 | 466,600 | |
ABN Amro Capital Funding Trust VII 6.08% | 40,400 | 971,620 | |
Barclays Bank PLC Series 2, 6.625% | 40,000 | 1,034,000 | |
BNY Capital V 5.95% | 115,000 | 2,745,050 | |
First Tennessee Bank NA, Memphis 3.90% (f) | 5,000 | 5,125,000 | |
Keycorp Capital IX 6.75% | 40,000 | 1,006,400 | |
Royal Bank of Scotland Group PLC Series R, 6.125% | 40,000 | 998,800 | |
Santander Finance Preferred SA Unipersonal (f) | 40,000 | 946,000 | |
Santander Finance Preferred SA Unipersonal: | |||
6.41% | 69,400 | 1,738,470 | |
6.50% (f) | 40,000 | 984,000 | |
6.80% (f) | 160,000 | 4,000,000 | |
U.S. Bancorp, Delaware Series B, 0.00% | 40,000 | 1,053,600 | |
USB Capital XII 6.30% | 80,000 | 1,952,000 | |
Wachovia Capital Trust IX 6.375% | 120,000 | 2,964,000 | |
25,985,540 | |||
Consumer Finance - 0.2% | |||
Ford Motor Credit Co. LLC 7.375% | 40,000 | 866,000 | |
HSBC USA, Inc.: | |||
Series G, 4.9175% | 80,000 | 2,120,000 | |
Series H, 6.50% | 40,000 | 1,056,400 | |
SLM Corp. 4.07% | 1,200 | 104,400 | |
4,146,800 | |||
Diversified Financial Services - 1.0% | |||
Bank of America Corp.: | |||
Series D | 20,000 | 519,800 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Diversified Financial Services - continued | |||
Bank of America Corp.: - continued | |||
Series E | 40,000 | $ 1,019,200 | |
CIT Group, Inc. Series B, 5.189% | 15,000 | 1,479,000 | |
Citigroup Capital XVI Series C, 6.45% | 120,000 | 3,012,000 | |
Citigroup Capital XVII 6.35% | 80,000 | 1,992,000 | |
Deutsche Bank Capital Funding Trust VIII 6.375% | 140,000 | 3,514,000 | |
General Electric Capital Corp. 6.05% | 80,000 | 1,963,200 | |
Merrill Lynch Capital Trust II 6.45% | 200,000 | 4,900,000 | |
18,399,200 | |||
Insurance - 0.2% | |||
American International Group, Inc. 6.45% | 80,000 | 2,000,000 | |
MetLife, Inc. Series A, 4.39% | 40,000 | 1,041,200 | |
3,041,200 | |||
Real Estate Investment Trusts - 0.6% | |||
Apartment Investment & Management Co. Series V, 8.00% | 79,000 | 2,012,920 | |
Duke Realty LP (depositary shares) Series K, 6.50% | 95,800 | 2,394,042 | |
Hospitality Properties Trust Series C, 7.00% | 100,000 | 2,460,000 | |
Host Hotels & Resorts, Inc. Series E, 8.875% | 20,000 | 535,200 | |
Public Storage, Inc. Series M, 6.625% | 80,000 | 1,971,200 | |
Vornado Realty Trust Series E, 7.00% | 40,000 | 1,017,200 | |
10,390,562 | |||
Thrifts & Mortgage Finance - 3.1% | |||
Countrywide Capital V 7.00% | 80,000 | 1,990,400 | |
Fannie Mae: | |||
5.10% | 27,562 | 1,219,619 | |
7.00% | 42,200 | 2,270,782 | |
Series H, 5.81% | 71,200 | 3,560,000 | |
Series I, 5.375% | 5,000 | 243,250 | |
Series L, 5.125% | 140,900 | 6,602,574 | |
Series N, 5.50% | 92,650 | 4,525,026 | |
Freddie Mac: | |||
5.30% | 40,000 | 1,890,000 | |
5.57% | 546,000 | 13,404,300 | |
5.90% | 40,000 | 1,024,000 | |
Series F, 5.00% | 58,500 | 2,612,025 | |
Series H, 5.10% | 10,300 | 462,161 | |
Series K, 5.79% | 35,200 | 1,742,400 | |
Series O, 5.81% | 19,500 | 970,125 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - continued | |||
Freddie Mac: - continued | |||
Series R, 5.70% | 117,000 | $ 5,791,500 | |
Series S, adj. rate | 10,000 | 528,500 | |
Series T 6.42% | 10,000 | 532,200 | |
Series W, 5.66% | 120,000 | 2,996,400 | |
Indymac Bank F S B Pasadena Cali 8.50% (f) | 80,000 | 2,028,000 | |
Sovereign Bancorp, Inc. Series C, 7.30% | 80,000 | 2,174,400 | |
56,567,662 | |||
TOTAL FINANCIALS | 146,021,272 | ||
MATERIALS - 0.1% | |||
Chemicals - 0.1% | |||
E.I. du Pont de Nemours & Co. Series B, 4.50% | 9,900 | 827,937 | |
Metals & Mining - 0.0% | |||
Alcoa, Inc. 3.75% | 6,400 | 480,000 | |
TOTAL MATERIALS | 1,307,937 | ||
TELECOMMUNICATION SERVICES - 0.4% | |||
Diversified Telecommunication Services - 0.4% | |||
AT&T, Inc. 6.375% | 281,800 | 6,994,276 | |
UTILITIES - 2.3% | |||
Electric Utilities - 2.1% | |||
Alabama Power Co.: | |||
4.60% | 2,000 | 188,500 | |
5.20% | 120,000 | 2,858,400 | |
5.30% | 88,600 | 2,090,960 | |
5.625% | 80,000 | 2,000,000 | |
Baltimore Gas & Electric Co. Series 1993, 6.70% (a) | 10,000 | 1,034,000 | |
Duquesne Light Co. 6.50% | 106,050 | 5,307,803 | |
Entergy Louisiana LLC 6.95% | 7,500 | 746,250 | |
FPL Group Capital Trust I 5.875% | 20,000 | 471,600 | |
Mid-American Energy Co. 4.40% | 5,000 | 427,500 | |
Pacific Gas & Electric Co.: | |||
Series A, 5.00% | 16,900 | 383,630 | |
Series B, 5.50% | 61,900 | 1,473,839 | |
Series D 5.00% | 69,200 | 1,550,080 | |
PPL Electric Utilities Corp. 6.25% | 180,000 | 4,563,000 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
UTILITIES - continued | |||
Electric Utilities - continued | |||
Southern California Edison Co.: | |||
4.78% | 46,500 | $ 1,011,375 | |
5.349% | 40,000 | 4,036,000 | |
6.125% | 35,000 | 3,535,000 | |
Series B, 4.08% | 27,271 | 506,968 | |
Series C: | |||
4.24% | 94,600 | 1,773,750 | |
6.00% | 20,000 | 2,055,000 | |
Series D, 4.32% | 70,000 | 1,400,000 | |
37,413,655 | |||
Independent Power Producers & Energy Traders - 0.0% | |||
Heco Capital Trust III 6.50% | 12,000 | 300,600 | |
Multi-Utilities - 0.2% | |||
Consolidated Edison Co. of New York, Inc. Series A, 5.00% | 28,705 | 2,648,036 | |
San Diego Gas & Electric Co. 1.70% | 67,548 | 1,764,692 | |
4,412,728 | |||
TOTAL UTILITIES | 42,126,983 | ||
TOTAL NONCONVERTIBLE PREFERRED STOCKS | 203,754,949 | ||
TOTAL PREFERRED STOCKS (Cost $257,748,989) | 276,327,991 | ||
Preferred Securities - 0.4% | |||
Principal Amount | |||
FINANCIALS - 0.4% | |||
Commercial Banks - 0.2% | |||
PNC Preferred Funding Trust I 6.517% 12/31/49 (f)(g) | $ 3,000,000 | 3,102,340 | |
SunTrust Preferred Capital I 5.853% 12/15/49 (g) | 1,000,000 | 1,036,743 | |
4,139,083 | |||
Diversified Financial Services - 0.1% | |||
Wachovia Capital Trust III 5.8% (g) | 2,000,000 | 2,027,133 | |
Preferred Securities - continued | |||
Principal Amount | Value | ||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - 0.1% | |||
Washington Mutual Preferred Funding Trust I 6.534% (f)(g) | $ 2,000,000 | $ 1,985,498 | |
TOTAL PREFERRED SECURITIES (Cost $8,000,001) | 8,151,714 | ||
Money Market Funds - 6.8% | |||
Shares | |||
Fidelity Cash Central Fund, 5.33% (b) | 117,375,018 | 117,375,018 | |
Fidelity Securities Lending Cash Central Fund, 5.36% (b)(c) | 5,056,580 | 5,056,580 | |
TOTAL MONEY MARKET FUNDS (Cost $122,431,598) | 122,431,598 | ||
TOTAL INVESTMENT PORTFOLIO - 100.3% (Cost $1,559,080,628) | 1,809,899,723 | ||
NET OTHER ASSETS - (0.3)% | (6,170,343) | ||
NET ASSETS - 100% | $ 1,803,729,380 |
Security Type Abbreviations |
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(e) Security or a portion of the security is on loan at period end. |
(f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $103,384,833 or 5.7% of net assets. |
(g) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 2,542,359 |
Fidelity Securities Lending Cash Central Fund | 12,030 |
Total | $ 2,554,389 |
Other Information |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 2.2% |
BBB | 1.1% |
BB | 3.4% |
B | 3.2% |
CCC,CC,C | 1.3% |
Not Rated | 3.7% |
Equities | 78.6% |
Short-Term Investments and Net Other Assets | 6.5% |
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. Percentages are adjusted for the effect of futures contracts, if applicable. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
May 31, 2007 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $4,882,929) - See accompanying schedule: Unaffiliated issuers (cost $1,436,649,030) | $ 1,687,468,125 | |
Fidelity Central Funds (cost $122,431,598) | 122,431,598 | |
Total Investments (cost $1,559,080,628) | $ 1,809,899,723 | |
Cash | 49,466 | |
Foreign currency held at value (cost $12,570) | 12,493 | |
Receivable for investments sold | 5,956,598 | |
Receivable for fund shares sold | 6,251,782 | |
Dividends receivable | 1,717,317 | |
Interest receivable | 1,471,682 | |
Distributions receivable from Fidelity Central Funds | 506,596 | |
Prepaid expenses | 3,427 | |
Other receivables | 609 | |
Total assets | 1,825,869,693 | |
Liabilities | ||
Payable for investments purchased | $ 13,640,626 | |
Payable for fund shares redeemed | 2,082,569 | |
Accrued management fee | 814,663 | |
Distribution fees payable | 198,625 | |
Other affiliated payables | 302,245 | |
Other payables and accrued expenses | 45,005 | |
Collateral on securities loaned, at value | 5,056,580 | |
Total liabilities | 22,140,313 | |
Net Assets | $ 1,803,729,380 | |
Net Assets consist of: | ||
Paid in capital | $ 1,503,897,761 | |
Undistributed net investment income | 6,028,336 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 43,004,322 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 250,798,961 | |
Net Assets | $ 1,803,729,380 |
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, 2007 (Unaudited) | ||
Calculation of Maximum Offering Price | $ 14.09 | |
Maximum offering price per share (100/94.25 of $14.09) | $ 14.95 | |
Class T: | $ 14.07 | |
Maximum offering price per share (100/96.50 of $14.07) | $ 14.58 | |
Class B: | $ 14.03 | |
Class C: | $ 14.04 | |
Strategic Dividend and Income: | $ 14.13 | |
Institutional Class: | $ 14.12 |
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
Six months ended May 31, 2007 (Unaudited) | ||
Investment Income | ||
Dividends | $ 13,949,002 | |
Interest | 2,532,545 | |
Income from Fidelity Central Funds | 2,554,389 | |
Total income | 19,035,936 | |
Expenses | ||
Management fee | $ 4,303,540 | |
Transfer agent fees | 1,412,605 | |
Distribution fees | 1,019,617 | |
Accounting and security lending fees | 241,779 | |
Custodian fees and expenses | 30,059 | |
Independent trustees' compensation | 2,371 | |
Registration fees | 124,567 | |
Audit | 29,033 | |
Legal | 9,699 | |
Miscellaneous | 4,809 | |
Total expenses before reductions | 7,178,079 | |
Expense reductions | (35,603) | 7,142,476 |
Net investment income (loss) | 11,893,460 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $13,745) | 46,238,978 | |
Foreign currency transactions | (11,905) | |
Total net realized gain (loss) | 46,227,073 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $1,995) | 80,261,896 | |
Assets and liabilities in foreign currencies | (10,203) | |
Total change in net unrealized appreciation (depreciation) | 80,251,693 | |
Net gain (loss) | 126,478,766 | |
Net increase (decrease) in net assets resulting from operations | $ 138,372,226 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 11,893,460 | $ 20,961,984 |
Net realized gain (loss) | 46,227,073 | 74,058,210 |
Change in net unrealized appreciation (depreciation) | 80,251,693 | 71,876,495 |
Net increase (decrease) in net assets resulting | 138,372,226 | 166,896,689 |
Distributions to shareholders from net investment income | (10,236,496) | (19,594,724) |
Distributions to shareholders from net realized gain | (67,051,469) | (10,685,905) |
Total distributions | (77,287,965) | (30,280,629) |
Share transactions - net increase (decrease) | 364,315,074 | 245,540,386 |
Total increase (decrease) in net assets | 425,399,335 | 382,156,446 |
Net Assets | ||
Beginning of period | 1,378,330,045 | 996,173,599 |
End of period (including undistributed net investment income of $6,028,336 and undistributed net investment income of $4,371,372, respectively) | $ 1,803,729,380 | $ 1,378,330,045 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.66 | $ 12.18 | $ 11.09 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .09 | .19 | .18 | .16 |
Net realized and unrealized gain (loss) | 1.09 | 1.61 | 1.10 | 1.04 |
Total from investment operations | 1.18 | 1.80 | 1.28 | 1.20 |
Distributions from net investment income | (.09) | (.19) | (.19) | (.11) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.75) | (.32) | (.19) | (.11) |
Net asset value, end of period | $ 14.09 | $ 13.66 | $ 12.18 | $ 11.09 |
Total Return B, C, D | 9.05% | 15.01% | 11.63% | 12.01% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.10% A | 1.14% | 1.16% | 1.20% A |
Expenses net of fee waivers, if any | 1.10% A | 1.14% | 1.16% | 1.20% A |
Expenses net of all reductions | 1.10% A | 1.14% | 1.13% | 1.17% A |
Net investment income (loss) | 1.37% A | 1.52% | 1.60% | 1.67% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 108,615 | $ 70,083 | $ 38,886 | $ 21,985 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class T
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.64 | $ 12.17 | $ 11.08 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .08 | .17 | .16 | .13 |
Net realized and unrealized gain (loss) | 1.08 | 1.59 | 1.09 | 1.04 |
Total from investment operations | 1.16 | 1.76 | 1.25 | 1.17 |
Distributions from net investment income | (.07) | (.16) | (.16) | (.09) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.73) | (.29) | (.16) | (.09) |
Net asset value, end of period | $ 14.07 | $ 13.64 | $ 12.17 | $ 11.08 |
Total Return B, C, D | 8.95% | 14.70% | 11.43% | 11.75% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.32% A | 1.35% | 1.38% | 1.45% A |
Expenses net of fee waivers, if any | 1.32% A | 1.35% | 1.38% | 1.45% A |
Expenses net of all reductions | 1.32% A | 1.35% | 1.35% | 1.42% A |
Net investment income (loss) | 1.16% A | 1.31% | 1.38% | 1.43% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 172,128 | $ 119,834 | $ 79,920 | $ 36,526 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class B
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.61 | $ 12.14 | $ 11.06 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .04 | .09 | .09 | .09 |
Net realized and unrealized gain (loss) | 1.07 | 1.59 | 1.09 | 1.03 |
Total from investment operations | 1.11 | 1.68 | 1.18 | 1.12 |
Distributions from net investment income | (.03) | (.08) | (.10) | (.06) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.69) | (.21) | (.10) | (.06) |
Net asset value, end of period | $ 14.03 | $ 13.61 | $ 12.14 | $ 11.06 |
Total Return B, C, D | 8.59% | 14.05% | 10.73% | 11.24% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.91% A | 1.96% | 1.96% | 1.99% A |
Expenses net of fee waivers, if any | 1.91% A | 1.96% | 1.95% | 1.95% A |
Expenses net of all reductions | 1.91% A | 1.96% | 1.93% | 1.92% A |
Net investment income (loss) | .56% A | .70% | .81% | .92% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 33,939 | $ 23,992 | $ 19,744 | $ 13,457 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class C
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.61 | $ 12.15 | $ 11.06 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .04 | .10 | .10 | .09 |
Net realized and unrealized gain (loss) | 1.09 | 1.58 | 1.09 | 1.03 |
Total from investment operations | 1.13 | 1.68 | 1.19 | 1.12 |
Distributions from net investment income | (.04) | (.09) | (.10) | (.06) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.70) | (.22) | (.10) | (.06) |
Net asset value, end of period | $ 14.04 | $ 13.61 | $ 12.15 | $ 11.06 |
Total Return B, C, D | 8.69% | 14.05% | 10.85% | 11.24% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.85% A | 1.89% | 1.90% | 1.94% A |
Expenses net of fee waivers, if any | 1.85% A | 1.89% | 1.90% | 1.94% A |
Expenses net of all reductions | 1.85% A | 1.88% | 1.87% | 1.92% A |
Net investment income (loss) | .62% A | .78% | .86% | .93% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 101,182 | $ 75,301 | $ 49,713 | $ 28,795 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Strategic Dividend and Income
Six months ended May 31, 2007 | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 G | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.70 | $ 12.22 | $ 11.11 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) D | .11 | .24 | .22 | .19 |
Net realized and unrealized gain (loss) | 1.08 | 1.60 | 1.11 | 1.04 |
Total from investment operations | 1.19 | 1.84 | 1.33 | 1.23 |
Distributions from net investment income | (.10) | (.23) | (.22) | (.12) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.76) | (.36) | (.22) | (.12) |
Net asset value, end of period | $ 14.13 | $ 13.70 | $ 12.22 | $ 11.11 |
Total Return B, C | 9.18% | 15.33% | 12.08% | 12.32% |
Ratios to Average Net Assets E, H | ||||
Expenses before reductions | .79% A | .80% | .82% | .90% A |
Expenses net of fee waivers, if any | .79% A | .80% | .82% | .90% A |
Expenses net of all reductions | .78% A | .79% | .79% | .87% A |
Net investment income (loss) | 1.69% A | 1.87% | 1.94% | 1.98% A |
Supplemental Data | ||||
Net assets, end of period | $ 1,365,085 | $ 1,075,348 | $ 798,113 | $ 476,032 |
Portfolio turnover rate F | 88% A | 125% | 64% | 66% 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 periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period December 23, 2003 (commencement of operations) to November 30, 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 fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Institutional Class
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 G | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.68 | $ 12.21 | $ 11.11 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) D | .11 | .23 | .22 | .19 |
Net realized and unrealized gain (loss) | 1.10 | 1.59 | 1.10 | 1.04 |
Total from investment operations | 1.21 | 1.82 | 1.32 | 1.23 |
Distributions from net investment income | (.11) | (.22) | (.22) | (.12) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.77) | (.35) | (.22) | (.12) |
Net asset value, end of period | $ 14.12 | $ 13.68 | $ 12.21 | $ 11.11 |
Total Return B, C | 9.28% | 15.24% | 11.98% | 12.38% |
Ratios to Average Net Assets E, H | ||||
Expenses before reductions | .80% A | .82% | .83% | .88% A |
Expenses net of fee waivers, if any | .80% A | .82% | .83% | .88% A |
Expenses net of all reductions | .79% A | .82% | .81% | .85% A |
Net investment income (loss) | 1.68% A | 1.84% | 1.93% | 2.00% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 22,781 | $ 13,771 | $ 9,798 | $ 4,973 |
Portfolio turnover rate F | 88% A | 125% | 64% | 66% 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 periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period December 23, 2003 (commencement of operations) to November 30, 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 fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2007 (Unaudited)
1. Organization.
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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request. In addition, the financial statements of the Fidelity Central Funds are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Fund:
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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
3. 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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and income distributions from the Fidelity Central Funds are accrued as earned, with any distributions receivable as of period end included in Distributions receivable from Fidelity Central Funds on the Statement of Assets and Liabilities. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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, passive foreign investment companies (PFIC), market discount and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 268,348,506 | |
Unrealized depreciation | (19,141,932) | |
Net unrealized appreciation (depreciation) | $ 249,206,574 | |
Cost for federal income tax purposes | $ 1,560,693,149 |
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. Operating Policies.
Repurchase Agreements. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal
Semiannual Report
4. Operating Policies - continued
Repurchase Agreements - continued
to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $901,935,901 and $636,940,261, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged ..26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .56% 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% | $ 105,811 | $ 9,316 |
Class T | .25% | .25% | 349,748 | 37,015 |
Class B | .75% | .25% | 138,327 | 104,062 |
Class C | .75% | .25% | 425,731 | 113,989 |
$ 1,019,617 | $ 264,382 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
6. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 118,841 |
Class T | 42,489 |
Class B * | 18,169 |
Class C * | 5,328 |
$ 184,827 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund, except for Strategic Dividend & Income shares. 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 | $ 101,350 | .24 |
Class T | 144,873 | .21 |
Class B | 41,868 | .30 |
Class C | 102,735 | .24 |
Strategic Dividend and Income | 1,005,927 | .17 |
Institutional Class | 15,852 | .18 |
$ 1,412,605 |
* Annualized
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
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.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $4,159 for the period.
