UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3587
Fidelity Financial Trust
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Scott C. Goebel, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | November 30 |
|
|
Date of reporting period: | May 31, 2009 |
Item 1. Reports to Stockholders
Fidelity®
Convertible Securities
Fund
Semiannual Report
May 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
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 LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Although there has been some encouraging news in the capital markets this spring, many economic uncertainties remain - including still-weak corporate earnings and sluggish consumer spending - which could call into question the sustainability and overall strength of the markets' recent forward momentum. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help 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 can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today,
more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/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, 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 actual expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2008 to May 31, 2009) for Convertible Securities and for the entire period (February 19, 2009 to May 1, 2009) for Class A, Class T, Class B, Class C and Institutional Class. The hypothetical expense Example is based on an investment of $1,000 invested for the one-half year period (December 1, 2008 to May 31, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Semiannual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,395.40 | $ 2.95 B |
Hypothetical A |
| $ 1,000.00 | $ 1,020.54 | $ 4.43 C |
Class T | 1.08% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,394.70 | $ 3.61 B |
Hypothetical A |
| $ 1,000.00 | $ 1,019.55 | $ 5.44 C |
Class B | 1.62% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,392.30 | $ 5.42 B |
Hypothetical A |
| $ 1,000.00 | $ 1,016.85 | $ 8.15 C |
Class C | 1.59% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,392.70 | $ 5.32 B |
Hypothetical A |
| $ 1,000.00 | $ 1,017.00 | $ 8.00 C |
Convertible Securities | .60% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,351.10 | $ 3.52 B |
Hypothetical A |
| $ 1,000.00 | $ 1,021.94 | $ 3.02 C |
Institutional Class | .59% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,396.70 | $ 1.98 B |
Hypothetical A |
| $ 1,000.00 | $ 1,021.99 | $ 2.97 C |
A 5% return per year before expenses
B Actual expenses are equal to each Class' annualized expense ratio (shown in the table above); multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period) for Convertible Securities and multiplied by 102/365 (to reflect the period February 19, 2009 to May 31, 2009) for Class A, Class T, Class B, Class C and Institutional Class.
C Hypothetical expenses are equal to each Class' annualized expense ratio (shown in the table above); multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Investments as of May 31, 2009 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
Bank of America Corp. | 6.7 | 0.0 |
El Paso Corp. 4.99% | 5.6 | 7.4 |
Freeport-McMoRan Copper & Gold, Inc. 6.75% | 5.2 | 2.8 |
Wells Fargo & Co. 7.50% | 5.0 | 5.3 |
Peabody Energy Corp. 4.75% 12/15/66 | 4.7 | 3.9 |
Celanese Corp. 4.25% | 4.5 | 3.2 |
Intel Corp. 2.95% 12/15/35 | 2.2 | 2.0 |
Bank of America Corp. Series L, 7.25% | 2.0 | 7.1 |
ON Semiconductor Corp. 2.625% 12/15/26 | 1.8 | 1.2 |
Chesapeake Energy Corp. 2.5% 5/15/37 | 1.4 | 3.6 |
| 39.1 | |
Top Five Market Sectors as of May 31, 2009 | ||
| % of fund's | % of fund's net assets |
Financials | 19.4 | 19.7 |
Information Technology | 18.0 | 17.4 |
Energy | 16.5 | 24.2 |
Materials | 11.6 | 7.9 |
Consumer Staples | 8.7 | 8.0 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2009 * | As of November 30, 2008 ** | ||||||
![]() | Convertible |
| ![]() | Convertible |
| ||
![]() | Stocks 10.8% |
| ![]() | Stocks 5.2% |