7. 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, which amounted to $1,729 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $12,030.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $7,879 for the period. In addition, through arrangements with the Fund's custodian and each class' 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 expenses by $2,450. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class A | $ 2 | |
Strategic Dividend and Income | 4,362 | |
Institutional Class | 61 | |
$ 4,425 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, a transfer agent of the Fund, Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of Fidelity Management & Research Company, notified the Fund that the fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. Management has determined that this did not have a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund. FIIOC has reimbursed the Fund for related audit and legal expenses and, beginning in June 2007, remediated affected shareholders.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
Semiannual Report
10. Other - continued
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
On April 19, 2007, the Board of Trustees approved an Agreement and Plan of Reorganization whereby the Fund will reorganize into Fidelity Fixed-Income Trust, effective on or about June 29, 2007. The reorganization will not impact the Fund's investment strategies or FMR's management of the Fund. All legal and other expenses associated with the reorganization will be paid by FMR.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income | ||
Class A | $ 490,389 | $ 755,007 |
Class T | 680,938 | 1,207,524 |
Class B | 61,475 | 136,347 |
Class C | 215,479 | 455,492 |
Strategic Dividend and Income | 8,667,121 | 16,844,509 |
Institutional Class | 121,094 | 195,845 |
Total | $ 10,236,496 | $ 19,594,724 |
From net realized gain | ||
Class A | $ 3,476,044 | $ 422,135 |
Class T | 5,864,593 | 869,186 |
Class B | 1,178,860 | 212,465 |
Class C | 3,680,940 | 535,091 |
Strategic Dividend and Income | 52,196,348 | 8,542,657 |
Institutional Class | 654,684 | 104,371 |
Total | $ 67,051,469 | $ 10,685,905 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Six months ended | Year ended | Six months ended | Year ended | |
Class A | ||||
Shares sold | 2,926,412 | 2,652,278 | $ 39,489,901 | $ 33,771,371 |
Reinvestment of distributions | 252,823 | 74,313 | 3,308,909 | 927,356 |
Shares redeemed | (600,738) | (785,506) | (8,065,191) | (9,972,783) |
Net increase (decrease) | 2,578,497 | 1,941,085 | $ 34,733,619 | $ 24,725,944 |
Class T | ||||
Shares sold | 3,794,386 | 3,093,279 | $ 51,052,059 | $ 39,401,358 |
Reinvestment of distributions | 444,882 | 142,542 | 5,816,103 | 1,774,211 |
Shares redeemed | (789,975) | (1,016,565) | (10,630,944) | (12,945,160) |
Net increase (decrease) | 3,449,293 | 2,219,256 | $ 46,237,218 | $ 28,230,409 |
Class B | ||||
Shares sold | 802,112 | 651,095 | $ 10,802,487 | $ 8,286,669 |
Reinvestment of distributions | 76,573 | 22,168 | 998,646 | 273,978 |
Shares redeemed | (223,245) | (535,951) | (3,001,618) | (6,733,248) |
Net increase (decrease) | 655,440 | 137,312 | $ 8,799,515 | $ 1,827,399 |
Class C | ||||
Shares sold | 1,903,967 | 2,077,679 | $ 25,591,126 | $ 26,455,087 |
Reinvestment of distributions | 234,981 | 59,230 | 3,067,189 | 735,267 |
Shares redeemed | (462,502) | (696,643) | (6,224,306) | (8,845,742) |
Net increase (decrease) | 1,676,446 | 1,440,266 | $ 22,434,009 | $ 18,344,612 |
Strategic Dividend and Income | ||||
Shares sold | 27,387,979 | 36,957,213 | $ 369,206,245 | $ 472,572,702 |
Reinvestment of distributions | 4,149,855 | 1,804,449 | 54,456,045 | 22,539,587 |
Shares redeemed | (13,464,573) | (25,574,480) | (179,696,506) | (325,330,308) |
Net increase (decrease) | 18,073,261 | 13,187,182 | $ 243,965,784 | $ 169,781,981 |
Institutional Class | ||||
Shares sold | 695,629 | 358,059 | $ 9,370,612 | $ 4,585,437 |
Reinvestment of distributions | 24,718 | 10,004 | 324,269 | 124,626 |
Shares redeemed | (113,165) | (164,319) | (1,549,952) | (2,080,022) |
Net increase (decrease) | 607,182 | 203,744 | $ 8,144,929 | $ 2,630,041 |
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Strategic Dividend & Income Fund
On April 19, 2007, the Board of Trustees, including the Independent Trustees (together, the Board), voted to approve the management contract and subadvisory agreements (together, the Advisory Contracts) for the fund in connection with reorganizing the fund from one Trust to another. The Board reached this determination because the contractual terms of and fees payable under the fund's Advisory Contracts are identical to those in the fund's current Advisory Contracts. The Advisory Contracts involve no changes in (i) the investment process or strategies employed in the management of the fund's assets; (ii) the nature or level of services provided under the fund's Advisory Contracts; or (iii) the day-to-day management of the fund or the persons primarily responsible for such management. The Board considered that it approved the Advisory Contracts for the fund during the past year and that it will again consider renewal of the Advisory Contracts in July 2007.
Because the Board was approving Advisory Contracts with terms identical to the current Advisory Contracts, it did not consider the fund's investment performance, competitiveness of management fee and total expenses, costs of services and profitability, or economies of scale to be significant factors in its decision.
In connection with its future renewal of the fund's Advisory Contracts, the Board will consider: (i) the nature, extent, and quality of services provided to the fund, including shareholder and administrative services and investment performance; (ii) the competitiveness of the fund's management fee and total expenses; (iii) the costs of the services and profitability, including the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering, and servicing the fund and its shareholders; and (iv) whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the fund's Advisory Contracts are fair and reasonable, and that the fund's Advisory Contracts should be approved, without modification, as part of the process of reorganizing the fund from one Trust to another.
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
7001 West Ray Road
Chandler, AZ
15445 N. Scottsdale Road
Scottsdale, AZ
California
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Burlingame, CA
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10100 Santa Monica Blvd.
Los Angeles, CA
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Colorado
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Connecticut
48 West Putnam Avenue
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Delaware
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Florida
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Illinois
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Indiana
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Kansas
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Maine
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Portland, ME
Maryland
7315 Wisconsin Avenue
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Massachusetts
801 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
238 Main Street
Cambridge, MA
405 Cochituate Road
Framingham, MA
416 Belmont Street
Worcester, MA
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Semiannual Report
Michigan
500 E. Eisenhower Pkwy.
Ann Arbor, MI
280 Old N. Woodward Ave.
Birmingham, MI
43420 Grand River Avenue
Novi, MI
29155 Northwestern Hwy.
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Minnesota
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Edina, MN
Missouri
1524 South Lindbergh Blvd.
St. Louis, MO
Nevada
2225 Village Walk Drive
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New Jersey
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56 South Street
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396 Route 17, North
Paramus, NJ
3518 Route 1 North
Princeton, NJ
530 Broad Street
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New York
1055 Franklin Avenue
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37 West Jericho Turnpike
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1271 Avenue of the Americas
New York, NY
980 Madison Avenue
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61 Broadway
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350 Park Avenue
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200 Fifth Avenue
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733 Third Avenue
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11 Penn Plaza
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2070 Broadway
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1075 Northern Blvd.
Roslyn, NY
799 Central Park Avenue
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North Carolina
4611 Sharon Road
Charlotte, NC
7011 Fayetteville Road
Durham, NC
Ohio
3805 Edwards Road
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1324 Polaris Parkway
Columbus, OH
28699 Chagrin Boulevard
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Oregon
7493 SW Bridgeport Road
Tigard, OR
Pennsylvania
600 West DeKalb Pike
King of Prussia, PA
1735 Market Street
Philadelphia, PA
12001 Perry Highway
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Rhode Island
47 Providence Place
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Tennessee
6150 Poplar Avenue
Memphis, TN
Texas
10000 Research Boulevard
Austin, TX
4001 Northwest Parkway
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12532 Memorial Drive
Houston, TX
2701 Drexel Drive
Houston, TX
6560 Fannin Street
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6500 N. MacArthur Blvd.
Irving, TX
6005 West Park Boulevard
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14100 San Pedro
San Antonio, TX
1576 East Southlake Blvd.
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19740 IH 45 North
Spring, TX
Utah
279 West South Temple
Salt Lake City, UT
Virginia
1861 International Drive
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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 Research & Analysis Company
(formerly 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 Service Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
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
SDI-USAN-0707
1.802526.103
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Strategic Dividend & Income
Fund - Class A, Class T,
Class B and Class C
Semiannual Report
May 31, 2007
(2_fidelity_logos) (Registered_Trademark)
Class A, Class T, Class B,
and Class C are classes
of Fidelity® Strategic
Dividend & Income® Fund
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Stocks are currently on pace to register their fifth-straight year of positive returns, although gains could be trimmed if the U.S. economy continues to slow. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2006 to May 31, 2007).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Semiannual Report
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 1,090.50 | $ 5.73 |
HypotheticalA | $ 1,000.00 | $ 1,019.45 | $ 5.54 |
Class T | |||
Actual | $ 1,000.00 | $ 1,089.50 | $ 6.88 |
HypotheticalA | $ 1,000.00 | $ 1,018.35 | $ 6.64 |
Class B | |||
Actual | $ 1,000.00 | $ 1,085.90 | $ 9.93 |
HypotheticalA | $ 1,000.00 | $ 1,015.41 | $ 9.60 |
Class C | |||
Actual | $ 1,000.00 | $ 1,086.90 | $ 9.63 |
HypotheticalA | $ 1,000.00 | $ 1,015.71 | $ 9.30 |
Strategic Dividend and Income | |||
Actual | $ 1,000.00 | $ 1,091.80 | $ 4.12 |
HypotheticalA | $ 1,000.00 | $ 1,020.99 | $ 3.98 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,092.80 | $ 4.17 |
HypotheticalA | $ 1,000.00 | $ 1,020.94 | $ 4.03 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.10% |
Class T | 1.32% |
Class B | 1.91% |
Class C | 1.85% |
Strategic Dividend and Income | .79% |
Institutional Class | .80% |
Semiannual Report
Investment Changes
Top Ten Investments as of May 31, 2007 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
Valero Energy Corp. | 2.0 | 1.7 |
AT&T, Inc. | 1.5 | 1.0 |
JPMorgan Chase & Co. | 1.4 | 1.4 |
National Oilwell Varco, Inc. | 1.1 | 1.2 |
Citigroup, Inc. | 1.1 | 0.0 |
General Growth Properties, Inc. | 0.9 | 1.2 |
Transocean, Inc. | 0.9 | 0.0 |
Diamond Offshore Drilling, Inc. | 0.8 | 0.0 |
El Paso Corp. 4.99% | 0.8 | 0.9 |
American International Group, Inc. | 0.8 | 1.0 |
11.3 | ||
Top Five Market Sectors as of May 31, 2007 | ||
% of fund's | % of fund's net assets | |
Financials | 33.1 | 34.2 |
Information Technology | 14.6 | 14.8 |
Energy | 12.2 | 13.4 |
Utilities | 6.5 | 5.4 |
Industrials | 6.4 | 6.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2007* | As of November 30, 2006** | ||||||
![]() | Common Stocks 63.3% | ![]() | Common Stocks 66.8% | ||||
![]() | Preferred Stocks 15.3% | ![]() | Preferred Stocks 13.0% | ||||
![]() | Convertible Bonds 13.4% | ![]() | Convertible Bonds 13.5% | ||||
![]() | Other Investments 1.5% | ![]() | Other Investments 0.9% | ||||
![]() | Short-Term | ![]() | Short-Term | ||||
* Foreign investments | 8.5% | ** Foreign investments | 10.8% |
Semiannual Report
Investments May 31, 2007 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 14.5% | ||||
Principal Amount | Value | |||
Convertible Bonds - 13.4% | ||||
CONSUMER DISCRETIONARY - 1.0% | ||||
Automobiles - 0.1% | ||||
Ford Motor Co. 4.25% 12/15/36 | $ 970,000 | $ 1,118,216 | ||
Hotels, Restaurants & Leisure - 0.4% | ||||
Carnival Corp. 1.132% 4/29/33 (d) | 5,820,000 | 4,104,148 | ||
Six Flags, Inc. 4.5% 5/15/15 | 3,300,000 | 3,902,250 | ||
8,006,398 | ||||
Media - 0.4% | ||||
Charter Communications, Inc.: | ||||
5.875% 11/16/09 (f) | 70,000 | 124,600 | ||
5.875% 11/16/09 | 4,013,000 | 7,143,140 | ||
7,267,740 | ||||
Specialty Retail - 0.1% | ||||
Asbury Automotive Group, Inc. 3% 9/15/12 (f) | 1,000,000 | 973,400 | ||
Eddie Bauer Holdings, Inc. 5.25% 4/1/14 (f) | 1,000,000 | 1,256,250 | ||
2,229,650 | ||||
TOTAL CONSUMER DISCRETIONARY | 18,622,004 | |||
CONSUMER STAPLES - 0.0% | ||||
Food & Staples Retailing - 0.0% | ||||
Nash-Finch Co. 1.6314% 3/15/35 (d) | 1,520,000 | 817,304 | ||
ENERGY - 2.7% | ||||
Energy Equipment & Services - 1.1% | ||||
Grey Wolf, Inc. 5.2994% 4/1/24 (g) | 2,300,000 | 3,225,980 | ||
Halliburton Co. 3.125% 7/15/23 | 4,260,000 | 8,216,475 | ||
Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (d)(f) | 1,000,000 | 1,048,700 | ||
Maverick Tube Corp. 1.875% 11/15/25 | 3,000,000 | 3,633,000 | ||
SESI LLC 1.5% 12/15/26 (d)(f) | 3,000,000 | 3,243,000 | ||
19,367,155 | ||||
Oil, Gas & Consumable Fuels - 1.6% | ||||
Chesapeake Energy Corp.: | ||||
2.75% 11/15/35 (f) | 5,000,000 | 5,491,000 | ||
2.75% 11/15/35 | 10,200,000 | 11,201,640 | ||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
ENERGY - continued | ||||
Oil, Gas & Consumable Fuels - continued | ||||
McMoRan Exploration Co. 6% 7/2/08 | $ 3,000,000 | $ 3,567,600 | ||
Peabody Energy Corp. 4.75% 12/15/66 | 8,000,000 | 9,080,000 | ||
29,340,240 | ||||
TOTAL ENERGY | 48,707,395 | |||
FINANCIALS - 0.2% | ||||
Real Estate Investment Trusts - 0.2% | ||||
Ventas, Inc. 3.875% 11/15/11 (f) | 3,000,000 | 3,202,500 | ||
HEALTH CARE - 1.8% | ||||
Biotechnology - 0.6% | ||||
Amgen, Inc.: | ||||
0.375% 2/1/13 (f) | 5,000,000 | 4,494,000 | ||
0.375% 2/1/13 | 7,000,000 | 6,300,000 | ||
10,794,000 | ||||
Health Care Equipment & Supplies - 0.5% | ||||
Beckman Coulter, Inc. 2.5% 12/15/36 (f) | 2,000,000 | 2,129,600 | ||
Inverness Medical Innovations, Inc. 3% 5/15/16 (f) | 4,000,000 | 4,360,000 | ||
Medtronic, Inc. 1.625% 4/15/13 | 2,000,000 | 2,130,820 | ||
8,620,420 | ||||
Life Sciences Tools & Services - 0.5% | ||||
Charles River Laboratories International, Inc. 2.25% 6/15/13 (f) | 1,000,000 | 1,239,300 | ||
Fisher Scientific International, Inc.: | ||||
2.5% 10/1/23 (f) | 995,000 | 2,339,345 | ||
2.5% 10/1/23 | 2,400,000 | 5,642,640 | ||
Nektar Therapeutics 3.25% 9/28/12 | 1,000,000 | 915,100 | ||
10,136,385 | ||||
Pharmaceuticals - 0.2% | ||||
Alpharma, Inc. 2.125% 3/15/27 | 3,000,000 | 2,966,779 | ||
TOTAL HEALTH CARE | 32,517,584 | |||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
INDUSTRIALS - 1.4% | ||||
Aerospace & Defense - 0.3% | ||||
AAR Corp. 1.75% 2/1/26 (f) | $ 1,000,000 | $ 1,261,570 | ||
Alliant Techsystems, Inc. 3% 8/15/24 | 2,680,000 | 3,831,354 | ||
5,092,924 | ||||
Airlines - 0.2% | ||||
UAL Corp. 4.5% 6/30/21 (f) | 2,000,000 | 2,652,800 | ||
US Airways Group, Inc. 7% 9/30/20 (f) | 490,000 | 878,325 | ||
3,531,125 | ||||
Commercial Services & Supplies - 0.1% | ||||
FTI Consulting, Inc. 3.75% 7/15/12 (f) | 1,000,000 | 1,392,696 | ||
Construction & Engineering - 0.4% | ||||
Fluor Corp. 1.5% 2/15/24 | 2,000,000 | 3,749,476 | ||
Quanta Services, Inc. 3.75% 4/30/26 (f) | 3,000,000 | 4,474,032 | ||
8,223,508 | ||||
Electrical Equipment - 0.2% | ||||
GrafTech International Ltd. 1.625% 1/15/24 | 2,720,000 | 2,903,600 | ||
Machinery - 0.2% | ||||
Greenbrier Companies, Inc.: | ||||
2.375% 5/15/26 (f) | 1,000,000 | 920,593 | ||
2.375% 5/15/26 | 2,000,000 | 1,841,187 | ||
Trinity Industries, Inc. 3.875% 6/1/36 | 1,000,000 | 1,170,040 | ||
3,931,820 | ||||
TOTAL INDUSTRIALS | 25,075,673 | |||
INFORMATION TECHNOLOGY - 5.9% | ||||
Communications Equipment - 1.0% | ||||
Ciena Corp. 0.25% 5/1/13 | 1,560,000 | 1,579,800 | ||
Finisar Corp. 2.5% 10/15/10 | 6,920,000 | 8,719,200 | ||
JDS Uniphase Corp. 1% 5/15/26 (f) | 5,000,000 | 4,009,500 | ||
L-3 Communications Corp. 3% 8/1/35 | 2,000,000 | 2,227,500 | ||
Symmetricom, Inc. 3.25% 6/15/25 | 2,000,000 | 1,944,200 | ||
18,480,200 | ||||
Computers & Peripherals - 0.7% | ||||
EMC Corp.: | ||||
1.75% 12/1/13 (f) | 1,800,000 | 2,193,750 | ||
1.75% 12/1/13 | 930,000 | 1,133,438 | ||
Hutchinson Technology, Inc. 3.25% 1/15/26 | 3,000,000 | 2,573,700 | ||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Computers & Peripherals - continued | ||||
Maxtor Corp. 2.375% 8/15/12 | $ 600,000 | $ 794,700 | ||
SanDisk Corp. 1% 5/15/13 | 7,000,000 | 5,910,100 | ||
12,605,688 | ||||
Electronic Equipment & Instruments - 1.6% | ||||
Anixter International, Inc. 1% 2/15/13 (f) | 2,000,000 | 2,555,200 | ||
Coherent, Inc. 2.75% 3/1/11 (f) | 1,110,000 | 1,164,579 | ||
Flextronics International Ltd. 1% 8/1/10 | 8,420,000 | 8,103,408 | ||
Itron, Inc. 2.5% 8/1/26 | 10,000,000 | 12,208,000 | ||
Merix Corp. 4% 5/15/13 (f) | 1,000,000 | 866,875 | ||
Newport Corp. 2.5% 2/15/12 (f) | 1,000,000 | 936,920 | ||
Solectron Corp. 0.5% 2/15/34 | 1,000,000 | 830,400 | ||
Vishay Intertechnology, Inc. 3.625% 8/1/23 | 2,600,000 | 2,729,047 | ||
29,394,429 | ||||
IT Services - 0.5% | ||||
BearingPoint, Inc. 3.1% 12/15/24 (f) | 2,000,000 | 1,909,715 | ||
DST Systems, Inc. 4.125% 8/15/23 | 3,470,000 | 6,187,180 | ||
8,096,895 | ||||
Semiconductors & Semiconductor Equipment - 1.8% | ||||
Advanced Micro Devices, Inc. 6% 5/1/15 (f) | 5,000,000 | 4,925,000 | ||
Amkor Technology, Inc. 2.5% 5/15/11 | 2,000,000 | 2,380,800 | ||
Conexant Systems, Inc. 4% 3/1/26 | 3,000,000 | 2,601,600 | ||
Credence Systems Corp. 3.5% 5/15/10 (f) | 2,000,000 | 1,835,000 | ||
EMCORE Corp. 5.5% 5/15/11 | 880,000 | 925,100 | ||
Intel Corp. 2.95% 12/15/35 | 6,000,000 | 5,547,780 | ||
ON Semiconductor Corp.: | ||||
0% 4/15/24 | 6,500,000 | 7,907,900 | ||
1.875% 12/15/25 (f) | 1,250,000 | 2,092,375 | ||
Photronics, Inc. 2.25% 4/15/08 | 3,000,000 | 3,160,500 | ||
31,376,055 | ||||
Software - 0.3% | ||||
Borland Software Corp. 2.75% 2/15/12 (f) | 2,000,000 | 2,272,500 | ||
Cadence Design Systems, Inc. 1.5% 12/15/13 (f) | 2,000,000 | 2,344,000 | ||
Symantec Corp. 1% 6/15/13 (f) | 1,000,000 | 1,168,000 | ||
5,784,500 | ||||
TOTAL INFORMATION TECHNOLOGY | 105,737,767 | |||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
MATERIALS - 0.1% | ||||
Chemicals - 0.1% | ||||
Pioneer Companies, Inc. 2.75% 3/1/27 (f) | $ 1,420,000 | $ 1,696,900 | ||
TELECOMMUNICATION SERVICES - 0.3% | ||||
Diversified Telecommunication Services - 0.3% | ||||
Level 3 Communications, Inc. 3.5% 6/15/12 | 2,000,000 | 2,531,900 | ||
Time Warner Telecom, Inc. 2.375% 4/1/26 | 2,000,000 | 2,465,000 | ||
4,996,900 | ||||
TOTAL CONVERTIBLE BONDS | 241,374,027 | |||
Nonconvertible Bonds - 1.1% | ||||
FINANCIALS - 0.8% | ||||
Capital Markets - 0.4% | ||||
Goldman Sachs Group, Inc. 5.793% | 2,000,000 | 1,972,000 | ||
JPMorgan Chase Capital XXII 6.45% 2/2/37 | 3,000,000 | 2,916,543 | ||
Lehman Brothers Holdings, Inc.: | ||||
5.857% (g) | 1,000,000 | 989,421 | ||
6.19% (g) | 1,000,000 | 1,001,250 | ||
6,879,214 | ||||
Commercial Banks - 0.4% | ||||
Capital One Capital IV 6.745% 2/17/37 (g) | 2,000,000 | 1,907,220 | ||
HBOS plc 6.657% (f)(g) | 5,000,000 | 4,900,000 | ||
Wells Fargo Capital X 5.95% 12/15/36 | 1,000,000 | 953,980 | ||
7,761,200 | ||||
TOTAL FINANCIALS | 14,640,414 | |||
UTILITIES - 0.3% | ||||
Multi-Utilities - 0.3% | ||||
Wisconsin Energy Corp. 6.25% 5/15/67 (g) | 5,000,000 | 4,869,360 | ||
TOTAL NONCONVERTIBLE BONDS | 19,509,774 | |||
TOTAL CORPORATE BONDS (Cost $238,807,078) | 260,883,801 |
Common Stocks - 63.3% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 4.9% | |||
Automobiles - 0.1% | |||
Winnebago Industries, Inc. | 78,400 | $ 2,430,400 | |
Diversified Consumer Services - 0.5% | |||
Coinmach Service Corp. unit | 156,800 | 2,993,312 | |
Service Corp. International | 339,000 | 4,739,220 | |
Stewart Enterprises, Inc. Class A | 225,800 | 1,747,692 | |
9,480,224 | |||
Hotels, Restaurants & Leisure - 1.4% | |||
Accor SA | 23,500 | 2,185,288 | |
Aristocrat Leisure Ltd. | 229,600 | 2,928,206 | |
Centerplate, Inc. unit | 268,800 | 4,381,440 | |
Hilton Hotels Corp. | 27,700 | 984,735 | |
Jollibee Food Corp. | 409,500 | 491,400 | |
McDonald's Corp. | 105,849 | 5,350,667 | |
Minor International PCL (For. Reg.) | 1,212,900 | 416,552 | |
Starwood Hotels & Resorts Worldwide, Inc. | 65,500 | 4,720,585 | |
WMS Industries, Inc. (a) | 66,400 | 2,812,704 | |
24,271,577 | |||
Household Durables - 1.0% | |||
Bassett Furniture Industries, Inc. | 80,957 | 1,161,733 | |
Beazer Homes USA, Inc. | 21,600 | 772,632 | |
Black & Decker Corp. | 27,900 | 2,634,597 | |
KB Home | 35,600 | 1,633,684 | |
La-Z-Boy, Inc. | 95,477 | 1,122,810 | |
The Stanley Works | 43,910 | 2,776,429 | |
Urbi, Desarrollos Urbanos, SA de CV (a) | 243,500 | 1,040,932 | |
Whirlpool Corp. | 56,600 | 6,319,390 | |
17,462,207 | |||
Internet & Catalog Retail - 0.1% | |||
FTD Group, Inc. | 30,500 | 540,765 | |
Submarino SA | 15,200 | 645,585 | |
1,186,350 | |||
Leisure Equipment & Products - 0.3% | |||
Brunswick Corp. | 71,900 | 2,475,517 | |
Eastman Kodak Co. | 111,600 | 2,830,176 | |
MarineMax, Inc. (a) | 18,300 | 380,274 | |
5,685,967 | |||
Media - 0.8% | |||
Charter Communications, Inc. Class A (a) | 977,700 | 3,920,577 | |
Getty Images, Inc. (a) | 47,700 | 2,387,385 | |
Common Stocks - continued | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - continued | |||
Media - continued | |||
Grupo Televisa SA de CV (CPO) sponsored ADR | 21,500 | $ 618,770 | |
News Corp.: | |||
Class A | 86,700 | 1,915,203 | |
Class B | 8,400 | 198,492 | |
R.H. Donnelley Corp. | 49,200 | 3,834,648 | |
Viacom, Inc. Class B (non-vtg.) (a) | 41,865 | 1,880,576 | |
14,755,651 | |||
Multiline Retail - 0.4% | |||
JCPenney Co., Inc. | 36,600 | 2,945,568 | |
Retail Ventures, Inc. (a) | 39,791 | 771,547 | |
Sears Holdings Corp. (a) | 16,200 | 2,916,324 | |
Tuesday Morning Corp. | 90,385 | 1,259,967 | |
7,893,406 | |||
Specialty Retail - 0.1% | |||
AutoZone, Inc. (a) | 6,500 | 836,095 | |
Circuit City Stores, Inc. | 51,200 | 822,784 | |
Truworths International Ltd. | 78,600 | 458,132 | |
2,117,011 | |||
Textiles, Apparel & Luxury Goods - 0.2% | |||
G-III Apparel Group Ltd. (a) | 83,500 | 1,728,450 | |
VF Corp. | 22,000 | 2,063,160 | |
3,791,610 | |||
TOTAL CONSUMER DISCRETIONARY | 89,074,403 | ||
CONSUMER STAPLES - 3.2% | |||
Beverages - 0.1% | |||
Anadolu Efes Biracilk Ve Malt Sanyii AS | 11,000 | 455,028 | |
Remy Cointreau SA | 23,200 | 1,679,462 | |
2,134,490 | |||
Food & Staples Retailing - 0.5% | |||
Rite Aid Corp. | 380,200 | 2,402,864 | |
Safeway, Inc. | 154,900 | 5,340,952 | |
Wal-Mart de Mexico SA de CV Series V | 219,926 | 832,235 | |
8,576,051 | |||
Food Products - 1.4% | |||
B&G Foods, Inc. unit | 156,900 | 3,426,696 | |
BioMar Holding AS | 49,200 | 2,933,095 | |
Bunge Ltd. | 30,000 | 2,343,600 | |
Common Stocks - continued | |||
Shares | Value | ||
CONSUMER STAPLES - continued | |||
Food Products - continued | |||
Cermaq ASA (e) | 143,100 | $ 2,455,868 | |
Chaoda Modern Agriculture (Holdings) Ltd. | 1,024,000 | 889,118 | |
Chiquita Brands International, Inc. (e) | 234,337 | 4,297,741 | |
Kraft Foods, Inc. Class A | 70,794 | 2,395,669 | |
Marine Harvest ASA (a) | 2,180,000 | 2,414,671 | |
Ralcorp Holdings, Inc. (a) | 22,800 | 1,326,048 | |
Tyson Foods, Inc. Class A | 158,000 | 3,521,820 | |
26,004,326 | |||
Household Products - 0.1% | |||
Central Garden & Pet Co. (a) | 108,600 | 1,558,410 | |
Personal Products - 0.6% | |||
Avon Products, Inc. | 148,000 | 5,681,720 | |
Playtex Products, Inc. (a) | 312,100 | 4,650,290 | |
10,332,010 | |||
Tobacco - 0.5% | |||
Altria Group, Inc. | 102,300 | 7,273,530 | |
Japan Tobacco, Inc. | 484 | 2,521,206 | |
9,794,736 | |||
TOTAL CONSUMER STAPLES | 58,400,023 | ||
ENERGY - 8.2% | |||
Energy Equipment & Services - 2.8% | |||
Diamond Offshore Drilling, Inc. | 155,700 | 14,693,409 | |
National Oilwell Varco, Inc. (a) | 211,589 | 19,984,581 | |
Transocean, Inc. (a) | 158,600 | 15,580,864 | |
50,258,854 | |||
Oil, Gas & Consumable Fuels - 5.4% | |||
Cabot Oil & Gas Corp. | 220,400 | 8,595,600 | |
Canadian Natural Resources Ltd. | 105,300 | 6,999,651 | |
Chesapeake Energy Corp. | 55,800 | 1,945,188 | |
CONSOL Energy, Inc. | 110,700 | 5,378,913 | |
EOG Resources, Inc. | 67,900 | 5,221,510 | |
Noble Energy, Inc. | 67,900 | 4,297,391 | |
Peabody Energy Corp. | 96,300 | 5,204,052 | |
Plains Exploration & Production Co. (a) | 193,400 | 10,234,728 | |
Range Resources Corp. | 113,022 | 4,378,472 | |
Spectra Energy Corp. | 1,733 | 46,150 | |
Common Stocks - continued | |||
Shares | Value | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - continued | |||
Teekay Shipping Corp. | 142,050 | $ 8,645,163 | |
Valero Energy Corp. | 484,861 | 36,180,324 | |
97,127,142 | |||
TOTAL ENERGY | 147,385,996 | ||
FINANCIALS - 23.4% | |||
Capital Markets - 1.8% | |||
Ares Capital Corp. | 126,600 | 2,345,898 | |
Bank of New York Co., Inc. | 73,500 | 2,981,160 | |
Franklin Resources, Inc. | 17,600 | 2,389,024 | |
Janus Capital Group, Inc. | 96,800 | 2,679,424 | |
Merrill Lynch & Co., Inc. | 74,500 | 6,908,385 | |
Merrill Lynch & Co., Inc. (depositary shares) Series 1, unit | 277,700 | 7,039,695 | |
Morgan Stanley | 95,700 | 8,138,328 | |
32,481,914 | |||
Commercial Banks - 1.4% | |||
Cathay General Bancorp | 61,246 | 2,075,014 | |
Commerce Bancorp, Inc. | 72,400 | 2,499,248 | |
East West Bancorp, Inc. | 100,131 | 4,059,311 | |
Hanmi Financial Corp. | 150,600 | 2,630,982 | |
PNC Financial Services Group, Inc. | 32,700 | 2,413,260 | |
UCBH Holdings, Inc. | 125,600 | 2,337,416 | |
Wachovia Corp. | 91,809 | 4,975,130 | |
Wells Fargo & Co. | 115,900 | 4,182,831 | |
25,173,192 | |||
Consumer Finance - 0.1% | |||
Advance America Cash Advance Centers, Inc. | 98,400 | 1,736,760 | |
Diversified Financial Services - 3.3% | |||
Bank of America Corp. | 275,614 | 13,976,386 | |
Citigroup, Inc. | 350,400 | 19,093,296 | |
JPMorgan Chase & Co. | 490,904 | 25,443,554 | |
58,513,236 | |||
Insurance - 3.9% | |||
AFLAC, Inc. | 73,100 | 3,864,066 | |
American International Group, Inc. | 195,200 | 14,120,768 | |
Aspen Insurance Holdings Ltd. | 365,018 | 9,899,288 | |
Axis Capital Holdings Ltd. | 218,795 | 8,657,718 | |
Endurance Specialty Holdings Ltd. | 213,995 | 8,523,421 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Insurance - continued | |||
Everest Re Group Ltd. | 16,500 | $ 1,769,295 | |
Hartford Financial Services Group, Inc. | 37,600 | 3,879,192 | |
MetLife, Inc. | 49,500 | 3,366,000 | |
Platinum Underwriters Holdings Ltd. | 290,666 | 10,010,537 | |
Prudential Financial, Inc. | 42,500 | 4,335,850 | |
Universal American Financial Corp. (a) | 101,900 | 2,163,337 | |
70,589,472 | |||
Real Estate Investment Trusts - 11.8% | |||
Alexandria Real Estate Equities, Inc. | 66,800 | 7,027,360 | |
American Financial Realty Trust (SBI) | 215,500 | 2,430,840 | |
AvalonBay Communities, Inc. | 46,560 | 6,070,958 | |
Boston Properties, Inc. | 60,314 | 6,977,124 | |
BRE Properties, Inc. Class A | 112,400 | 7,105,928 | |
British Land Co. PLC | 22,800 | 653,234 | |
Capital Lease Funding, Inc. | 47,300 | 528,341 | |
CBL & Associates Properties, Inc. | 44,555 | 1,828,537 | |
Corporate Office Properties Trust (SBI) | 187,900 | 8,464,895 | |
DCT Industrial Trust, Inc. | 278,351 | 3,075,779 | |
Developers Diversified Realty Corp. | 165,500 | 10,203,075 | |
Duke Realty LP | 164,370 | 6,594,524 | |
Equity Lifestyle Properties, Inc. | 33,660 | 1,833,124 | |
Equity One, Inc. | 16,900 | 495,170 | |
Equity Residential (SBI) | 165,580 | 8,389,939 | |
General Growth Properties, Inc. | 282,125 | 16,656,660 | |
GMH Communities Trust | 107,200 | 1,089,152 | |
Health Care Property Investors, Inc. | 119,500 | 3,904,065 | |
Healthcare Realty Trust, Inc. | 79,100 | 2,592,107 | |
Hersha Hospitality Trust | 80,500 | 977,270 | |
Highwoods Properties, Inc. (SBI) | 101,800 | 4,462,912 | |
Home Properties, Inc. | 93,100 | 5,362,560 | |
HomeBanc Mortgage Corp., Georgia | 139,500 | 284,580 | |
Host Hotels & Resorts, Inc. | 302,645 | 7,723,500 | |
Inland Real Estate Corp. | 222,000 | 3,996,000 | |
Kilroy Realty Corp. | 65,100 | 4,838,232 | |
Kimco Realty Corp. | 103,938 | 4,811,290 | |
Mission West Properties, Inc. | 74,300 | 1,052,831 | |
Plum Creek Timber Co., Inc. | 16,200 | 677,160 | |
Potlatch Corp. | 49,530 | 2,168,423 | |
ProLogis Trust | 169,565 | 10,964,073 | |
Public Storage, Inc. | 115,536 | 10,340,472 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Real Estate Investment Trusts - continued | |||
Rayonier, Inc. | 52,520 | $ 2,361,299 | |
Simon Property Group, Inc. | 111,310 | 12,019,254 | |
SL Green Realty Corp. | 31,700 | 4,440,536 | |
Strategic Hotel & Resorts, Inc. | 193,700 | 4,517,084 | |
Tanger Factory Outlet Centers, Inc. | 126,300 | 5,298,285 | |
Taubman Centers, Inc. | 22,100 | 1,215,942 | |
UDR, Inc. | 416,040 | 12,630,974 | |
Unibail (Reg.) | 2,100 | 602,599 | |
Ventas, Inc. | 78,950 | 3,344,322 | |
Vornado Realty Trust | 111,850 | 13,534,969 | |
213,545,379 | |||
Real Estate Management & Development - 0.2% | |||
Brookfield Properties Corp. | 27,200 | 714,272 | |
Mitsubishi Estate Co. Ltd. | 101,000 | 3,103,607 | |
Thomas Properties Group, Inc. | 28,500 | 479,655 | |
4,297,534 | |||
Thrifts & Mortgage Finance - 0.9% | |||
Countrywide Financial Corp. | 45,600 | 1,775,664 | |
Fannie Mae | 58,100 | 3,713,752 | |
Hudson City Bancorp, Inc. | 192,300 | 2,536,437 | |
New York Community Bancorp, Inc. | 231,600 | 4,048,368 | |
Radian Group, Inc. | 72,100 | 4,462,990 | |
16,537,211 | |||
TOTAL FINANCIALS | 422,874,698 | ||
HEALTH CARE - 3.1% | |||
Biotechnology - 0.1% | |||
Amgen, Inc. (a) | 24,700 | 1,391,351 | |
Health Care Equipment & Supplies - 0.7% | |||
Becton, Dickinson & Co. | 72,400 | 5,520,500 | |
C.R. Bard, Inc. | 62,700 | 5,292,507 | |
Varian Medical Systems, Inc. (a) | 58,974 | 2,376,652 | |
13,189,659 | |||
Health Care Providers & Services - 0.6% | |||
Acibadem Saglik Hizmetleri AS | 57,847 | 742,022 | |
Brookdale Senior Living, Inc. | 132,580 | 6,259,102 | |
Bumrungrad Hospital PCL (For. Reg.) | 346,100 | 464,463 | |
Capital Senior Living Corp. (a) | 27,600 | 306,912 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE - continued | |||
Health Care Providers & Services - continued | |||
DaVita, Inc. (a) | 54,000 | $ 2,982,420 | |
Henry Schein, Inc. (a) | 800 | 42,824 | |
Sun Healthcare Group, Inc. (a) | 44,700 | 639,210 | |
11,436,953 | |||
Health Care Technology - 0.2% | |||
Cerner Corp. (a) | 50,000 | 2,840,500 | |
Pharmaceuticals - 1.5% | |||
Merck & Co., Inc. | 250,800 | 13,154,460 | |
MGI Pharma, Inc. (a) | 114,300 | 2,443,734 | |
Pfizer, Inc. | 295,000 | 8,109,550 | |
Wyeth | 44,400 | 2,568,096 | |
26,275,840 | |||
TOTAL HEALTH CARE | 55,134,303 | ||
INDUSTRIALS - 4.8% | |||
Aerospace & Defense - 1.3% | |||
General Dynamics Corp. | 41,900 | 3,362,056 | |
Honeywell International, Inc. | 114,900 | 6,653,859 | |
Precision Castparts Corp. | 24,500 | 2,929,220 | |
United Technologies Corp. | 158,000 | 11,146,900 | |
24,092,035 | |||
Air Freight & Logistics - 0.2% | |||
United Parcel Service, Inc. Class B | 39,100 | 2,814,027 | |
Building Products - 0.2% | |||
Masco Corp. | 82,100 | 2,480,241 | |
Commercial Services & Supplies - 0.3% | |||
Allied Waste Industries, Inc. | 135,900 | 1,829,214 | |
The Brink's Co. | 13,100 | 863,683 | |
The Geo Group, Inc. (a) | 28,450 | 1,550,525 | |
Waste Management, Inc. | 46,300 | 1,790,421 | |
6,033,843 | |||
Construction & Engineering - 0.8% | |||
Fluor Corp. | 91,335 | 9,507,974 | |
Shaw Group, Inc. (a) | 137,700 | 5,571,342 | |
15,079,316 | |||
Electrical Equipment - 0.1% | |||
Cooper Industries Ltd. Class A | 30,500 | 1,634,190 | |
Common Stocks - continued | |||
Shares | Value | ||
INDUSTRIALS - continued | |||
Industrial Conglomerates - 0.3% | |||
Tyco International Ltd. | 129,000 | $ 4,303,440 | |
Machinery - 1.0% | |||
Dover Corp. | 32,300 | 1,616,615 | |
Flowserve Corp. | 57,606 | 3,998,432 | |
Oshkosh Truck Co. | 42,300 | 2,609,487 | |
SPX Corp. | 115,400 | 10,140,198 | |
18,364,732 | |||
Road & Rail - 0.6% | |||
Con-way, Inc. | 77,600 | 4,399,920 | |
Kansas City Southern | 1,803 | 74,013 | |
Landstar System, Inc. | 39,600 | 1,926,936 | |
Union Pacific Corp. | 37,100 | 4,477,228 | |
10,878,097 | |||
TOTAL INDUSTRIALS | 85,679,921 | ||
INFORMATION TECHNOLOGY - 8.7% | |||
Communications Equipment - 0.7% | |||
Alcatel-Lucent SA sponsored ADR | 124,200 | 1,704,024 | |
Avocent Corp. (a) | 30,500 | 854,915 | |
Comverse Technology, Inc. (a) | 87,300 | 2,000,916 | |
Motorola, Inc. | 180,000 | 3,274,200 | |
Nokia Corp. sponsored ADR | 163,900 | 4,487,582 | |
12,321,637 | |||
Computers & Peripherals - 1.4% | |||
Dell, Inc. (a) | 109,700 | 2,947,639 | |
Diebold, Inc. | 54,300 | 2,692,194 | |
Hewlett-Packard Co. | 118,200 | 5,402,922 | |
Intermec, Inc. (a) | 144,900 | 3,564,540 | |
International Business Machines Corp. | 66,300 | 7,067,580 | |
NCR Corp. (a) | 51,100 | 2,742,537 | |
Sun Microsystems, Inc. (a) | 141,900 | 723,690 | |
25,141,102 | |||
Electronic Equipment & Instruments - 1.5% | |||
Agilent Technologies, Inc. (a) | 74,300 | 2,836,031 | |
Amphenol Corp. Class A | 235,000 | 8,408,300 | |
Arrow Electronics, Inc. (a) | 106,200 | 4,359,510 | |
Avnet, Inc. (a) | 103,000 | 4,412,520 | |
Flextronics International Ltd. (a) | 279,200 | 3,224,760 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Electronic Equipment & Instruments - continued | |||
Ingram Micro, Inc. Class A (a) | 87,000 | $ 1,802,640 | |
Molex, Inc. | 82,300 | 2,447,602 | |
27,491,363 | |||
Internet Software & Services - 0.4% | |||
Google, Inc. Class A (sub. vtg.) (a) | 8,100 | 4,031,775 | |
VeriSign, Inc. (a) | 128,100 | 3,821,223 | |
7,852,998 | |||
IT Services - 0.3% | |||
Mastercard, Inc. Class A | 30,700 | 4,591,185 | |
Semiconductors & Semiconductor Equipment - 3.5% | |||
Advanced Micro Devices, Inc. (a) | 182,600 | 2,605,702 | |
Analog Devices, Inc. | 49,300 | 1,785,153 | |
Applied Materials, Inc. | 195,400 | 3,732,140 | |
ASML Holding NV (NY Shares) (a) | 145,700 | 3,754,689 | |
Atmel Corp. (a) | 428,900 | 2,397,551 | |
Axcelis Technologies, Inc. (a) | 219,100 | 1,408,813 | |
Broadcom Corp. Class A (a) | 75,800 | 2,316,448 | |
Cypress Semiconductor Corp. (a) | 78,300 | 1,681,101 | |
Fairchild Semiconductor International, Inc. (a) | 131,500 | 2,422,230 | |
FormFactor, Inc. (a) | 72,500 | 2,884,050 | |
Hittite Microwave Corp. (a) | 38,800 | 1,577,220 | |
Integrated Device Technology, Inc. (a) | 268,529 | 4,030,620 | |
Intel Corp. | 158,100 | 3,505,077 | |
Intersil Corp. Class A | 78,700 | 2,368,870 | |
Lam Research Corp. (a) | 49,700 | 2,666,902 | |
Linear Technology Corp. | 70,400 | 2,526,656 | |
Maxim Integrated Products, Inc. | 87,200 | 2,681,400 | |
Microchip Technology, Inc. | 45,700 | 1,854,506 | |
National Semiconductor Corp. | 163,900 | 4,412,188 | |
ON Semiconductor Corp. (a) | 453,300 | 4,868,442 | |
Saifun Semiconductors Ltd. (a) | 140,100 | 1,490,664 | |
Silicon Motion Technology Corp. sponsored ADR (a) | 94,100 | 2,176,533 | |
Volterra Semiconductor Corp. (a) | 212,163 | 3,335,202 | |
62,482,157 | |||
Software - 0.9% | |||
Business Objects SA sponsored ADR (a) | 64,495 | 2,651,389 | |
Microsoft Corp. | 135,200 | 4,146,584 | |
Nintendo Co. Ltd. | 7,900 | 2,758,680 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Software - continued | |||
Symantec Corp. (a) | 129,800 | $ 2,594,702 | |
Ubisoft Entertainment SA (a) | 92,304 | 4,628,921 | |
16,780,276 | |||
TOTAL INFORMATION TECHNOLOGY | 156,660,718 | ||
MATERIALS - 1.4% | |||
Chemicals - 0.6% | |||
Agrium, Inc. | 65,300 | 2,518,701 | |
Arkema (a) | 27,400 | 1,795,844 | |
Celanese Corp. Class A | 61,400 | 2,234,346 | |
Monsanto Co. | 59,900 | 3,689,840 | |
10,238,731 | |||
Metals & Mining - 0.7% | |||
Alcoa, Inc. | 110,600 | 4,565,568 | |
Titanium Metals Corp. | 262,800 | 9,092,880 | |
13,658,448 | |||
Paper & Forest Products - 0.1% | |||
Neenah Paper, Inc. | 46,175 | 2,022,465 | |
TOTAL MATERIALS | 25,919,644 | ||
TELECOMMUNICATION SERVICES - 3.1% | |||
Diversified Telecommunication Services - 2.5% | |||
AT&T, Inc. | 639,915 | 26,454,086 | |
CenturyTel, Inc. | 48,689 | 2,406,210 | |
Level 3 Communications, Inc. (a) | 287,274 | 1,671,935 | |
Verizon Communications, Inc. | 315,000 | 13,711,950 | |
44,244,181 | |||
Wireless Telecommunication Services - 0.6% | |||
America Movil SA de CV Series L sponsored ADR | 37,600 | 2,276,680 | |
Bharti Airtel Ltd. (a) | 41,763 | 899,674 | |
Cellcom Israel Ltd. | 20,700 | 513,360 | |
MTN Group Ltd. | 107,100 | 1,471,121 | |
NII Holdings, Inc. (a) | 11,200 | 912,464 | |
Common Stocks - continued | |||
Shares | Value | ||
TELECOMMUNICATION SERVICES - continued | |||
Wireless Telecommunication Services - continued | |||
Partner Communications Co. Ltd. ADR (e) | 31,818 | $ 540,270 | |
Sprint Nextel Corp. | 208,200 | 4,757,370 | |
11,370,939 | |||
TOTAL TELECOMMUNICATION SERVICES | 55,615,120 | ||
UTILITIES - 2.5% | |||
Electric Utilities - 1.0% | |||
Entergy Corp. | 41,300 | 4,662,770 | |
Exelon Corp. | 56,200 | 4,383,600 | |
PPL Corp. | 192,811 | 8,861,594 | |
17,907,964 | |||
Independent Power Producers & Energy Traders - 1.1% | |||
AES Corp. (a) | 377,300 | 8,953,329 | |
Constellation Energy Group, Inc. | 105,500 | 9,681,735 | |
Mirant Corp. (a) | 38,500 | 1,786,400 | |
20,421,464 | |||
Multi-Utilities - 0.4% | |||
CMS Energy Corp. | 270,700 | 4,940,275 | |
Public Service Enterprise Group, Inc. | 23,500 | 2,090,090 | |
7,030,365 | |||
TOTAL UTILITIES | 45,359,793 | ||
TOTAL COMMON STOCKS (Cost $932,092,962) | 1,142,104,619 | ||
Preferred Stocks - 15.3% | |||
Convertible Preferred Stocks - 4.0% | |||
CONSUMER DISCRETIONARY - 0.1% | |||
Automobiles - 0.1% | |||
General Motors Corp. Series C, 6.25% | 98,500 | 2,262,545 | |
Hotels, Restaurants & Leisure - 0.0% | |||
Six Flags, Inc. 7.25% PIERS | 2,100 | 50,138 | |
Media - 0.0% | |||
Emmis Communications Corp. Series A, 6.25% | 10,100 | 478,336 | |
TOTAL CONSUMER DISCRETIONARY | 2,791,019 | ||
Preferred Stocks - continued | |||
Shares | Value | ||
Convertible Preferred Stocks - continued | |||
ENERGY - 1.1% | |||
Oil, Gas & Consumable Fuels - 1.1% | |||
Chesapeake Energy Corp.: | |||
4.50% | 20,500 | $ 2,080,750 | |
5.00% (a) | 7,500 | 1,107,188 | |
6.25% | 8,000 | 2,285,280 | |
El Paso Corp. 4.99% | 10,000 | 14,527,447 | |
20,000,665 | |||
FINANCIALS - 0.2% | |||
Diversified Financial Services - 0.1% | |||
Carriage Services Capital Trust 7.00% TIDES | 45,000 | 1,957,500 | |
Real Estate Investment Trusts - 0.1% | |||
HRPT Properties Trust 6.50% | 40,000 | 998,760 | |
TOTAL FINANCIALS | 2,956,260 | ||
INDUSTRIALS - 0.2% | |||
Road & Rail - 0.2% | |||
Kansas City Southern: | |||
4.25% | 1,370 | 1,756,979 | |
5.125% | 1,000 | 1,544,200 | |
3,301,179 | |||
MATERIALS - 1.0% | |||
Chemicals - 0.7% | |||
Celanese Corp. 4.25% | 252,600 | 11,963,136 | |
Containers & Packaging - 0.1% | |||
Owens-Illinois, Inc. 4.75% | 63,510 | 2,619,788 | |
Metals & Mining - 0.2% | |||
Freeport-McMoRan Copper & Gold, Inc. 5.50% | 2,550 | 4,438,989 | |
TOTAL MATERIALS | 19,021,913 | ||
UTILITIES - 1.4% | |||
Electric Utilities - 0.5% | |||
AES Trust VII 6.00% | 180,700 | 8,977,176 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Convertible Preferred Stocks - continued | |||
UTILITIES - continued | |||
Independent Power Producers & Energy Traders - 0.5% | |||
NRG Energy, Inc.: | |||
4.00% (f) | 3,900 | $ 8,861,970 | |
Series A, 5.75% | 1,000 | 382,960 | |
9,244,930 | |||
Multi-Utilities - 0.4% | |||
CMS Energy Corp. 4.50% | 66,000 | 6,279,900 | |
TOTAL UTILITIES | 24,502,006 | ||
TOTAL CONVERTIBLE PREFERRED STOCKS | 72,573,042 | ||
Nonconvertible Preferred Stocks - 11.3% | |||
CONSUMER DISCRETIONARY - 0.1% | |||
Household Durables - 0.0% | |||
Hovnanian Enterprises, Inc. Series A, 7.625% | 40,000 | 984,000 | |
Media - 0.1% | |||
CBS Corp. 6.75% | 40,000 | 991,200 | |
TOTAL CONSUMER DISCRETIONARY | 1,975,200 | ||
CONSUMER STAPLES - 0.1% | |||
Food Products - 0.1% | |||
H.J. Heinz Finance Co. 6.226% | 10 | 1,020,000 | |
ENERGY - 0.2% | |||
Oil, Gas & Consumable Fuels - 0.2% | |||
Apache Corp. (depositary shares) Series B, 5.68% | 29,375 | 2,930,156 | |
Devon Energy Corp. 6.49% | 13,750 | 1,379,125 | |
4,309,281 | |||
FINANCIALS - 8.1% | |||
Capital Markets - 1.5% | |||
Bear Stearns Companies, Inc.: | |||
Series E, 6.155% | 15,000 | 756,000 | |
Series G, 5.49% | 15,000 | 750,000 | |
Deutsche Bank Contingent Capital Trust II 6.55% | 80,000 | 2,025,600 | |
Goldman Sachs Group, Inc.: | |||
Series A, 3.9106% | 120,000 | 3,079,200 | |
Series B, 6.20% | 100,000 | 2,575,000 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Goldman Sachs Group, Inc.: - continued | |||
Series C, 4.9931% | 40,000 | $ 1,048,800 | |
Series D | 160,000 | 4,155,200 | |
Lehman Brothers Holdings, Inc.: | |||
(depositary shares) Series F, 6.50% | 169,015 | 4,314,953 | |
Series D, 5.67% | 34,900 | 1,708,355 | |
Merrill Lynch & Co., Inc.: | |||
Series 5, 5.86% | 80,000 | 2,019,200 | |
Series H, 3.97% | 120,000 | 3,049,200 | |
Morgan Stanley Capital Trust IV 6.60% | 80,000 | 2,008,800 | |
27,490,308 | |||
Commercial Banks - 1.5% | |||
ABN AMRO Capital Funding Trust V 5.90% | 20,000 | 466,600 | |
ABN Amro Capital Funding Trust VII 6.08% | 40,400 | 971,620 | |
Barclays Bank PLC Series 2, 6.625% | 40,000 | 1,034,000 | |
BNY Capital V 5.95% | 115,000 | 2,745,050 | |
First Tennessee Bank NA, Memphis 3.90% (f) | 5,000 | 5,125,000 | |
Keycorp Capital IX 6.75% | 40,000 | 1,006,400 | |
Royal Bank of Scotland Group PLC Series R, 6.125% | 40,000 | 998,800 | |
Santander Finance Preferred SA Unipersonal (f) | 40,000 | 946,000 | |
Santander Finance Preferred SA Unipersonal: | |||
6.41% | 69,400 | 1,738,470 | |
6.50% (f) | 40,000 | 984,000 | |
6.80% (f) | 160,000 | 4,000,000 | |
U.S. Bancorp, Delaware Series B, 0.00% | 40,000 | 1,053,600 | |
USB Capital XII 6.30% | 80,000 | 1,952,000 | |
Wachovia Capital Trust IX 6.375% | 120,000 | 2,964,000 | |
25,985,540 | |||
Consumer Finance - 0.2% | |||
Ford Motor Credit Co. LLC 7.375% | 40,000 | 866,000 | |
HSBC USA, Inc.: | |||
Series G, 4.9175% | 80,000 | 2,120,000 | |
Series H, 6.50% | 40,000 | 1,056,400 | |
SLM Corp. 4.07% | 1,200 | 104,400 | |
4,146,800 | |||
Diversified Financial Services - 1.0% | |||
Bank of America Corp.: | |||
Series D | 20,000 | 519,800 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Diversified Financial Services - continued | |||
Bank of America Corp.: - continued | |||
Series E | 40,000 | $ 1,019,200 | |
CIT Group, Inc. Series B, 5.189% | 15,000 | 1,479,000 | |
Citigroup Capital XVI Series C, 6.45% | 120,000 | 3,012,000 | |
Citigroup Capital XVII 6.35% | 80,000 | 1,992,000 | |
Deutsche Bank Capital Funding Trust VIII 6.375% | 140,000 | 3,514,000 | |
General Electric Capital Corp. 6.05% | 80,000 | 1,963,200 | |
Merrill Lynch Capital Trust II 6.45% | 200,000 | 4,900,000 | |
18,399,200 | |||
Insurance - 0.2% | |||
American International Group, Inc. 6.45% | 80,000 | 2,000,000 | |
MetLife, Inc. Series A, 4.39% | 40,000 | 1,041,200 | |
3,041,200 | |||
Real Estate Investment Trusts - 0.6% | |||
Apartment Investment & Management Co. Series V, 8.00% | 79,000 | 2,012,920 | |
Duke Realty LP (depositary shares) Series K, 6.50% | 95,800 | 2,394,042 | |
Hospitality Properties Trust Series C, 7.00% | 100,000 | 2,460,000 | |
Host Hotels & Resorts, Inc. Series E, 8.875% | 20,000 | 535,200 | |
Public Storage, Inc. Series M, 6.625% | 80,000 | 1,971,200 | |
Vornado Realty Trust Series E, 7.00% | 40,000 | 1,017,200 | |
10,390,562 | |||
Thrifts & Mortgage Finance - 3.1% | |||
Countrywide Capital V 7.00% | 80,000 | 1,990,400 | |
Fannie Mae: | |||
5.10% | 27,562 | 1,219,619 | |
7.00% | 42,200 | 2,270,782 | |
Series H, 5.81% | 71,200 | 3,560,000 | |
Series I, 5.375% | 5,000 | 243,250 | |
Series L, 5.125% | 140,900 | 6,602,574 | |
Series N, 5.50% | 92,650 | 4,525,026 | |
Freddie Mac: | |||
5.30% | 40,000 | 1,890,000 | |
5.57% | 546,000 | 13,404,300 | |
5.90% | 40,000 | 1,024,000 | |
Series F, 5.00% | 58,500 | 2,612,025 | |
Series H, 5.10% | 10,300 | 462,161 | |
Series K, 5.79% | 35,200 | 1,742,400 | |
Series O, 5.81% | 19,500 | 970,125 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - continued | |||
Freddie Mac: - continued | |||
Series R, 5.70% | 117,000 | $ 5,791,500 | |
Series S, adj. rate | 10,000 | 528,500 | |
Series T 6.42% | 10,000 | 532,200 | |
Series W, 5.66% | 120,000 | 2,996,400 | |
Indymac Bank F S B Pasadena Cali 8.50% (f) | 80,000 | 2,028,000 | |
Sovereign Bancorp, Inc. Series C, 7.30% | 80,000 | 2,174,400 | |
56,567,662 | |||
TOTAL FINANCIALS | 146,021,272 | ||
MATERIALS - 0.1% | |||
Chemicals - 0.1% | |||
E.I. du Pont de Nemours & Co. Series B, 4.50% | 9,900 | 827,937 | |
Metals & Mining - 0.0% | |||
Alcoa, Inc. 3.75% | 6,400 | 480,000 | |
TOTAL MATERIALS | 1,307,937 | ||
TELECOMMUNICATION SERVICES - 0.4% | |||
Diversified Telecommunication Services - 0.4% | |||
AT&T, Inc. 6.375% | 281,800 | 6,994,276 | |
UTILITIES - 2.3% | |||
Electric Utilities - 2.1% | |||
Alabama Power Co.: | |||
4.60% | 2,000 | 188,500 | |
5.20% | 120,000 | 2,858,400 | |
5.30% | 88,600 | 2,090,960 | |
5.625% | 80,000 | 2,000,000 | |
Baltimore Gas & Electric Co. Series 1993, 6.70% (a) | 10,000 | 1,034,000 | |
Duquesne Light Co. 6.50% | 106,050 | 5,307,803 | |
Entergy Louisiana LLC 6.95% | 7,500 | 746,250 | |
FPL Group Capital Trust I 5.875% | 20,000 | 471,600 | |
Mid-American Energy Co. 4.40% | 5,000 | 427,500 | |
Pacific Gas & Electric Co.: | |||
Series A, 5.00% | 16,900 | 383,630 | |
Series B, 5.50% | 61,900 | 1,473,839 | |
Series D 5.00% | 69,200 | 1,550,080 | |
PPL Electric Utilities Corp. 6.25% | 180,000 | 4,563,000 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
UTILITIES - continued | |||
Electric Utilities - continued | |||
Southern California Edison Co.: | |||
4.78% | 46,500 | $ 1,011,375 | |
5.349% | 40,000 | 4,036,000 | |
6.125% | 35,000 | 3,535,000 | |
Series B, 4.08% | 27,271 | 506,968 | |
Series C: | |||
4.24% | 94,600 | 1,773,750 | |
6.00% | 20,000 | 2,055,000 | |
Series D, 4.32% | 70,000 | 1,400,000 | |
37,413,655 | |||
Independent Power Producers & Energy Traders - 0.0% | |||
Heco Capital Trust III 6.50% | 12,000 | 300,600 | |
Multi-Utilities - 0.2% | |||
Consolidated Edison Co. of New York, Inc. Series A, 5.00% | 28,705 | 2,648,036 | |
San Diego Gas & Electric Co. 1.70% | 67,548 | 1,764,692 | |
4,412,728 | |||
TOTAL UTILITIES | 42,126,983 | ||
TOTAL NONCONVERTIBLE PREFERRED STOCKS | 203,754,949 | ||
TOTAL PREFERRED STOCKS (Cost $257,748,989) | 276,327,991 | ||
Preferred Securities - 0.4% | |||
Principal Amount | |||
FINANCIALS - 0.4% | |||
Commercial Banks - 0.2% | |||
PNC Preferred Funding Trust I 6.517% 12/31/49 (f)(g) | $ 3,000,000 | 3,102,340 | |
SunTrust Preferred Capital I 5.853% 12/15/49 (g) | 1,000,000 | 1,036,743 | |
4,139,083 | |||
Diversified Financial Services - 0.1% | |||
Wachovia Capital Trust III 5.8% (g) | 2,000,000 | 2,027,133 | |
Preferred Securities - continued | |||
Principal Amount | Value | ||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - 0.1% | |||
Washington Mutual Preferred Funding Trust I 6.534% (f)(g) | $ 2,000,000 | $ 1,985,498 | |
TOTAL PREFERRED SECURITIES (Cost $8,000,001) | 8,151,714 | ||
Money Market Funds - 6.8% | |||
Shares | |||
Fidelity Cash Central Fund, 5.33% (b) | 117,375,018 | 117,375,018 | |
Fidelity Securities Lending Cash Central Fund, 5.36% (b)(c) | 5,056,580 | 5,056,580 | |
TOTAL MONEY MARKET FUNDS (Cost $122,431,598) | 122,431,598 | ||
TOTAL INVESTMENT PORTFOLIO - 100.3% (Cost $1,559,080,628) | 1,809,899,723 | ||
NET OTHER ASSETS - (0.3)% | (6,170,343) | ||
NET ASSETS - 100% | $ 1,803,729,380 |
Security Type Abbreviations |
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(e) Security or a portion of the security is on loan at period end. |
(f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $103,384,833 or 5.7% of net assets. |
(g) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 2,542,359 |
Fidelity Securities Lending Cash Central Fund | 12,030 |
Total | $ 2,554,389 |
Other Information |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 2.2% |
BBB | 1.1% |
BB | 3.4% |
B | 3.2% |
CCC,CC,C | 1.3% |
Not Rated | 3.7% |
Equities | 78.6% |
Short-Term Investments and Net Other Assets | 6.5% |
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. Percentages are adjusted for the effect of futures contracts, if applicable. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
May 31, 2007 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $4,882,929) - See accompanying schedule: Unaffiliated issuers (cost $1,436,649,030) | $ 1,687,468,125 | |
Fidelity Central Funds (cost $122,431,598) | 122,431,598 | |
Total Investments (cost $1,559,080,628) | $ 1,809,899,723 | |
Cash | 49,466 | |
Foreign currency held at value (cost $12,570) | 12,493 | |
Receivable for investments sold | 5,956,598 | |
Receivable for fund shares sold | 6,251,782 | |
Dividends receivable | 1,717,317 | |
Interest receivable | 1,471,682 | |
Distributions receivable from Fidelity Central Funds | 506,596 | |
Prepaid expenses | 3,427 | |
Other receivables | 609 | |
Total assets | 1,825,869,693 | |
Liabilities | ||
Payable for investments purchased | $ 13,640,626 | |
Payable for fund shares redeemed | 2,082,569 | |
Accrued management fee | 814,663 | |
Distribution fees payable | 198,625 | |
Other affiliated payables | 302,245 | |
Other payables and accrued expenses | 45,005 | |
Collateral on securities loaned, at value | 5,056,580 | |
Total liabilities | 22,140,313 | |
Net Assets | $ 1,803,729,380 | |
Net Assets consist of: | ||
Paid in capital | $ 1,503,897,761 | |
Undistributed net investment income | 6,028,336 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 43,004,322 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 250,798,961 | |
Net Assets | $ 1,803,729,380 |
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, 2007 (Unaudited) | ||
Calculation of Maximum Offering Price | $ 14.09 | |
Maximum offering price per share (100/94.25 of $14.09) | $ 14.95 | |
Class T: | $ 14.07 | |
Maximum offering price per share (100/96.50 of $14.07) | $ 14.58 | |
Class B: | $ 14.03 | |
Class C: | $ 14.04 | |
Strategic Dividend and Income: | $ 14.13 | |
Institutional Class: | $ 14.12 |
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
Six months ended May 31, 2007 (Unaudited) | ||
Investment Income | ||
Dividends | $ 13,949,002 | |
Interest | 2,532,545 | |
Income from Fidelity Central Funds | 2,554,389 | |
Total income | 19,035,936 | |
Expenses | ||
Management fee | $ 4,303,540 | |
Transfer agent fees | 1,412,605 | |
Distribution fees | 1,019,617 | |
Accounting and security lending fees | 241,779 | |
Custodian fees and expenses | 30,059 | |
Independent trustees' compensation | 2,371 | |
Registration fees | 124,567 | |
Audit | 29,033 | |
Legal | 9,699 | |
Miscellaneous | 4,809 | |
Total expenses before reductions | 7,178,079 | |
Expense reductions | (35,603) | 7,142,476 |
Net investment income (loss) | 11,893,460 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $13,745) | 46,238,978 | |
Foreign currency transactions | (11,905) | |
Total net realized gain (loss) | 46,227,073 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $1,995) | 80,261,896 | |
Assets and liabilities in foreign currencies | (10,203) | |
Total change in net unrealized appreciation (depreciation) | 80,251,693 | |
Net gain (loss) | 126,478,766 | |
Net increase (decrease) in net assets resulting from operations | $ 138,372,226 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 11,893,460 | $ 20,961,984 |
Net realized gain (loss) | 46,227,073 | 74,058,210 |
Change in net unrealized appreciation (depreciation) | 80,251,693 | 71,876,495 |
Net increase (decrease) in net assets resulting | 138,372,226 | 166,896,689 |
Distributions to shareholders from net investment income | (10,236,496) | (19,594,724) |
Distributions to shareholders from net realized gain | (67,051,469) | (10,685,905) |
Total distributions | (77,287,965) | (30,280,629) |
Share transactions - net increase (decrease) | 364,315,074 | 245,540,386 |
Total increase (decrease) in net assets | 425,399,335 | 382,156,446 |
Net Assets | ||
Beginning of period | 1,378,330,045 | 996,173,599 |
End of period (including undistributed net investment income of $6,028,336 and undistributed net investment income of $4,371,372, respectively) | $ 1,803,729,380 | $ 1,378,330,045 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.66 | $ 12.18 | $ 11.09 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .09 | .19 | .18 | .16 |
Net realized and unrealized gain (loss) | 1.09 | 1.61 | 1.10 | 1.04 |
Total from investment operations | 1.18 | 1.80 | 1.28 | 1.20 |
Distributions from net investment income | (.09) | (.19) | (.19) | (.11) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.75) | (.32) | (.19) | (.11) |
Net asset value, end of period | $ 14.09 | $ 13.66 | $ 12.18 | $ 11.09 |
Total Return B, C, D | 9.05% | 15.01% | 11.63% | 12.01% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.10% A | 1.14% | 1.16% | 1.20% A |
Expenses net of fee waivers, if any | 1.10% A | 1.14% | 1.16% | 1.20% A |
Expenses net of all reductions | 1.10% A | 1.14% | 1.13% | 1.17% A |
Net investment income (loss) | 1.37% A | 1.52% | 1.60% | 1.67% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 108,615 | $ 70,083 | $ 38,886 | $ 21,985 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class T
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.64 | $ 12.17 | $ 11.08 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .08 | .17 | .16 | .13 |
Net realized and unrealized gain (loss) | 1.08 | 1.59 | 1.09 | 1.04 |
Total from investment operations | 1.16 | 1.76 | 1.25 | 1.17 |
Distributions from net investment income | (.07) | (.16) | (.16) | (.09) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.73) | (.29) | (.16) | (.09) |
Net asset value, end of period | $ 14.07 | $ 13.64 | $ 12.17 | $ 11.08 |
Total Return B, C, D | 8.95% | 14.70% | 11.43% | 11.75% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.32% A | 1.35% | 1.38% | 1.45% A |
Expenses net of fee waivers, if any | 1.32% A | 1.35% | 1.38% | 1.45% A |
Expenses net of all reductions | 1.32% A | 1.35% | 1.35% | 1.42% A |
Net investment income (loss) | 1.16% A | 1.31% | 1.38% | 1.43% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 172,128 | $ 119,834 | $ 79,920 | $ 36,526 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class B
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.61 | $ 12.14 | $ 11.06 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .04 | .09 | .09 | .09 |
Net realized and unrealized gain (loss) | 1.07 | 1.59 | 1.09 | 1.03 |
Total from investment operations | 1.11 | 1.68 | 1.18 | 1.12 |
Distributions from net investment income | (.03) | (.08) | (.10) | (.06) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.69) | (.21) | (.10) | (.06) |
Net asset value, end of period | $ 14.03 | $ 13.61 | $ 12.14 | $ 11.06 |
Total Return B, C, D | 8.59% | 14.05% | 10.73% | 11.24% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.91% A | 1.96% | 1.96% | 1.99% A |
Expenses net of fee waivers, if any | 1.91% A | 1.96% | 1.95% | 1.95% A |
Expenses net of all reductions | 1.91% A | 1.96% | 1.93% | 1.92% A |
Net investment income (loss) | .56% A | .70% | .81% | .92% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 33,939 | $ 23,992 | $ 19,744 | $ 13,457 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class C
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.61 | $ 12.15 | $ 11.06 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .04 | .10 | .10 | .09 |
Net realized and unrealized gain (loss) | 1.09 | 1.58 | 1.09 | 1.03 |
Total from investment operations | 1.13 | 1.68 | 1.19 | 1.12 |
Distributions from net investment income | (.04) | (.09) | (.10) | (.06) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.70) | (.22) | (.10) | (.06) |
Net asset value, end of period | $ 14.04 | $ 13.61 | $ 12.15 | $ 11.06 |
Total Return B, C, D | 8.69% | 14.05% | 10.85% | 11.24% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.85% A | 1.89% | 1.90% | 1.94% A |
Expenses net of fee waivers, if any | 1.85% A | 1.89% | 1.90% | 1.94% A |
Expenses net of all reductions | 1.85% A | 1.88% | 1.87% | 1.92% A |
Net investment income (loss) | .62% A | .78% | .86% | .93% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 101,182 | $ 75,301 | $ 49,713 | $ 28,795 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Strategic Dividend and Income
Six months ended May 31, 2007 | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 G | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.70 | $ 12.22 | $ 11.11 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) D | .11 | .24 | .22 | .19 |
Net realized and unrealized gain (loss) | 1.08 | 1.60 | 1.11 | 1.04 |
Total from investment operations | 1.19 | 1.84 | 1.33 | 1.23 |
Distributions from net investment income | (.10) | (.23) | (.22) | (.12) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.76) | (.36) | (.22) | (.12) |
Net asset value, end of period | $ 14.13 | $ 13.70 | $ 12.22 | $ 11.11 |
Total Return B, C | 9.18% | 15.33% | 12.08% | 12.32% |
Ratios to Average Net Assets E, H | ||||
Expenses before reductions | .79% A | .80% | .82% | .90% A |
Expenses net of fee waivers, if any | .79% A | .80% | .82% | .90% A |
Expenses net of all reductions | .78% A | .79% | .79% | .87% A |
Net investment income (loss) | 1.69% A | 1.87% | 1.94% | 1.98% A |
Supplemental Data | ||||
Net assets, end of period | $ 1,365,085 | $ 1,075,348 | $ 798,113 | $ 476,032 |
Portfolio turnover rate F | 88% A | 125% | 64% | 66% 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 periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period December 23, 2003 (commencement of operations) to November 30, 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 fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Institutional Class
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 G | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.68 | $ 12.21 | $ 11.11 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) D | .11 | .23 | .22 | .19 |
Net realized and unrealized gain (loss) | 1.10 | 1.59 | 1.10 | 1.04 |
Total from investment operations | 1.21 | 1.82 | 1.32 | 1.23 |
Distributions from net investment income | (.11) | (.22) | (.22) | (.12) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.77) | (.35) | (.22) | (.12) |
Net asset value, end of period | $ 14.12 | $ 13.68 | $ 12.21 | $ 11.11 |
Total Return B, C | 9.28% | 15.24% | 11.98% | 12.38% |
Ratios to Average Net Assets E, H | ||||
Expenses before reductions | .80% A | .82% | .83% | .88% A |
Expenses net of fee waivers, if any | .80% A | .82% | .83% | .88% A |
Expenses net of all reductions | .79% A | .82% | .81% | .85% A |
Net investment income (loss) | 1.68% A | 1.84% | 1.93% | 2.00% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 22,781 | $ 13,771 | $ 9,798 | $ 4,973 |
Portfolio turnover rate F | 88% A | 125% | 64% | 66% 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 periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period December 23, 2003 (commencement of operations) to November 30, 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 fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2007 (Unaudited)
1. Organization.
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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request. In addition, the financial statements of the Fidelity Central Funds are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Fund:
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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
3. 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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and income distributions from the Fidelity Central Funds are accrued as earned, with any distributions receivable as of period end included in Distributions receivable from Fidelity Central Funds on the Statement of Assets and Liabilities. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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, passive foreign investment companies (PFIC), market discount and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 268,348,506 | |
Unrealized depreciation | (19,141,932) | |
Net unrealized appreciation (depreciation) | $ 249,206,574 | |
Cost for federal income tax purposes | $ 1,560,693,149 |
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. Operating Policies.
Repurchase Agreements. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal
Semiannual Report
4. Operating Policies - continued
Repurchase Agreements - continued
to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $901,935,901 and $636,940,261, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged ..26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .56% 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% | $ 105,811 | $ 9,316 |
Class T | .25% | .25% | 349,748 | 37,015 |
Class B | .75% | .25% | 138,327 | 104,062 |
Class C | .75% | .25% | 425,731 | 113,989 |
$ 1,019,617 | $ 264,382 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
6. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 118,841 |
Class T | 42,489 |
Class B * | 18,169 |
Class C * | 5,328 |
$ 184,827 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund, except for Strategic Dividend & Income shares. 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 | $ 101,350 | .24 |
Class T | 144,873 | .21 |
Class B | 41,868 | .30 |
Class C | 102,735 | .24 |
Strategic Dividend and Income | 1,005,927 | .17 |
Institutional Class | 15,852 | .18 |
$ 1,412,605 |
* Annualized
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
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.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $4,159 for the period.
7. 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, which amounted to $1,729 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $12,030.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $7,879 for the period. In addition, through arrangements with the Fund's custodian and each class' 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 expenses by $2,450. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class A | $ 2 | |
Strategic Dividend and Income | 4,362 | |
Institutional Class | 61 | |
$ 4,425 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, a transfer agent of the Fund, Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of Fidelity Management & Research Company, notified the Fund that the fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. Management has determined that this did not have a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund. FIIOC has reimbursed the Fund for related audit and legal expenses and, beginning in June 2007, remediated affected shareholders.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
Semiannual Report
10. Other - continued
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
On April 19, 2007, the Board of Trustees approved an Agreement and Plan of Reorganization whereby the Fund will reorganize into Fidelity Fixed-Income Trust, effective on or about June 29, 2007. The reorganization will not impact the Fund's investment strategies or FMR's management of the Fund. All legal and other expenses associated with the reorganization will be paid by FMR.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income | ||
Class A | $ 490,389 | $ 755,007 |
Class T | 680,938 | 1,207,524 |
Class B | 61,475 | 136,347 |
Class C | 215,479 | 455,492 |
Strategic Dividend and Income | 8,667,121 | 16,844,509 |
Institutional Class | 121,094 | 195,845 |
Total | $ 10,236,496 | $ 19,594,724 |
From net realized gain | ||
Class A | $ 3,476,044 | $ 422,135 |
Class T | 5,864,593 | 869,186 |
Class B | 1,178,860 | 212,465 |
Class C | 3,680,940 | 535,091 |
Strategic Dividend and Income | 52,196,348 | 8,542,657 |
Institutional Class | 654,684 | 104,371 |
Total | $ 67,051,469 | $ 10,685,905 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Six months ended | Year ended | Six months ended | Year ended | |
Class A | ||||
Shares sold | 2,926,412 | 2,652,278 | $ 39,489,901 | $ 33,771,371 |
Reinvestment of distributions | 252,823 | 74,313 | 3,308,909 | 927,356 |
Shares redeemed | (600,738) | (785,506) | (8,065,191) | (9,972,783) |
Net increase (decrease) | 2,578,497 | 1,941,085 | $ 34,733,619 | $ 24,725,944 |
Class T | ||||
Shares sold | 3,794,386 | 3,093,279 | $ 51,052,059 | $ 39,401,358 |
Reinvestment of distributions | 444,882 | 142,542 | 5,816,103 | 1,774,211 |
Shares redeemed | (789,975) | (1,016,565) | (10,630,944) | (12,945,160) |
Net increase (decrease) | 3,449,293 | 2,219,256 | $ 46,237,218 | $ 28,230,409 |
Class B | ||||
Shares sold | 802,112 | 651,095 | $ 10,802,487 | $ 8,286,669 |
Reinvestment of distributions | 76,573 | 22,168 | 998,646 | 273,978 |
Shares redeemed | (223,245) | (535,951) | (3,001,618) | (6,733,248) |
Net increase (decrease) | 655,440 | 137,312 | $ 8,799,515 | $ 1,827,399 |
Class C | ||||
Shares sold | 1,903,967 | 2,077,679 | $ 25,591,126 | $ 26,455,087 |
Reinvestment of distributions | 234,981 | 59,230 | 3,067,189 | 735,267 |
Shares redeemed | (462,502) | (696,643) | (6,224,306) | (8,845,742) |
Net increase (decrease) | 1,676,446 | 1,440,266 | $ 22,434,009 | $ 18,344,612 |
Strategic Dividend and Income | ||||
Shares sold | 27,387,979 | 36,957,213 | $ 369,206,245 | $ 472,572,702 |
Reinvestment of distributions | 4,149,855 | 1,804,449 | 54,456,045 | 22,539,587 |
Shares redeemed | (13,464,573) | (25,574,480) | (179,696,506) | (325,330,308) |
Net increase (decrease) | 18,073,261 | 13,187,182 | $ 243,965,784 | $ 169,781,981 |
Institutional Class | ||||
Shares sold | 695,629 | 358,059 | $ 9,370,612 | $ 4,585,437 |
Reinvestment of distributions | 24,718 | 10,004 | 324,269 | 124,626 |
Shares redeemed | (113,165) | (164,319) | (1,549,952) | (2,080,022) |
Net increase (decrease) | 607,182 | 203,744 | $ 8,144,929 | $ 2,630,041 |
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Strategic Dividend & Income Fund
On April 19, 2007, the Board of Trustees, including the Independent Trustees (together, the Board), voted to approve the management contract and subadvisory agreements (together, the Advisory Contracts) for the fund in connection with reorganizing the fund from one Trust to another. The Board reached this determination because the contractual terms of and fees payable under the fund's Advisory Contracts are identical to those in the fund's current Advisory Contracts. The Advisory Contracts involve no changes in (i) the investment process or strategies employed in the management of the fund's assets; (ii) the nature or level of services provided under the fund's Advisory Contracts; or (iii) the day-to-day management of the fund or the persons primarily responsible for such management. The Board considered that it approved the Advisory Contracts for the fund during the past year and that it will again consider renewal of the Advisory Contracts in July 2007.
Because the Board was approving Advisory Contracts with terms identical to the current Advisory Contracts, it did not consider the fund's investment performance, competitiveness of management fee and total expenses, costs of services and profitability, or economies of scale to be significant factors in its decision.
In connection with its future renewal of the fund's Advisory Contracts, the Board will consider: (i) the nature, extent, and quality of services provided to the fund, including shareholder and administrative services and investment performance; (ii) the competitiveness of the fund's management fee and total expenses; (iii) the costs of the services and profitability, including the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering, and servicing the fund and its shareholders; and (iv) whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the fund's Advisory Contracts are fair and reasonable, and that the fund's Advisory Contracts should be approved, without modification, as part of the process of reorganizing the fund from one Trust to another.
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 Research & Analysis Company
(formerly 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 Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
ASDI-USAN-0707
1.802528.103
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Strategic Dividend & Income
Fund - Institutional Class
Semiannual Report
May 31, 2007
(2_fidelity_logos) (Registered_Trademark)
Institutional Class
is a class of Fidelity®
Strategic Dividend &
Income® Fund
Contents
Chairman's Message | Ned Johnson's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
Notes | Notes to the financial statements. | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidleines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings report, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Stocks are currently on pace to register their fifth-straight year of positive returns, although gains could be trimmed if the U.S. economy continues to slow. While financial markets are always unpredictable, there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2006 to May 31, 2007).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Semiannual Report
Beginning | Ending | Expenses Paid | |
Class A | |||
Actual | $ 1,000.00 | $ 1,090.50 | $ 5.73 |
HypotheticalA | $ 1,000.00 | $ 1,019.45 | $ 5.54 |
Class T | |||
Actual | $ 1,000.00 | $ 1,089.50 | $ 6.88 |
HypotheticalA | $ 1,000.00 | $ 1,018.35 | $ 6.64 |
Class B | |||
Actual | $ 1,000.00 | $ 1,085.90 | $ 9.93 |
HypotheticalA | $ 1,000.00 | $ 1,015.41 | $ 9.60 |
Class C | |||
Actual | $ 1,000.00 | $ 1,086.90 | $ 9.63 |
HypotheticalA | $ 1,000.00 | $ 1,015.71 | $ 9.30 |
Strategic Dividend and Income | |||
Actual | $ 1,000.00 | $ 1,091.80 | $ 4.12 |
HypotheticalA | $ 1,000.00 | $ 1,020.99 | $ 3.98 |
Institutional Class | |||
Actual | $ 1,000.00 | $ 1,092.80 | $ 4.17 |
HypotheticalA | $ 1,000.00 | $ 1,020.94 | $ 4.03 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Annualized | |
Class A | 1.10% |
Class T | 1.32% |
Class B | 1.91% |
Class C | 1.85% |
Strategic Dividend and Income | .79% |
Institutional Class | .80% |
Semiannual Report
Investment Changes
Top Ten Investments as of May 31, 2007 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
Valero Energy Corp. | 2.0 | 1.7 |
AT&T, Inc. | 1.5 | 1.0 |
JPMorgan Chase & Co. | 1.4 | 1.4 |
National Oilwell Varco, Inc. | 1.1 | 1.2 |
Citigroup, Inc. | 1.1 | 0.0 |
General Growth Properties, Inc. | 0.9 | 1.2 |
Transocean, Inc. | 0.9 | 0.0 |
Diamond Offshore Drilling, Inc. | 0.8 | 0.0 |
El Paso Corp. 4.99% | 0.8 | 0.9 |
American International Group, Inc. | 0.8 | 1.0 |
11.3 | ||
Top Five Market Sectors as of May 31, 2007 | ||
% of fund's | % of fund's net assets | |
Financials | 33.1 | 34.2 |
Information Technology | 14.6 | 14.8 |
Energy | 12.2 | 13.4 |
Utilities | 6.5 | 5.4 |
Industrials | 6.4 | 6.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2007* | As of November 30, 2006** | ||||||
![]() | Common Stocks 63.3% | ![]() | Common Stocks 66.8% | ||||
![]() | Preferred Stocks 15.3% | ![]() | Preferred Stocks 13.0% | ||||
![]() | Convertible Bonds 13.4% | ![]() | Convertible Bonds 13.5% | ||||
![]() | Other Investments 1.5% | ![]() | Other Investments 0.9% | ||||
![]() | Short-Term | ![]() | Short-Term | ||||
* Foreign investments | 8.5% | ** Foreign investments | 10.8% |
Semiannual Report
Investments May 31, 2007 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 14.5% | ||||
Principal Amount | Value | |||
Convertible Bonds - 13.4% | ||||
CONSUMER DISCRETIONARY - 1.0% | ||||
Automobiles - 0.1% | ||||
Ford Motor Co. 4.25% 12/15/36 | $ 970,000 | $ 1,118,216 | ||
Hotels, Restaurants & Leisure - 0.4% | ||||
Carnival Corp. 1.132% 4/29/33 (d) | 5,820,000 | 4,104,148 | ||
Six Flags, Inc. 4.5% 5/15/15 | 3,300,000 | 3,902,250 | ||
8,006,398 | ||||
Media - 0.4% | ||||
Charter Communications, Inc.: | ||||
5.875% 11/16/09 (f) | 70,000 | 124,600 | ||
5.875% 11/16/09 | 4,013,000 | 7,143,140 | ||
7,267,740 | ||||
Specialty Retail - 0.1% | ||||
Asbury Automotive Group, Inc. 3% 9/15/12 (f) | 1,000,000 | 973,400 | ||
Eddie Bauer Holdings, Inc. 5.25% 4/1/14 (f) | 1,000,000 | 1,256,250 | ||
2,229,650 | ||||
TOTAL CONSUMER DISCRETIONARY | 18,622,004 | |||
CONSUMER STAPLES - 0.0% | ||||
Food & Staples Retailing - 0.0% | ||||
Nash-Finch Co. 1.6314% 3/15/35 (d) | 1,520,000 | 817,304 | ||
ENERGY - 2.7% | ||||
Energy Equipment & Services - 1.1% | ||||
Grey Wolf, Inc. 5.2994% 4/1/24 (g) | 2,300,000 | 3,225,980 | ||
Halliburton Co. 3.125% 7/15/23 | 4,260,000 | 8,216,475 | ||
Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (d)(f) | 1,000,000 | 1,048,700 | ||
Maverick Tube Corp. 1.875% 11/15/25 | 3,000,000 | 3,633,000 | ||
SESI LLC 1.5% 12/15/26 (d)(f) | 3,000,000 | 3,243,000 | ||
19,367,155 | ||||
Oil, Gas & Consumable Fuels - 1.6% | ||||
Chesapeake Energy Corp.: | ||||
2.75% 11/15/35 (f) | 5,000,000 | 5,491,000 | ||
2.75% 11/15/35 | 10,200,000 | 11,201,640 | ||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
ENERGY - continued | ||||
Oil, Gas & Consumable Fuels - continued | ||||
McMoRan Exploration Co. 6% 7/2/08 | $ 3,000,000 | $ 3,567,600 | ||
Peabody Energy Corp. 4.75% 12/15/66 | 8,000,000 | 9,080,000 | ||
29,340,240 | ||||
TOTAL ENERGY | 48,707,395 | |||
FINANCIALS - 0.2% | ||||
Real Estate Investment Trusts - 0.2% | ||||
Ventas, Inc. 3.875% 11/15/11 (f) | 3,000,000 | 3,202,500 | ||
HEALTH CARE - 1.8% | ||||
Biotechnology - 0.6% | ||||
Amgen, Inc.: | ||||
0.375% 2/1/13 (f) | 5,000,000 | 4,494,000 | ||
0.375% 2/1/13 | 7,000,000 | 6,300,000 | ||
10,794,000 | ||||
Health Care Equipment & Supplies - 0.5% | ||||
Beckman Coulter, Inc. 2.5% 12/15/36 (f) | 2,000,000 | 2,129,600 | ||
Inverness Medical Innovations, Inc. 3% 5/15/16 (f) | 4,000,000 | 4,360,000 | ||
Medtronic, Inc. 1.625% 4/15/13 | 2,000,000 | 2,130,820 | ||
8,620,420 | ||||
Life Sciences Tools & Services - 0.5% | ||||
Charles River Laboratories International, Inc. 2.25% 6/15/13 (f) | 1,000,000 | 1,239,300 | ||
Fisher Scientific International, Inc.: | ||||
2.5% 10/1/23 (f) | 995,000 | 2,339,345 | ||
2.5% 10/1/23 | 2,400,000 | 5,642,640 | ||
Nektar Therapeutics 3.25% 9/28/12 | 1,000,000 | 915,100 | ||
10,136,385 | ||||
Pharmaceuticals - 0.2% | ||||
Alpharma, Inc. 2.125% 3/15/27 | 3,000,000 | 2,966,779 | ||
TOTAL HEALTH CARE | 32,517,584 | |||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
INDUSTRIALS - 1.4% | ||||
Aerospace & Defense - 0.3% | ||||
AAR Corp. 1.75% 2/1/26 (f) | $ 1,000,000 | $ 1,261,570 | ||
Alliant Techsystems, Inc. 3% 8/15/24 | 2,680,000 | 3,831,354 | ||
5,092,924 | ||||
Airlines - 0.2% | ||||
UAL Corp. 4.5% 6/30/21 (f) | 2,000,000 | 2,652,800 | ||
US Airways Group, Inc. 7% 9/30/20 (f) | 490,000 | 878,325 | ||
3,531,125 | ||||
Commercial Services & Supplies - 0.1% | ||||
FTI Consulting, Inc. 3.75% 7/15/12 (f) | 1,000,000 | 1,392,696 | ||
Construction & Engineering - 0.4% | ||||
Fluor Corp. 1.5% 2/15/24 | 2,000,000 | 3,749,476 | ||
Quanta Services, Inc. 3.75% 4/30/26 (f) | 3,000,000 | 4,474,032 | ||
8,223,508 | ||||
Electrical Equipment - 0.2% | ||||
GrafTech International Ltd. 1.625% 1/15/24 | 2,720,000 | 2,903,600 | ||
Machinery - 0.2% | ||||
Greenbrier Companies, Inc.: | ||||
2.375% 5/15/26 (f) | 1,000,000 | 920,593 | ||
2.375% 5/15/26 | 2,000,000 | 1,841,187 | ||
Trinity Industries, Inc. 3.875% 6/1/36 | 1,000,000 | 1,170,040 | ||
3,931,820 | ||||
TOTAL INDUSTRIALS | 25,075,673 | |||
INFORMATION TECHNOLOGY - 5.9% | ||||
Communications Equipment - 1.0% | ||||
Ciena Corp. 0.25% 5/1/13 | 1,560,000 | 1,579,800 | ||
Finisar Corp. 2.5% 10/15/10 | 6,920,000 | 8,719,200 | ||
JDS Uniphase Corp. 1% 5/15/26 (f) | 5,000,000 | 4,009,500 | ||
L-3 Communications Corp. 3% 8/1/35 | 2,000,000 | 2,227,500 | ||
Symmetricom, Inc. 3.25% 6/15/25 | 2,000,000 | 1,944,200 | ||
18,480,200 | ||||
Computers & Peripherals - 0.7% | ||||
EMC Corp.: | ||||
1.75% 12/1/13 (f) | 1,800,000 | 2,193,750 | ||
1.75% 12/1/13 | 930,000 | 1,133,438 | ||
Hutchinson Technology, Inc. 3.25% 1/15/26 | 3,000,000 | 2,573,700 | ||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Computers & Peripherals - continued | ||||
Maxtor Corp. 2.375% 8/15/12 | $ 600,000 | $ 794,700 | ||
SanDisk Corp. 1% 5/15/13 | 7,000,000 | 5,910,100 | ||
12,605,688 | ||||
Electronic Equipment & Instruments - 1.6% | ||||
Anixter International, Inc. 1% 2/15/13 (f) | 2,000,000 | 2,555,200 | ||
Coherent, Inc. 2.75% 3/1/11 (f) | 1,110,000 | 1,164,579 | ||
Flextronics International Ltd. 1% 8/1/10 | 8,420,000 | 8,103,408 | ||
Itron, Inc. 2.5% 8/1/26 | 10,000,000 | 12,208,000 | ||
Merix Corp. 4% 5/15/13 (f) | 1,000,000 | 866,875 | ||
Newport Corp. 2.5% 2/15/12 (f) | 1,000,000 | 936,920 | ||
Solectron Corp. 0.5% 2/15/34 | 1,000,000 | 830,400 | ||
Vishay Intertechnology, Inc. 3.625% 8/1/23 | 2,600,000 | 2,729,047 | ||
29,394,429 | ||||
IT Services - 0.5% | ||||
BearingPoint, Inc. 3.1% 12/15/24 (f) | 2,000,000 | 1,909,715 | ||
DST Systems, Inc. 4.125% 8/15/23 | 3,470,000 | 6,187,180 | ||
8,096,895 | ||||
Semiconductors & Semiconductor Equipment - 1.8% | ||||
Advanced Micro Devices, Inc. 6% 5/1/15 (f) | 5,000,000 | 4,925,000 | ||
Amkor Technology, Inc. 2.5% 5/15/11 | 2,000,000 | 2,380,800 | ||
Conexant Systems, Inc. 4% 3/1/26 | 3,000,000 | 2,601,600 | ||
Credence Systems Corp. 3.5% 5/15/10 (f) | 2,000,000 | 1,835,000 | ||
EMCORE Corp. 5.5% 5/15/11 | 880,000 | 925,100 | ||
Intel Corp. 2.95% 12/15/35 | 6,000,000 | 5,547,780 | ||
ON Semiconductor Corp.: | ||||
0% 4/15/24 | 6,500,000 | 7,907,900 | ||
1.875% 12/15/25 (f) | 1,250,000 | 2,092,375 | ||
Photronics, Inc. 2.25% 4/15/08 | 3,000,000 | 3,160,500 | ||
31,376,055 | ||||
Software - 0.3% | ||||
Borland Software Corp. 2.75% 2/15/12 (f) | 2,000,000 | 2,272,500 | ||
Cadence Design Systems, Inc. 1.5% 12/15/13 (f) | 2,000,000 | 2,344,000 | ||
Symantec Corp. 1% 6/15/13 (f) | 1,000,000 | 1,168,000 | ||
5,784,500 | ||||
TOTAL INFORMATION TECHNOLOGY | 105,737,767 | |||
Corporate Bonds - continued | ||||
Principal Amount | Value | |||
Convertible Bonds - continued | ||||
MATERIALS - 0.1% | ||||
Chemicals - 0.1% | ||||
Pioneer Companies, Inc. 2.75% 3/1/27 (f) | $ 1,420,000 | $ 1,696,900 | ||
TELECOMMUNICATION SERVICES - 0.3% | ||||
Diversified Telecommunication Services - 0.3% | ||||
Level 3 Communications, Inc. 3.5% 6/15/12 | 2,000,000 | 2,531,900 | ||
Time Warner Telecom, Inc. 2.375% 4/1/26 | 2,000,000 | 2,465,000 | ||
4,996,900 | ||||
TOTAL CONVERTIBLE BONDS | 241,374,027 | |||
Nonconvertible Bonds - 1.1% | ||||
FINANCIALS - 0.8% | ||||
Capital Markets - 0.4% | ||||
Goldman Sachs Group, Inc. 5.793% | 2,000,000 | 1,972,000 | ||
JPMorgan Chase Capital XXII 6.45% 2/2/37 | 3,000,000 | 2,916,543 | ||
Lehman Brothers Holdings, Inc.: | ||||
5.857% (g) | 1,000,000 | 989,421 | ||
6.19% (g) | 1,000,000 | 1,001,250 | ||
6,879,214 | ||||
Commercial Banks - 0.4% | ||||
Capital One Capital IV 6.745% 2/17/37 (g) | 2,000,000 | 1,907,220 | ||
HBOS plc 6.657% (f)(g) | 5,000,000 | 4,900,000 | ||
Wells Fargo Capital X 5.95% 12/15/36 | 1,000,000 | 953,980 | ||
7,761,200 | ||||
TOTAL FINANCIALS | 14,640,414 | |||
UTILITIES - 0.3% | ||||
Multi-Utilities - 0.3% | ||||
Wisconsin Energy Corp. 6.25% 5/15/67 (g) | 5,000,000 | 4,869,360 | ||
TOTAL NONCONVERTIBLE BONDS | 19,509,774 | |||
TOTAL CORPORATE BONDS (Cost $238,807,078) | 260,883,801 |
Common Stocks - 63.3% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 4.9% | |||
Automobiles - 0.1% | |||
Winnebago Industries, Inc. | 78,400 | $ 2,430,400 | |
Diversified Consumer Services - 0.5% | |||
Coinmach Service Corp. unit | 156,800 | 2,993,312 | |
Service Corp. International | 339,000 | 4,739,220 | |
Stewart Enterprises, Inc. Class A | 225,800 | 1,747,692 | |
9,480,224 | |||
Hotels, Restaurants & Leisure - 1.4% | |||
Accor SA | 23,500 | 2,185,288 | |
Aristocrat Leisure Ltd. | 229,600 | 2,928,206 | |
Centerplate, Inc. unit | 268,800 | 4,381,440 | |
Hilton Hotels Corp. | 27,700 | 984,735 | |
Jollibee Food Corp. | 409,500 | 491,400 | |
McDonald's Corp. | 105,849 | 5,350,667 | |
Minor International PCL (For. Reg.) | 1,212,900 | 416,552 | |
Starwood Hotels & Resorts Worldwide, Inc. | 65,500 | 4,720,585 | |
WMS Industries, Inc. (a) | 66,400 | 2,812,704 | |
24,271,577 | |||
Household Durables - 1.0% | |||
Bassett Furniture Industries, Inc. | 80,957 | 1,161,733 | |
Beazer Homes USA, Inc. | 21,600 | 772,632 | |
Black & Decker Corp. | 27,900 | 2,634,597 | |
KB Home | 35,600 | 1,633,684 | |
La-Z-Boy, Inc. | 95,477 | 1,122,810 | |
The Stanley Works | 43,910 | 2,776,429 | |
Urbi, Desarrollos Urbanos, SA de CV (a) | 243,500 | 1,040,932 | |
Whirlpool Corp. | 56,600 | 6,319,390 | |
17,462,207 | |||
Internet & Catalog Retail - 0.1% | |||
FTD Group, Inc. | 30,500 | 540,765 | |
Submarino SA | 15,200 | 645,585 | |
1,186,350 | |||
Leisure Equipment & Products - 0.3% | |||
Brunswick Corp. | 71,900 | 2,475,517 | |
Eastman Kodak Co. | 111,600 | 2,830,176 | |
MarineMax, Inc. (a) | 18,300 | 380,274 | |
5,685,967 | |||
Media - 0.8% | |||
Charter Communications, Inc. Class A (a) | 977,700 | 3,920,577 | |
Getty Images, Inc. (a) | 47,700 | 2,387,385 | |
Common Stocks - continued | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - continued | |||
Media - continued | |||
Grupo Televisa SA de CV (CPO) sponsored ADR | 21,500 | $ 618,770 | |
News Corp.: | |||
Class A | 86,700 | 1,915,203 | |
Class B | 8,400 | 198,492 | |
R.H. Donnelley Corp. | 49,200 | 3,834,648 | |
Viacom, Inc. Class B (non-vtg.) (a) | 41,865 | 1,880,576 | |
14,755,651 | |||
Multiline Retail - 0.4% | |||
JCPenney Co., Inc. | 36,600 | 2,945,568 | |
Retail Ventures, Inc. (a) | 39,791 | 771,547 | |
Sears Holdings Corp. (a) | 16,200 | 2,916,324 | |
Tuesday Morning Corp. | 90,385 | 1,259,967 | |
7,893,406 | |||
Specialty Retail - 0.1% | |||
AutoZone, Inc. (a) | 6,500 | 836,095 | |
Circuit City Stores, Inc. | 51,200 | 822,784 | |
Truworths International Ltd. | 78,600 | 458,132 | |
2,117,011 | |||
Textiles, Apparel & Luxury Goods - 0.2% | |||
G-III Apparel Group Ltd. (a) | 83,500 | 1,728,450 | |
VF Corp. | 22,000 | 2,063,160 | |
3,791,610 | |||
TOTAL CONSUMER DISCRETIONARY | 89,074,403 | ||
CONSUMER STAPLES - 3.2% | |||
Beverages - 0.1% | |||
Anadolu Efes Biracilk Ve Malt Sanyii AS | 11,000 | 455,028 | |
Remy Cointreau SA | 23,200 | 1,679,462 | |
2,134,490 | |||
Food & Staples Retailing - 0.5% | |||
Rite Aid Corp. | 380,200 | 2,402,864 | |
Safeway, Inc. | 154,900 | 5,340,952 | |
Wal-Mart de Mexico SA de CV Series V | 219,926 | 832,235 | |
8,576,051 | |||
Food Products - 1.4% | |||
B&G Foods, Inc. unit | 156,900 | 3,426,696 | |
BioMar Holding AS | 49,200 | 2,933,095 | |
Bunge Ltd. | 30,000 | 2,343,600 | |
Common Stocks - continued | |||
Shares | Value | ||
CONSUMER STAPLES - continued | |||
Food Products - continued | |||
Cermaq ASA (e) | 143,100 | $ 2,455,868 | |
Chaoda Modern Agriculture (Holdings) Ltd. | 1,024,000 | 889,118 | |
Chiquita Brands International, Inc. (e) | 234,337 | 4,297,741 | |
Kraft Foods, Inc. Class A | 70,794 | 2,395,669 | |
Marine Harvest ASA (a) | 2,180,000 | 2,414,671 | |
Ralcorp Holdings, Inc. (a) | 22,800 | 1,326,048 | |
Tyson Foods, Inc. Class A | 158,000 | 3,521,820 | |
26,004,326 | |||
Household Products - 0.1% | |||
Central Garden & Pet Co. (a) | 108,600 | 1,558,410 | |
Personal Products - 0.6% | |||
Avon Products, Inc. | 148,000 | 5,681,720 | |
Playtex Products, Inc. (a) | 312,100 | 4,650,290 | |
10,332,010 | |||
Tobacco - 0.5% | |||
Altria Group, Inc. | 102,300 | 7,273,530 | |
Japan Tobacco, Inc. | 484 | 2,521,206 | |
9,794,736 | |||
TOTAL CONSUMER STAPLES | 58,400,023 | ||
ENERGY - 8.2% | |||
Energy Equipment & Services - 2.8% | |||
Diamond Offshore Drilling, Inc. | 155,700 | 14,693,409 | |
National Oilwell Varco, Inc. (a) | 211,589 | 19,984,581 | |
Transocean, Inc. (a) | 158,600 | 15,580,864 | |
50,258,854 | |||
Oil, Gas & Consumable Fuels - 5.4% | |||
Cabot Oil & Gas Corp. | 220,400 | 8,595,600 | |
Canadian Natural Resources Ltd. | 105,300 | 6,999,651 | |
Chesapeake Energy Corp. | 55,800 | 1,945,188 | |
CONSOL Energy, Inc. | 110,700 | 5,378,913 | |
EOG Resources, Inc. | 67,900 | 5,221,510 | |
Noble Energy, Inc. | 67,900 | 4,297,391 | |
Peabody Energy Corp. | 96,300 | 5,204,052 | |
Plains Exploration & Production Co. (a) | 193,400 | 10,234,728 | |
Range Resources Corp. | 113,022 | 4,378,472 | |
Spectra Energy Corp. | 1,733 | 46,150 | |
Common Stocks - continued | |||
Shares | Value | ||
ENERGY - continued | |||
Oil, Gas & Consumable Fuels - continued | |||
Teekay Shipping Corp. | 142,050 | $ 8,645,163 | |
Valero Energy Corp. | 484,861 | 36,180,324 | |
97,127,142 | |||
TOTAL ENERGY | 147,385,996 | ||
FINANCIALS - 23.4% | |||
Capital Markets - 1.8% | |||
Ares Capital Corp. | 126,600 | 2,345,898 | |
Bank of New York Co., Inc. | 73,500 | 2,981,160 | |
Franklin Resources, Inc. | 17,600 | 2,389,024 | |
Janus Capital Group, Inc. | 96,800 | 2,679,424 | |
Merrill Lynch & Co., Inc. | 74,500 | 6,908,385 | |
Merrill Lynch & Co., Inc. (depositary shares) Series 1, unit | 277,700 | 7,039,695 | |
Morgan Stanley | 95,700 | 8,138,328 | |
32,481,914 | |||
Commercial Banks - 1.4% | |||
Cathay General Bancorp | 61,246 | 2,075,014 | |
Commerce Bancorp, Inc. | 72,400 | 2,499,248 | |
East West Bancorp, Inc. | 100,131 | 4,059,311 | |
Hanmi Financial Corp. | 150,600 | 2,630,982 | |
PNC Financial Services Group, Inc. | 32,700 | 2,413,260 | |
UCBH Holdings, Inc. | 125,600 | 2,337,416 | |
Wachovia Corp. | 91,809 | 4,975,130 | |
Wells Fargo & Co. | 115,900 | 4,182,831 | |
25,173,192 | |||
Consumer Finance - 0.1% | |||
Advance America Cash Advance Centers, Inc. | 98,400 | 1,736,760 | |
Diversified Financial Services - 3.3% | |||
Bank of America Corp. | 275,614 | 13,976,386 | |
Citigroup, Inc. | 350,400 | 19,093,296 | |
JPMorgan Chase & Co. | 490,904 | 25,443,554 | |
58,513,236 | |||
Insurance - 3.9% | |||
AFLAC, Inc. | 73,100 | 3,864,066 | |
American International Group, Inc. | 195,200 | 14,120,768 | |
Aspen Insurance Holdings Ltd. | 365,018 | 9,899,288 | |
Axis Capital Holdings Ltd. | 218,795 | 8,657,718 | |
Endurance Specialty Holdings Ltd. | 213,995 | 8,523,421 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Insurance - continued | |||
Everest Re Group Ltd. | 16,500 | $ 1,769,295 | |
Hartford Financial Services Group, Inc. | 37,600 | 3,879,192 | |
MetLife, Inc. | 49,500 | 3,366,000 | |
Platinum Underwriters Holdings Ltd. | 290,666 | 10,010,537 | |
Prudential Financial, Inc. | 42,500 | 4,335,850 | |
Universal American Financial Corp. (a) | 101,900 | 2,163,337 | |
70,589,472 | |||
Real Estate Investment Trusts - 11.8% | |||
Alexandria Real Estate Equities, Inc. | 66,800 | 7,027,360 | |
American Financial Realty Trust (SBI) | 215,500 | 2,430,840 | |
AvalonBay Communities, Inc. | 46,560 | 6,070,958 | |
Boston Properties, Inc. | 60,314 | 6,977,124 | |
BRE Properties, Inc. Class A | 112,400 | 7,105,928 | |
British Land Co. PLC | 22,800 | 653,234 | |
Capital Lease Funding, Inc. | 47,300 | 528,341 | |
CBL & Associates Properties, Inc. | 44,555 | 1,828,537 | |
Corporate Office Properties Trust (SBI) | 187,900 | 8,464,895 | |
DCT Industrial Trust, Inc. | 278,351 | 3,075,779 | |
Developers Diversified Realty Corp. | 165,500 | 10,203,075 | |
Duke Realty LP | 164,370 | 6,594,524 | |
Equity Lifestyle Properties, Inc. | 33,660 | 1,833,124 | |
Equity One, Inc. | 16,900 | 495,170 | |
Equity Residential (SBI) | 165,580 | 8,389,939 | |
General Growth Properties, Inc. | 282,125 | 16,656,660 | |
GMH Communities Trust | 107,200 | 1,089,152 | |
Health Care Property Investors, Inc. | 119,500 | 3,904,065 | |
Healthcare Realty Trust, Inc. | 79,100 | 2,592,107 | |
Hersha Hospitality Trust | 80,500 | 977,270 | |
Highwoods Properties, Inc. (SBI) | 101,800 | 4,462,912 | |
Home Properties, Inc. | 93,100 | 5,362,560 | |
HomeBanc Mortgage Corp., Georgia | 139,500 | 284,580 | |
Host Hotels & Resorts, Inc. | 302,645 | 7,723,500 | |
Inland Real Estate Corp. | 222,000 | 3,996,000 | |
Kilroy Realty Corp. | 65,100 | 4,838,232 | |
Kimco Realty Corp. | 103,938 | 4,811,290 | |
Mission West Properties, Inc. | 74,300 | 1,052,831 | |
Plum Creek Timber Co., Inc. | 16,200 | 677,160 | |
Potlatch Corp. | 49,530 | 2,168,423 | |
ProLogis Trust | 169,565 | 10,964,073 | |
Public Storage, Inc. | 115,536 | 10,340,472 | |
Common Stocks - continued | |||
Shares | Value | ||
FINANCIALS - continued | |||
Real Estate Investment Trusts - continued | |||
Rayonier, Inc. | 52,520 | $ 2,361,299 | |
Simon Property Group, Inc. | 111,310 | 12,019,254 | |
SL Green Realty Corp. | 31,700 | 4,440,536 | |
Strategic Hotel & Resorts, Inc. | 193,700 | 4,517,084 | |
Tanger Factory Outlet Centers, Inc. | 126,300 | 5,298,285 | |
Taubman Centers, Inc. | 22,100 | 1,215,942 | |
UDR, Inc. | 416,040 | 12,630,974 | |
Unibail (Reg.) | 2,100 | 602,599 | |
Ventas, Inc. | 78,950 | 3,344,322 | |
Vornado Realty Trust | 111,850 | 13,534,969 | |
213,545,379 | |||
Real Estate Management & Development - 0.2% | |||
Brookfield Properties Corp. | 27,200 | 714,272 | |
Mitsubishi Estate Co. Ltd. | 101,000 | 3,103,607 | |
Thomas Properties Group, Inc. | 28,500 | 479,655 | |
4,297,534 | |||
Thrifts & Mortgage Finance - 0.9% | |||
Countrywide Financial Corp. | 45,600 | 1,775,664 | |
Fannie Mae | 58,100 | 3,713,752 | |
Hudson City Bancorp, Inc. | 192,300 | 2,536,437 | |
New York Community Bancorp, Inc. | 231,600 | 4,048,368 | |
Radian Group, Inc. | 72,100 | 4,462,990 | |
16,537,211 | |||
TOTAL FINANCIALS | 422,874,698 | ||
HEALTH CARE - 3.1% | |||
Biotechnology - 0.1% | |||
Amgen, Inc. (a) | 24,700 | 1,391,351 | |
Health Care Equipment & Supplies - 0.7% | |||
Becton, Dickinson & Co. | 72,400 | 5,520,500 | |
C.R. Bard, Inc. | 62,700 | 5,292,507 | |
Varian Medical Systems, Inc. (a) | 58,974 | 2,376,652 | |
13,189,659 | |||
Health Care Providers & Services - 0.6% | |||
Acibadem Saglik Hizmetleri AS | 57,847 | 742,022 | |
Brookdale Senior Living, Inc. | 132,580 | 6,259,102 | |
Bumrungrad Hospital PCL (For. Reg.) | 346,100 | 464,463 | |
Capital Senior Living Corp. (a) | 27,600 | 306,912 | |
Common Stocks - continued | |||
Shares | Value | ||
HEALTH CARE - continued | |||
Health Care Providers & Services - continued | |||
DaVita, Inc. (a) | 54,000 | $ 2,982,420 | |
Henry Schein, Inc. (a) | 800 | 42,824 | |
Sun Healthcare Group, Inc. (a) | 44,700 | 639,210 | |
11,436,953 | |||
Health Care Technology - 0.2% | |||
Cerner Corp. (a) | 50,000 | 2,840,500 | |
Pharmaceuticals - 1.5% | |||
Merck & Co., Inc. | 250,800 | 13,154,460 | |
MGI Pharma, Inc. (a) | 114,300 | 2,443,734 | |
Pfizer, Inc. | 295,000 | 8,109,550 | |
Wyeth | 44,400 | 2,568,096 | |
26,275,840 | |||
TOTAL HEALTH CARE | 55,134,303 | ||
INDUSTRIALS - 4.8% | |||
Aerospace & Defense - 1.3% | |||
General Dynamics Corp. | 41,900 | 3,362,056 | |
Honeywell International, Inc. | 114,900 | 6,653,859 | |
Precision Castparts Corp. | 24,500 | 2,929,220 | |
United Technologies Corp. | 158,000 | 11,146,900 | |
24,092,035 | |||
Air Freight & Logistics - 0.2% | |||
United Parcel Service, Inc. Class B | 39,100 | 2,814,027 | |
Building Products - 0.2% | |||
Masco Corp. | 82,100 | 2,480,241 | |
Commercial Services & Supplies - 0.3% | |||
Allied Waste Industries, Inc. | 135,900 | 1,829,214 | |
The Brink's Co. | 13,100 | 863,683 | |
The Geo Group, Inc. (a) | 28,450 | 1,550,525 | |
Waste Management, Inc. | 46,300 | 1,790,421 | |
6,033,843 | |||
Construction & Engineering - 0.8% | |||
Fluor Corp. | 91,335 | 9,507,974 | |
Shaw Group, Inc. (a) | 137,700 | 5,571,342 | |
15,079,316 | |||
Electrical Equipment - 0.1% | |||
Cooper Industries Ltd. Class A | 30,500 | 1,634,190 | |
Common Stocks - continued | |||
Shares | Value | ||
INDUSTRIALS - continued | |||
Industrial Conglomerates - 0.3% | |||
Tyco International Ltd. | 129,000 | $ 4,303,440 | |
Machinery - 1.0% | |||
Dover Corp. | 32,300 | 1,616,615 | |
Flowserve Corp. | 57,606 | 3,998,432 | |
Oshkosh Truck Co. | 42,300 | 2,609,487 | |
SPX Corp. | 115,400 | 10,140,198 | |
18,364,732 | |||
Road & Rail - 0.6% | |||
Con-way, Inc. | 77,600 | 4,399,920 | |
Kansas City Southern | 1,803 | 74,013 | |
Landstar System, Inc. | 39,600 | 1,926,936 | |
Union Pacific Corp. | 37,100 | 4,477,228 | |
10,878,097 | |||
TOTAL INDUSTRIALS | 85,679,921 | ||
INFORMATION TECHNOLOGY - 8.7% | |||
Communications Equipment - 0.7% | |||
Alcatel-Lucent SA sponsored ADR | 124,200 | 1,704,024 | |
Avocent Corp. (a) | 30,500 | 854,915 | |
Comverse Technology, Inc. (a) | 87,300 | 2,000,916 | |
Motorola, Inc. | 180,000 | 3,274,200 | |
Nokia Corp. sponsored ADR | 163,900 | 4,487,582 | |
12,321,637 | |||
Computers & Peripherals - 1.4% | |||
Dell, Inc. (a) | 109,700 | 2,947,639 | |
Diebold, Inc. | 54,300 | 2,692,194 | |
Hewlett-Packard Co. | 118,200 | 5,402,922 | |
Intermec, Inc. (a) | 144,900 | 3,564,540 | |
International Business Machines Corp. | 66,300 | 7,067,580 | |
NCR Corp. (a) | 51,100 | 2,742,537 | |
Sun Microsystems, Inc. (a) | 141,900 | 723,690 | |
25,141,102 | |||
Electronic Equipment & Instruments - 1.5% | |||
Agilent Technologies, Inc. (a) | 74,300 | 2,836,031 | |
Amphenol Corp. Class A | 235,000 | 8,408,300 | |
Arrow Electronics, Inc. (a) | 106,200 | 4,359,510 | |
Avnet, Inc. (a) | 103,000 | 4,412,520 | |
Flextronics International Ltd. (a) | 279,200 | 3,224,760 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Electronic Equipment & Instruments - continued | |||
Ingram Micro, Inc. Class A (a) | 87,000 | $ 1,802,640 | |
Molex, Inc. | 82,300 | 2,447,602 | |
27,491,363 | |||
Internet Software & Services - 0.4% | |||
Google, Inc. Class A (sub. vtg.) (a) | 8,100 | 4,031,775 | |
VeriSign, Inc. (a) | 128,100 | 3,821,223 | |
7,852,998 | |||
IT Services - 0.3% | |||
Mastercard, Inc. Class A | 30,700 | 4,591,185 | |
Semiconductors & Semiconductor Equipment - 3.5% | |||
Advanced Micro Devices, Inc. (a) | 182,600 | 2,605,702 | |
Analog Devices, Inc. | 49,300 | 1,785,153 | |
Applied Materials, Inc. | 195,400 | 3,732,140 | |
ASML Holding NV (NY Shares) (a) | 145,700 | 3,754,689 | |
Atmel Corp. (a) | 428,900 | 2,397,551 | |
Axcelis Technologies, Inc. (a) | 219,100 | 1,408,813 | |
Broadcom Corp. Class A (a) | 75,800 | 2,316,448 | |
Cypress Semiconductor Corp. (a) | 78,300 | 1,681,101 | |
Fairchild Semiconductor International, Inc. (a) | 131,500 | 2,422,230 | |
FormFactor, Inc. (a) | 72,500 | 2,884,050 | |
Hittite Microwave Corp. (a) | 38,800 | 1,577,220 | |
Integrated Device Technology, Inc. (a) | 268,529 | 4,030,620 | |
Intel Corp. | 158,100 | 3,505,077 | |
Intersil Corp. Class A | 78,700 | 2,368,870 | |
Lam Research Corp. (a) | 49,700 | 2,666,902 | |
Linear Technology Corp. | 70,400 | 2,526,656 | |
Maxim Integrated Products, Inc. | 87,200 | 2,681,400 | |
Microchip Technology, Inc. | 45,700 | 1,854,506 | |
National Semiconductor Corp. | 163,900 | 4,412,188 | |
ON Semiconductor Corp. (a) | 453,300 | 4,868,442 | |
Saifun Semiconductors Ltd. (a) | 140,100 | 1,490,664 | |
Silicon Motion Technology Corp. sponsored ADR (a) | 94,100 | 2,176,533 | |
Volterra Semiconductor Corp. (a) | 212,163 | 3,335,202 | |
62,482,157 | |||
Software - 0.9% | |||
Business Objects SA sponsored ADR (a) | 64,495 | 2,651,389 | |
Microsoft Corp. | 135,200 | 4,146,584 | |
Nintendo Co. Ltd. | 7,900 | 2,758,680 | |
Common Stocks - continued | |||
Shares | Value | ||
INFORMATION TECHNOLOGY - continued | |||
Software - continued | |||
Symantec Corp. (a) | 129,800 | $ 2,594,702 | |
Ubisoft Entertainment SA (a) | 92,304 | 4,628,921 | |
16,780,276 | |||
TOTAL INFORMATION TECHNOLOGY | 156,660,718 | ||
MATERIALS - 1.4% | |||
Chemicals - 0.6% | |||
Agrium, Inc. | 65,300 | 2,518,701 | |
Arkema (a) | 27,400 | 1,795,844 | |
Celanese Corp. Class A | 61,400 | 2,234,346 | |
Monsanto Co. | 59,900 | 3,689,840 | |
10,238,731 | |||
Metals & Mining - 0.7% | |||
Alcoa, Inc. | 110,600 | 4,565,568 | |
Titanium Metals Corp. | 262,800 | 9,092,880 | |
13,658,448 | |||
Paper & Forest Products - 0.1% | |||
Neenah Paper, Inc. | 46,175 | 2,022,465 | |
TOTAL MATERIALS | 25,919,644 | ||
TELECOMMUNICATION SERVICES - 3.1% | |||
Diversified Telecommunication Services - 2.5% | |||
AT&T, Inc. | 639,915 | 26,454,086 | |
CenturyTel, Inc. | 48,689 | 2,406,210 | |
Level 3 Communications, Inc. (a) | 287,274 | 1,671,935 | |
Verizon Communications, Inc. | 315,000 | 13,711,950 | |
44,244,181 | |||
Wireless Telecommunication Services - 0.6% | |||
America Movil SA de CV Series L sponsored ADR | 37,600 | 2,276,680 | |
Bharti Airtel Ltd. (a) | 41,763 | 899,674 | |
Cellcom Israel Ltd. | 20,700 | 513,360 | |
MTN Group Ltd. | 107,100 | 1,471,121 | |
NII Holdings, Inc. (a) | 11,200 | 912,464 | |
Common Stocks - continued | |||
Shares | Value | ||
TELECOMMUNICATION SERVICES - continued | |||
Wireless Telecommunication Services - continued | |||
Partner Communications Co. Ltd. ADR (e) | 31,818 | $ 540,270 | |
Sprint Nextel Corp. | 208,200 | 4,757,370 | |
11,370,939 | |||
TOTAL TELECOMMUNICATION SERVICES | 55,615,120 | ||
UTILITIES - 2.5% | |||
Electric Utilities - 1.0% | |||
Entergy Corp. | 41,300 | 4,662,770 | |
Exelon Corp. | 56,200 | 4,383,600 | |
PPL Corp. | 192,811 | 8,861,594 | |
17,907,964 | |||
Independent Power Producers & Energy Traders - 1.1% | |||
AES Corp. (a) | 377,300 | 8,953,329 | |
Constellation Energy Group, Inc. | 105,500 | 9,681,735 | |
Mirant Corp. (a) | 38,500 | 1,786,400 | |
20,421,464 | |||
Multi-Utilities - 0.4% | |||
CMS Energy Corp. | 270,700 | 4,940,275 | |
Public Service Enterprise Group, Inc. | 23,500 | 2,090,090 | |
7,030,365 | |||
TOTAL UTILITIES | 45,359,793 | ||
TOTAL COMMON STOCKS (Cost $932,092,962) | 1,142,104,619 | ||
Preferred Stocks - 15.3% | |||
Convertible Preferred Stocks - 4.0% | |||
CONSUMER DISCRETIONARY - 0.1% | |||
Automobiles - 0.1% | |||
General Motors Corp. Series C, 6.25% | 98,500 | 2,262,545 | |
Hotels, Restaurants & Leisure - 0.0% | |||
Six Flags, Inc. 7.25% PIERS | 2,100 | 50,138 | |
Media - 0.0% | |||
Emmis Communications Corp. Series A, 6.25% | 10,100 | 478,336 | |
TOTAL CONSUMER DISCRETIONARY | 2,791,019 | ||
Preferred Stocks - continued | |||
Shares | Value | ||
Convertible Preferred Stocks - continued | |||
ENERGY - 1.1% | |||
Oil, Gas & Consumable Fuels - 1.1% | |||
Chesapeake Energy Corp.: | |||
4.50% | 20,500 | $ 2,080,750 | |
5.00% (a) | 7,500 | 1,107,188 | |
6.25% | 8,000 | 2,285,280 | |
El Paso Corp. 4.99% | 10,000 | 14,527,447 | |
20,000,665 | |||
FINANCIALS - 0.2% | |||
Diversified Financial Services - 0.1% | |||
Carriage Services Capital Trust 7.00% TIDES | 45,000 | 1,957,500 | |
Real Estate Investment Trusts - 0.1% | |||
HRPT Properties Trust 6.50% | 40,000 | 998,760 | |
TOTAL FINANCIALS | 2,956,260 | ||
INDUSTRIALS - 0.2% | |||
Road & Rail - 0.2% | |||
Kansas City Southern: | |||
4.25% | 1,370 | 1,756,979 | |
5.125% | 1,000 | 1,544,200 | |
3,301,179 | |||
MATERIALS - 1.0% | |||
Chemicals - 0.7% | |||
Celanese Corp. 4.25% | 252,600 | 11,963,136 | |
Containers & Packaging - 0.1% | |||
Owens-Illinois, Inc. 4.75% | 63,510 | 2,619,788 | |
Metals & Mining - 0.2% | |||
Freeport-McMoRan Copper & Gold, Inc. 5.50% | 2,550 | 4,438,989 | |
TOTAL MATERIALS | 19,021,913 | ||
UTILITIES - 1.4% | |||
Electric Utilities - 0.5% | |||
AES Trust VII 6.00% | 180,700 | 8,977,176 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Convertible Preferred Stocks - continued | |||
UTILITIES - continued | |||
Independent Power Producers & Energy Traders - 0.5% | |||
NRG Energy, Inc.: | |||
4.00% (f) | 3,900 | $ 8,861,970 | |
Series A, 5.75% | 1,000 | 382,960 | |
9,244,930 | |||
Multi-Utilities - 0.4% | |||
CMS Energy Corp. 4.50% | 66,000 | 6,279,900 | |
TOTAL UTILITIES | 24,502,006 | ||
TOTAL CONVERTIBLE PREFERRED STOCKS | 72,573,042 | ||
Nonconvertible Preferred Stocks - 11.3% | |||
CONSUMER DISCRETIONARY - 0.1% | |||
Household Durables - 0.0% | |||
Hovnanian Enterprises, Inc. Series A, 7.625% | 40,000 | 984,000 | |
Media - 0.1% | |||
CBS Corp. 6.75% | 40,000 | 991,200 | |
TOTAL CONSUMER DISCRETIONARY | 1,975,200 | ||
CONSUMER STAPLES - 0.1% | |||
Food Products - 0.1% | |||
H.J. Heinz Finance Co. 6.226% | 10 | 1,020,000 | |
ENERGY - 0.2% | |||
Oil, Gas & Consumable Fuels - 0.2% | |||
Apache Corp. (depositary shares) Series B, 5.68% | 29,375 | 2,930,156 | |
Devon Energy Corp. 6.49% | 13,750 | 1,379,125 | |
4,309,281 | |||
FINANCIALS - 8.1% | |||
Capital Markets - 1.5% | |||
Bear Stearns Companies, Inc.: | |||
Series E, 6.155% | 15,000 | 756,000 | |
Series G, 5.49% | 15,000 | 750,000 | |
Deutsche Bank Contingent Capital Trust II 6.55% | 80,000 | 2,025,600 | |
Goldman Sachs Group, Inc.: | |||
Series A, 3.9106% | 120,000 | 3,079,200 | |
Series B, 6.20% | 100,000 | 2,575,000 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Goldman Sachs Group, Inc.: - continued | |||
Series C, 4.9931% | 40,000 | $ 1,048,800 | |
Series D | 160,000 | 4,155,200 | |
Lehman Brothers Holdings, Inc.: | |||
(depositary shares) Series F, 6.50% | 169,015 | 4,314,953 | |
Series D, 5.67% | 34,900 | 1,708,355 | |
Merrill Lynch & Co., Inc.: | |||
Series 5, 5.86% | 80,000 | 2,019,200 | |
Series H, 3.97% | 120,000 | 3,049,200 | |
Morgan Stanley Capital Trust IV 6.60% | 80,000 | 2,008,800 | |
27,490,308 | |||
Commercial Banks - 1.5% | |||
ABN AMRO Capital Funding Trust V 5.90% | 20,000 | 466,600 | |
ABN Amro Capital Funding Trust VII 6.08% | 40,400 | 971,620 | |
Barclays Bank PLC Series 2, 6.625% | 40,000 | 1,034,000 | |
BNY Capital V 5.95% | 115,000 | 2,745,050 | |
First Tennessee Bank NA, Memphis 3.90% (f) | 5,000 | 5,125,000 | |
Keycorp Capital IX 6.75% | 40,000 | 1,006,400 | |
Royal Bank of Scotland Group PLC Series R, 6.125% | 40,000 | 998,800 | |
Santander Finance Preferred SA Unipersonal (f) | 40,000 | 946,000 | |
Santander Finance Preferred SA Unipersonal: | |||
6.41% | 69,400 | 1,738,470 | |
6.50% (f) | 40,000 | 984,000 | |
6.80% (f) | 160,000 | 4,000,000 | |
U.S. Bancorp, Delaware Series B, 0.00% | 40,000 | 1,053,600 | |
USB Capital XII 6.30% | 80,000 | 1,952,000 | |
Wachovia Capital Trust IX 6.375% | 120,000 | 2,964,000 | |
25,985,540 | |||
Consumer Finance - 0.2% | |||
Ford Motor Credit Co. LLC 7.375% | 40,000 | 866,000 | |
HSBC USA, Inc.: | |||
Series G, 4.9175% | 80,000 | 2,120,000 | |
Series H, 6.50% | 40,000 | 1,056,400 | |
SLM Corp. 4.07% | 1,200 | 104,400 | |
4,146,800 | |||
Diversified Financial Services - 1.0% | |||
Bank of America Corp.: | |||
Series D | 20,000 | 519,800 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Diversified Financial Services - continued | |||
Bank of America Corp.: - continued | |||
Series E | 40,000 | $ 1,019,200 | |
CIT Group, Inc. Series B, 5.189% | 15,000 | 1,479,000 | |
Citigroup Capital XVI Series C, 6.45% | 120,000 | 3,012,000 | |
Citigroup Capital XVII 6.35% | 80,000 | 1,992,000 | |
Deutsche Bank Capital Funding Trust VIII 6.375% | 140,000 | 3,514,000 | |
General Electric Capital Corp. 6.05% | 80,000 | 1,963,200 | |
Merrill Lynch Capital Trust II 6.45% | 200,000 | 4,900,000 | |
18,399,200 | |||
Insurance - 0.2% | |||
American International Group, Inc. 6.45% | 80,000 | 2,000,000 | |
MetLife, Inc. Series A, 4.39% | 40,000 | 1,041,200 | |
3,041,200 | |||
Real Estate Investment Trusts - 0.6% | |||
Apartment Investment & Management Co. Series V, 8.00% | 79,000 | 2,012,920 | |
Duke Realty LP (depositary shares) Series K, 6.50% | 95,800 | 2,394,042 | |
Hospitality Properties Trust Series C, 7.00% | 100,000 | 2,460,000 | |
Host Hotels & Resorts, Inc. Series E, 8.875% | 20,000 | 535,200 | |
Public Storage, Inc. Series M, 6.625% | 80,000 | 1,971,200 | |
Vornado Realty Trust Series E, 7.00% | 40,000 | 1,017,200 | |
10,390,562 | |||
Thrifts & Mortgage Finance - 3.1% | |||
Countrywide Capital V 7.00% | 80,000 | 1,990,400 | |
Fannie Mae: | |||
5.10% | 27,562 | 1,219,619 | |
7.00% | 42,200 | 2,270,782 | |
Series H, 5.81% | 71,200 | 3,560,000 | |
Series I, 5.375% | 5,000 | 243,250 | |
Series L, 5.125% | 140,900 | 6,602,574 | |
Series N, 5.50% | 92,650 | 4,525,026 | |
Freddie Mac: | |||
5.30% | 40,000 | 1,890,000 | |
5.57% | 546,000 | 13,404,300 | |
5.90% | 40,000 | 1,024,000 | |
Series F, 5.00% | 58,500 | 2,612,025 | |
Series H, 5.10% | 10,300 | 462,161 | |
Series K, 5.79% | 35,200 | 1,742,400 | |
Series O, 5.81% | 19,500 | 970,125 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - continued | |||
Freddie Mac: - continued | |||
Series R, 5.70% | 117,000 | $ 5,791,500 | |
Series S, adj. rate | 10,000 | 528,500 | |
Series T 6.42% | 10,000 | 532,200 | |
Series W, 5.66% | 120,000 | 2,996,400 | |
Indymac Bank F S B Pasadena Cali 8.50% (f) | 80,000 | 2,028,000 | |
Sovereign Bancorp, Inc. Series C, 7.30% | 80,000 | 2,174,400 | |
56,567,662 | |||
TOTAL FINANCIALS | 146,021,272 | ||
MATERIALS - 0.1% | |||
Chemicals - 0.1% | |||
E.I. du Pont de Nemours & Co. Series B, 4.50% | 9,900 | 827,937 | |
Metals & Mining - 0.0% | |||
Alcoa, Inc. 3.75% | 6,400 | 480,000 | |
TOTAL MATERIALS | 1,307,937 | ||
TELECOMMUNICATION SERVICES - 0.4% | |||
Diversified Telecommunication Services - 0.4% | |||
AT&T, Inc. 6.375% | 281,800 | 6,994,276 | |
UTILITIES - 2.3% | |||
Electric Utilities - 2.1% | |||
Alabama Power Co.: | |||
4.60% | 2,000 | 188,500 | |
5.20% | 120,000 | 2,858,400 | |
5.30% | 88,600 | 2,090,960 | |
5.625% | 80,000 | 2,000,000 | |
Baltimore Gas & Electric Co. Series 1993, 6.70% (a) | 10,000 | 1,034,000 | |
Duquesne Light Co. 6.50% | 106,050 | 5,307,803 | |
Entergy Louisiana LLC 6.95% | 7,500 | 746,250 | |
FPL Group Capital Trust I 5.875% | 20,000 | 471,600 | |
Mid-American Energy Co. 4.40% | 5,000 | 427,500 | |
Pacific Gas & Electric Co.: | |||
Series A, 5.00% | 16,900 | 383,630 | |
Series B, 5.50% | 61,900 | 1,473,839 | |
Series D 5.00% | 69,200 | 1,550,080 | |
PPL Electric Utilities Corp. 6.25% | 180,000 | 4,563,000 | |
Preferred Stocks - continued | |||
Shares | Value | ||
Nonconvertible Preferred Stocks - continued | |||
UTILITIES - continued | |||
Electric Utilities - continued | |||
Southern California Edison Co.: | |||
4.78% | 46,500 | $ 1,011,375 | |
5.349% | 40,000 | 4,036,000 | |
6.125% | 35,000 | 3,535,000 | |
Series B, 4.08% | 27,271 | 506,968 | |
Series C: | |||
4.24% | 94,600 | 1,773,750 | |
6.00% | 20,000 | 2,055,000 | |
Series D, 4.32% | 70,000 | 1,400,000 | |
37,413,655 | |||
Independent Power Producers & Energy Traders - 0.0% | |||
Heco Capital Trust III 6.50% | 12,000 | 300,600 | |
Multi-Utilities - 0.2% | |||
Consolidated Edison Co. of New York, Inc. Series A, 5.00% | 28,705 | 2,648,036 | |
San Diego Gas & Electric Co. 1.70% | 67,548 | 1,764,692 | |
4,412,728 | |||
TOTAL UTILITIES | 42,126,983 | ||
TOTAL NONCONVERTIBLE PREFERRED STOCKS | 203,754,949 | ||
TOTAL PREFERRED STOCKS (Cost $257,748,989) | 276,327,991 | ||
Preferred Securities - 0.4% | |||
Principal Amount | |||
FINANCIALS - 0.4% | |||
Commercial Banks - 0.2% | |||
PNC Preferred Funding Trust I 6.517% 12/31/49 (f)(g) | $ 3,000,000 | 3,102,340 | |
SunTrust Preferred Capital I 5.853% 12/15/49 (g) | 1,000,000 | 1,036,743 | |
4,139,083 | |||
Diversified Financial Services - 0.1% | |||
Wachovia Capital Trust III 5.8% (g) | 2,000,000 | 2,027,133 | |
Preferred Securities - continued | |||
Principal Amount | Value | ||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - 0.1% | |||
Washington Mutual Preferred Funding Trust I 6.534% (f)(g) | $ 2,000,000 | $ 1,985,498 | |
TOTAL PREFERRED SECURITIES (Cost $8,000,001) | 8,151,714 | ||
Money Market Funds - 6.8% | |||
Shares | |||
Fidelity Cash Central Fund, 5.33% (b) | 117,375,018 | 117,375,018 | |
Fidelity Securities Lending Cash Central Fund, 5.36% (b)(c) | 5,056,580 | 5,056,580 | |
TOTAL MONEY MARKET FUNDS (Cost $122,431,598) | 122,431,598 | ||
TOTAL INVESTMENT PORTFOLIO - 100.3% (Cost $1,559,080,628) | 1,809,899,723 | ||
NET OTHER ASSETS - (0.3)% | (6,170,343) | ||
NET ASSETS - 100% | $ 1,803,729,380 |
Security Type Abbreviations |
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 unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(e) Security or a portion of the security is on loan at period end. |
(f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $103,384,833 or 5.7% of net assets. |
(g) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 2,542,359 |
Fidelity Securities Lending Cash Central Fund | 12,030 |
Total | $ 2,554,389 |
Other Information |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 2.2% |
BBB | 1.1% |
BB | 3.4% |
B | 3.2% |
CCC,CC,C | 1.3% |
Not Rated | 3.7% |
Equities | 78.6% |
Short-Term Investments and Net Other Assets | 6.5% |
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. Percentages are adjusted for the effect of futures contracts, if applicable. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
May 31, 2007 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $4,882,929) - See accompanying schedule: Unaffiliated issuers (cost $1,436,649,030) | $ 1,687,468,125 | |
Fidelity Central Funds (cost $122,431,598) | 122,431,598 | |
Total Investments (cost $1,559,080,628) | $ 1,809,899,723 | |
Cash | 49,466 | |
Foreign currency held at value (cost $12,570) | 12,493 | |
Receivable for investments sold | 5,956,598 | |
Receivable for fund shares sold | 6,251,782 | |
Dividends receivable | 1,717,317 | |
Interest receivable | 1,471,682 | |
Distributions receivable from Fidelity Central Funds | 506,596 | |
Prepaid expenses | 3,427 | |
Other receivables | 609 | |
Total assets | 1,825,869,693 | |
Liabilities | ||
Payable for investments purchased | $ 13,640,626 | |
Payable for fund shares redeemed | 2,082,569 | |
Accrued management fee | 814,663 | |
Distribution fees payable | 198,625 | |
Other affiliated payables | 302,245 | |
Other payables and accrued expenses | 45,005 | |
Collateral on securities loaned, at value | 5,056,580 | |
Total liabilities | 22,140,313 | |
Net Assets | $ 1,803,729,380 | |
Net Assets consist of: | ||
Paid in capital | $ 1,503,897,761 | |
Undistributed net investment income | 6,028,336 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 43,004,322 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 250,798,961 | |
Net Assets | $ 1,803,729,380 |
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, 2007 (Unaudited) | ||
Calculation of Maximum Offering Price | $ 14.09 | |
Maximum offering price per share (100/94.25 of $14.09) | $ 14.95 | |
Class T: | $ 14.07 | |
Maximum offering price per share (100/96.50 of $14.07) | $ 14.58 | |
Class B: | $ 14.03 | |
Class C: | $ 14.04 | |
Strategic Dividend and Income: | $ 14.13 | |
Institutional Class: | $ 14.12 |
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
Six months ended May 31, 2007 (Unaudited) | ||
Investment Income | ||
Dividends | $ 13,949,002 | |
Interest | 2,532,545 | |
Income from Fidelity Central Funds | 2,554,389 | |
Total income | 19,035,936 | |
Expenses | ||
Management fee | $ 4,303,540 | |
Transfer agent fees | 1,412,605 | |
Distribution fees | 1,019,617 | |
Accounting and security lending fees | 241,779 | |
Custodian fees and expenses | 30,059 | |
Independent trustees' compensation | 2,371 | |
Registration fees | 124,567 | |
Audit | 29,033 | |
Legal | 9,699 | |
Miscellaneous | 4,809 | |
Total expenses before reductions | 7,178,079 | |
Expense reductions | (35,603) | 7,142,476 |
Net investment income (loss) | 11,893,460 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $13,745) | 46,238,978 | |
Foreign currency transactions | (11,905) | |
Total net realized gain (loss) | 46,227,073 | |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $1,995) | 80,261,896 | |
Assets and liabilities in foreign currencies | (10,203) | |
Total change in net unrealized appreciation (depreciation) | 80,251,693 | |
Net gain (loss) | 126,478,766 | |
Net increase (decrease) in net assets resulting from operations | $ 138,372,226 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Changes in Net Assets
Six months ended | Year ended | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $ 11,893,460 | $ 20,961,984 |
Net realized gain (loss) | 46,227,073 | 74,058,210 |
Change in net unrealized appreciation (depreciation) | 80,251,693 | 71,876,495 |
Net increase (decrease) in net assets resulting | 138,372,226 | 166,896,689 |
Distributions to shareholders from net investment income | (10,236,496) | (19,594,724) |
Distributions to shareholders from net realized gain | (67,051,469) | (10,685,905) |
Total distributions | (77,287,965) | (30,280,629) |
Share transactions - net increase (decrease) | 364,315,074 | 245,540,386 |
Total increase (decrease) in net assets | 425,399,335 | 382,156,446 |
Net Assets | ||
Beginning of period | 1,378,330,045 | 996,173,599 |
End of period (including undistributed net investment income of $6,028,336 and undistributed net investment income of $4,371,372, respectively) | $ 1,803,729,380 | $ 1,378,330,045 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.66 | $ 12.18 | $ 11.09 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .09 | .19 | .18 | .16 |
Net realized and unrealized gain (loss) | 1.09 | 1.61 | 1.10 | 1.04 |
Total from investment operations | 1.18 | 1.80 | 1.28 | 1.20 |
Distributions from net investment income | (.09) | (.19) | (.19) | (.11) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.75) | (.32) | (.19) | (.11) |
Net asset value, end of period | $ 14.09 | $ 13.66 | $ 12.18 | $ 11.09 |
Total Return B, C, D | 9.05% | 15.01% | 11.63% | 12.01% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.10% A | 1.14% | 1.16% | 1.20% A |
Expenses net of fee waivers, if any | 1.10% A | 1.14% | 1.16% | 1.20% A |
Expenses net of all reductions | 1.10% A | 1.14% | 1.13% | 1.17% A |
Net investment income (loss) | 1.37% A | 1.52% | 1.60% | 1.67% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 108,615 | $ 70,083 | $ 38,886 | $ 21,985 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class T
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.64 | $ 12.17 | $ 11.08 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .08 | .17 | .16 | .13 |
Net realized and unrealized gain (loss) | 1.08 | 1.59 | 1.09 | 1.04 |
Total from investment operations | 1.16 | 1.76 | 1.25 | 1.17 |
Distributions from net investment income | (.07) | (.16) | (.16) | (.09) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.73) | (.29) | (.16) | (.09) |
Net asset value, end of period | $ 14.07 | $ 13.64 | $ 12.17 | $ 11.08 |
Total Return B, C, D | 8.95% | 14.70% | 11.43% | 11.75% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.32% A | 1.35% | 1.38% | 1.45% A |
Expenses net of fee waivers, if any | 1.32% A | 1.35% | 1.38% | 1.45% A |
Expenses net of all reductions | 1.32% A | 1.35% | 1.35% | 1.42% A |
Net investment income (loss) | 1.16% A | 1.31% | 1.38% | 1.43% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 172,128 | $ 119,834 | $ 79,920 | $ 36,526 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the sales charges.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class B
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.61 | $ 12.14 | $ 11.06 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .04 | .09 | .09 | .09 |
Net realized and unrealized gain (loss) | 1.07 | 1.59 | 1.09 | 1.03 |
Total from investment operations | 1.11 | 1.68 | 1.18 | 1.12 |
Distributions from net investment income | (.03) | (.08) | (.10) | (.06) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.69) | (.21) | (.10) | (.06) |
Net asset value, end of period | $ 14.03 | $ 13.61 | $ 12.14 | $ 11.06 |
Total Return B, C, D | 8.59% | 14.05% | 10.73% | 11.24% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.91% A | 1.96% | 1.96% | 1.99% A |
Expenses net of fee waivers, if any | 1.91% A | 1.96% | 1.95% | 1.95% A |
Expenses net of all reductions | 1.91% A | 1.96% | 1.93% | 1.92% A |
Net investment income (loss) | .56% A | .70% | .81% | .92% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 33,939 | $ 23,992 | $ 19,744 | $ 13,457 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class C
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 H | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.61 | $ 12.15 | $ 11.06 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) E | .04 | .10 | .10 | .09 |
Net realized and unrealized gain (loss) | 1.09 | 1.58 | 1.09 | 1.03 |
Total from investment operations | 1.13 | 1.68 | 1.19 | 1.12 |
Distributions from net investment income | (.04) | (.09) | (.10) | (.06) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.70) | (.22) | (.10) | (.06) |
Net asset value, end of period | $ 14.04 | $ 13.61 | $ 12.15 | $ 11.06 |
Total Return B, C, D | 8.69% | 14.05% | 10.85% | 11.24% |
Ratios to Average Net Assets F, I | ||||
Expenses before reductions | 1.85% A | 1.89% | 1.90% | 1.94% A |
Expenses net of fee waivers, if any | 1.85% A | 1.89% | 1.90% | 1.94% A |
Expenses net of all reductions | 1.85% A | 1.88% | 1.87% | 1.92% A |
Net investment income (loss) | .62% A | .78% | .86% | .93% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 101,182 | $ 75,301 | $ 49,713 | $ 28,795 |
Portfolio turnover rate G | 88% A | 125% | 64% | 66% 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 periods shown.
D Total returns do not include the effect of the contingent deferred sales charge.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H For the period December 23, 2003 (commencement of operations) to November 30, 2004.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Strategic Dividend and Income
Six months ended May 31, 2007 | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 G | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.70 | $ 12.22 | $ 11.11 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) D | .11 | .24 | .22 | .19 |
Net realized and unrealized gain (loss) | 1.08 | 1.60 | 1.11 | 1.04 |
Total from investment operations | 1.19 | 1.84 | 1.33 | 1.23 |
Distributions from net investment income | (.10) | (.23) | (.22) | (.12) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.76) | (.36) | (.22) | (.12) |
Net asset value, end of period | $ 14.13 | $ 13.70 | $ 12.22 | $ 11.11 |
Total Return B, C | 9.18% | 15.33% | 12.08% | 12.32% |
Ratios to Average Net Assets E, H | ||||
Expenses before reductions | .79% A | .80% | .82% | .90% A |
Expenses net of fee waivers, if any | .79% A | .80% | .82% | .90% A |
Expenses net of all reductions | .78% A | .79% | .79% | .87% A |
Net investment income (loss) | 1.69% A | 1.87% | 1.94% | 1.98% A |
Supplemental Data | ||||
Net assets, end of period | $ 1,365,085 | $ 1,075,348 | $ 798,113 | $ 476,032 |
Portfolio turnover rate F | 88% A | 125% | 64% | 66% 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 periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period December 23, 2003 (commencement of operations) to November 30, 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 fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Institutional Class
Six months ended | Years ended November 30, | |||
(Unaudited) | 2006 | 2005 | 2004 G | |
Selected Per-Share Data | ||||
Net asset value, beginning of period | $ 13.68 | $ 12.21 | $ 11.11 | $ 10.00 |
Income from Investment Operations | ||||
Net investment income (loss) D | .11 | .23 | .22 | .19 |
Net realized and unrealized gain (loss) | 1.10 | 1.59 | 1.10 | 1.04 |
Total from investment operations | 1.21 | 1.82 | 1.32 | 1.23 |
Distributions from net investment income | (.11) | (.22) | (.22) | (.12) |
Distributions from net realized gain | (.66) | (.13) | - | - |
Total distributions | (.77) | (.35) | (.22) | (.12) |
Net asset value, end of period | $ 14.12 | $ 13.68 | $ 12.21 | $ 11.11 |
Total Return B, C | 9.28% | 15.24% | 11.98% | 12.38% |
Ratios to Average Net Assets E, H | ||||
Expenses before reductions | .80% A | .82% | .83% | .88% A |
Expenses net of fee waivers, if any | .80% A | .82% | .83% | .88% A |
Expenses net of all reductions | .79% A | .82% | .81% | .85% A |
Net investment income (loss) | 1.68% A | 1.84% | 1.93% | 2.00% A |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $ 22,781 | $ 13,771 | $ 9,798 | $ 4,973 |
Portfolio turnover rate F | 88% A | 125% | 64% | 66% 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 periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period December 23, 2003 (commencement of operations) to November 30, 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 fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended May 31, 2007 (Unaudited)
1. Organization.
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.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request. In addition, the financial statements of the Fidelity Central Funds are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Fund:
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, for which quotations are readily available, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used cannot be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.
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
3. 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. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV for processing shareholder transactions includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and income distributions from the Fidelity Central Funds are accrued as earned, with any distributions receivable as of period end included in Distributions receivable from Fidelity Central Funds on the Statement of Assets and Liabilities. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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 the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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, passive foreign investment companies (PFIC), market discount and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 268,348,506 | |
Unrealized depreciation | (19,141,932) | |
Net unrealized appreciation (depreciation) | $ 249,206,574 | |
Cost for federal income tax purposes | $ 1,560,693,149 |
New Accounting Pronouncements. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48), was issued and is effective on the last business day of the semiannual reporting period for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has concluded that the adoption of FIN 48 will not result in a material impact on the Fund's net assets, results of operations and financial statement disclosures.
In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.
4. Operating Policies.
Repurchase Agreements. 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 which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal
Semiannual Report
4. Operating Policies - continued
Repurchase Agreements - continued
to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $901,935,901 and $636,940,261, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged ..26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .56% 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% | $ 105,811 | $ 9,316 |
Class T | .25% | .25% | 349,748 | 37,015 |
Class B | .75% | .25% | 138,327 | 104,062 |
Class C | .75% | .25% | 425,731 | 113,989 |
$ 1,019,617 | $ 264,382 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
6. Fees and Other Transactions with Affiliates - continued
Sales Load. FDC receives a front-end sales charge of up to 5.75% for selling Class A shares, and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. FDC receives the proceeds of contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. These charges depend on the holding period. The deferred sales charges range from 5% to 1% for Class B, 1% for Class C, 1.00% to .50% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained | |
Class A | $ 118,841 |
Class T | 42,489 |
Class B * | 18,169 |
Class C * | 5,328 |
$ 184,827 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund, except for Strategic Dividend & Income shares. 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 | $ 101,350 | .24 |
Class T | 144,873 | .21 |
Class B | 41,868 | .30 |
Class C | 102,735 | .24 |
Strategic Dividend and Income | 1,005,927 | .17 |
Institutional Class | 15,852 | .18 |
$ 1,412,605 |
* Annualized
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
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.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $4,159 for the period.
7. 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, which amounted to $1,729 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $12,030.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $7,879 for the period. In addition, through arrangements with the Fund's custodian and each class' 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 expenses by $2,450. During the period, credits reduced each class' transfer agent expense as noted in the table below.
Transfer Agent | ||
Class A | $ 2 | |
Strategic Dividend and Income | 4,362 | |
Institutional Class | 61 | |
$ 4,425 |
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In September 2006, a transfer agent of the Fund, Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of Fidelity Management & Research Company, notified the Fund that the fund's books and records did not reflect a conversion of certain Class B to Class A shares upon their conversion date. Management has determined that this did not have a material impact to the Fund's reported net assets or results of operations in the accompanying financial statements. In March 2007, FIIOC converted the relevant Class B shares to Class A shares and recorded the conversion in the books and records of the Fund. FIIOC has reimbursed the Fund for related audit and legal expenses and, beginning in June 2007, remediated affected shareholders.
The United States Securities and Exchange Commission ("SEC") is conducting an investigation of FMR (covering the years 2002 to 2004) arising from gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during that period. FMR is in discussions with the SEC staff regarding the possible resolution of the matter, but as of period-end no final resolution has been reached.
Semiannual Report
10. Other - continued
In December 2006, the Independent Trustees completed their own investigation of the matter with the assistance of independent counsel. The Independent Trustees and FMR agree that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and is worthy of redress. Accordingly, the Independent Trustees have requested and FMR has agreed to pay $42 million to Fidelity mutual funds, plus interest to be determined at the time that payment is made. A method of allocating this payment among the funds has not yet been determined. The total payment to the Fund is not anticipated to have a material impact on the Fund's net assets. In addition, FMR reimbursed related legal expenses which are recorded in the accompanying Statement of Operations as an expense reduction.
On April 19, 2007, the Board of Trustees approved an Agreement and Plan of Reorganization whereby the Fund will reorganize into Fidelity Fixed-Income Trust, effective on or about June 29, 2007. The reorganization will not impact the Fund's investment strategies or FMR's management of the Fund. All legal and other expenses associated with the reorganization will be paid by FMR.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income | ||
Class A | $ 490,389 | $ 755,007 |
Class T | 680,938 | 1,207,524 |
Class B | 61,475 | 136,347 |
Class C | 215,479 | 455,492 |
Strategic Dividend and Income | 8,667,121 | 16,844,509 |
Institutional Class | 121,094 | 195,845 |
Total | $ 10,236,496 | $ 19,594,724 |
From net realized gain | ||
Class A | $ 3,476,044 | $ 422,135 |
Class T | 5,864,593 | 869,186 |
Class B | 1,178,860 | 212,465 |
Class C | 3,680,940 | 535,091 |
Strategic Dividend and Income | 52,196,348 | 8,542,657 |
Institutional Class | 654,684 | 104,371 |
Total | $ 67,051,469 | $ 10,685,905 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Dollars | |||
Six months ended | Year ended | Six months ended | Year ended | |
Class A | ||||
Shares sold | 2,926,412 | 2,652,278 | $ 39,489,901 | $ 33,771,371 |
Reinvestment of distributions | 252,823 | 74,313 | 3,308,909 | 927,356 |
Shares redeemed | (600,738) | (785,506) | (8,065,191) | (9,972,783) |
Net increase (decrease) | 2,578,497 | 1,941,085 | $ 34,733,619 | $ 24,725,944 |
Class T | ||||
Shares sold | 3,794,386 | 3,093,279 | $ 51,052,059 | $ 39,401,358 |
Reinvestment of distributions | 444,882 | 142,542 | 5,816,103 | 1,774,211 |
Shares redeemed | (789,975) | (1,016,565) | (10,630,944) | (12,945,160) |
Net increase (decrease) | 3,449,293 | 2,219,256 | $ 46,237,218 | $ 28,230,409 |
Class B | ||||
Shares sold | 802,112 | 651,095 | $ 10,802,487 | $ 8,286,669 |
Reinvestment of distributions | 76,573 | 22,168 | 998,646 | 273,978 |
Shares redeemed | (223,245) | (535,951) | (3,001,618) | (6,733,248) |
Net increase (decrease) | 655,440 | 137,312 | $ 8,799,515 | $ 1,827,399 |
Class C | ||||
Shares sold | 1,903,967 | 2,077,679 | $ 25,591,126 | $ 26,455,087 |
Reinvestment of distributions | 234,981 | 59,230 | 3,067,189 | 735,267 |
Shares redeemed | (462,502) | (696,643) | (6,224,306) | (8,845,742) |
Net increase (decrease) | 1,676,446 | 1,440,266 | $ 22,434,009 | $ 18,344,612 |
Strategic Dividend and Income | ||||
Shares sold | 27,387,979 | 36,957,213 | $ 369,206,245 | $ 472,572,702 |
Reinvestment of distributions | 4,149,855 | 1,804,449 | 54,456,045 | 22,539,587 |
Shares redeemed | (13,464,573) | (25,574,480) | (179,696,506) | (325,330,308) |
Net increase (decrease) | 18,073,261 | 13,187,182 | $ 243,965,784 | $ 169,781,981 |
Institutional Class | ||||
Shares sold | 695,629 | 358,059 | $ 9,370,612 | $ 4,585,437 |
Reinvestment of distributions | 24,718 | 10,004 | 324,269 | 124,626 |
Shares redeemed | (113,165) | (164,319) | (1,549,952) | (2,080,022) |
Net increase (decrease) | 607,182 | 203,744 | $ 8,144,929 | $ 2,630,041 |
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Strategic Dividend & Income Fund
On April 19, 2007, the Board of Trustees, including the Independent Trustees (together, the Board), voted to approve the management contract and subadvisory agreements (together, the Advisory Contracts) for the fund in connection with reorganizing the fund from one Trust to another. The Board reached this determination because the contractual terms of and fees payable under the fund's Advisory Contracts are identical to those in the fund's current Advisory Contracts. The Advisory Contracts involve no changes in (i) the investment process or strategies employed in the management of the fund's assets; (ii) the nature or level of services provided under the fund's Advisory Contracts; or (iii) the day-to-day management of the fund or the persons primarily responsible for such management. The Board considered that it approved the Advisory Contracts for the fund during the past year and that it will again consider renewal of the Advisory Contracts in July 2007.
Because the Board was approving Advisory Contracts with terms identical to the current Advisory Contracts, it did not consider the fund's investment performance, competitiveness of management fee and total expenses, costs of services and profitability, or economies of scale to be significant factors in its decision.
In connection with its future renewal of the fund's Advisory Contracts, the Board will consider: (i) the nature, extent, and quality of services provided to the fund, including shareholder and administrative services and investment performance; (ii) the competitiveness of the fund's management fee and total expenses; (iii) the costs of the services and profitability, including the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering, and servicing the fund and its shareholders; and (iv) whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the fund's Advisory Contracts are fair and reasonable, and that the fund's Advisory Contracts should be approved, without modification, as part of the process of reorganizing the fund from one Trust to another.
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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 Research & Analysis Company
(formerly 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 Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Citibank, N.A.
New York, NY
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
ASDII-USAN-0707
1.802530.103
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. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the Fidelity Financial Trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the Fidelity Financial Trust's (the "Trust") disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the Trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Not applicable. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) | Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Financial Trust
By: | /s/Kimberley Monasterio |
Kimberley Monasterio | |
President and Treasurer | |
Date: | July 16, 2007 |
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/Kimberley Monasterio |
Kimberley Monasterio | |
President and Treasurer | |
Date: | July 16, 2007 |
By: | /s/Joseph B. Hollis |
Joseph B. Hollis | |
Chief Financial Officer | |
Date: | July 16, 2007 |