| ||
![]() | Nonconvertible |
| ![]() | Nonconvertible |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
![]() | Floating Rate |
| ![]() | Floating Rate |
| ||
* Foreign investments | 3.0% |
| ** Foreign investments | 6.0% |
|
Semiannual Report
Investments May 31, 2009 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 55.1% | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - 53.6% | ||||
CONSUMER DISCRETIONARY - 3.9% | ||||
Auto Components - 0.5% | ||||
BorgWarner, Inc. 3.5% 4/15/12 | $ 910 | $ 1,115 | ||
Johnson Controls, Inc. 6.5% 9/30/12 | 3,850 | 7,131 | ||
| 8,246 | |||
Diversified Consumer Services - 0.5% | ||||
Ingersoll-Rand Global Holding Co. Ltd. 4.5% 4/15/12 | 490 | 638 | ||
Stewart Enterprises, Inc. 3.375% 7/15/16 (g) | 11,000 | 7,508 | ||
| 8,146 | |||
Hotels, Restaurants & Leisure - 1.1% | ||||
Ambassadors International, Inc. 3.75% 4/15/27 (g) | 8,000 | 1,880 | ||
WMS Industries, Inc.: | ||||
2.75% 7/15/10 (g) | 4,000 | 10,759 | ||
2.75% 7/15/10 | 2,800 | 7,531 | ||
| 20,170 | |||
Household Durables - 0.0% | ||||
Newell Rubbermaid, Inc. 5.5% 3/15/14 | 590 | 898 | ||
Media - 1.2% | ||||
Regal Entertainment Group 6.25% 3/15/11 (g) | 19,297 | 18,334 | ||
XM Satellite Radio, Inc. 7% 12/1/14 (g) | 10,000 | 3,600 | ||
| 21,934 | |||
Specialty Retail - 0.6% | ||||
Asbury Automotive Group, Inc. 3% 9/15/12 (g) | 3,000 | 2,073 | ||
United Auto Group, Inc. 3.5% 4/1/26 | 9,533 | 8,134 | ||
| 10,207 | |||
TOTAL CONSUMER DISCRETIONARY | 69,601 | |||
CONSUMER STAPLES - 5.5% | ||||
Beverages - 0.9% | ||||
Molson Coors Brewing Co. 2.5% 7/30/13 | 14,000 | 15,371 | ||
Food & Staples Retailing - 2.8% | ||||
Nash-Finch Co. 1.6314% 3/15/35 (e) | 34,480 | 13,299 | ||
Rite Aid Corp. 8.5% 5/15/15 | 9,100 | 6,325 | ||
The Great Atlantic & Pacific Tea Co.: | ||||
5.125% 6/15/11 | 18,000 | 12,600 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
CONSUMER STAPLES - continued | ||||
Food & Staples Retailing - continued | ||||
The Great Atlantic & Pacific Tea Co.: - continued | ||||
6.75% 12/15/12 | $ 12,000 | $ 7,560 | ||
The Pantry, Inc. 3% 11/15/12 | 14,000 | 11,176 | ||
| 50,960 | |||
Food Products - 1.8% | ||||
Smithfield Foods, Inc. 4% 6/30/13 | 22,250 | 18,390 | ||
Tyson Foods, Inc. 3.25% 10/15/13 | 13,000 | 13,742 | ||
| 32,132 | |||
TOTAL CONSUMER STAPLES | 98,463 | |||
ENERGY - 10.4% | ||||
Energy Equipment & Services - 1.7% | ||||
Global Industries Ltd. 2.75% 8/1/27 (g) | 10,000 | 4,700 | ||
Hercules Offshore, Inc. 3.375% 6/1/38 (g) | 20,000 | 10,976 | ||
Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (e)(g) | 5,000 | 4,223 | ||
Oil States International, Inc. 2.375% 7/1/25 (g) | 4,500 | 4,627 | ||
SESI LLC 1.5% 12/15/26 (e)(g) | 7,000 | 6,020 | ||
| 30,546 | |||
Oil, Gas & Consumable Fuels - 8.7% | ||||
Alpha Natural Resources, Inc. 2.375% 4/15/15 | 30,000 | 23,733 | ||
Chesapeake Energy Corp. 2.5% 5/15/37 | 35,250 | 26,015 | ||
Goodrich Petroleum Corp. 3.25% 12/1/26 | 6,000 | 5,056 | ||
Patriot Coal Corp. 3.25% 5/31/13 (g) | 6,000 | 3,308 | ||
Peabody Energy Corp. 4.75% 12/15/66 | 107,250 | 83,451 | ||
Quicksilver Resources, Inc. 1.875% 11/1/24 (g) | 14,500 | 14,410 | ||
| 155,973 | |||
TOTAL ENERGY | 186,519 | |||
FINANCIALS - 2.0% | ||||
Diversified Financial Services - 1.4% | ||||
The NASDAQ Stock Market, Inc. 2.5% 8/15/13 | 30,000 | 24,363 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
FINANCIALS - continued | ||||
Real Estate Investment Trusts - 0.6% | ||||
Ventas, Inc. 3.875% 11/15/11 (g) | $ 12,000 | $ 11,754 | ||
TOTAL FINANCIALS | 36,117 | |||
HEALTH CARE - 5.7% | ||||
Health Care Equipment & Supplies - 3.9% | ||||
Beckman Coulter, Inc. 2.5% 12/15/36 (g) | 8,500 | 8,351 | ||
Inverness Medical Innovations, Inc.: | ||||
3% 5/15/16 (g) | 21,000 | 19,688 | ||
3% 5/15/16 | 10,000 | 9,375 | ||
Kinetic Concepts, Inc. 3.25% 4/15/15 (g) | 15,000 | 11,589 | ||
Medtronic, Inc. 1.625% 4/15/13 | 16,000 | 14,681 | ||
SonoSite, Inc. 3.75% 7/15/14 | 7,000 | 6,114 | ||
| 69,798 | |||
Health Care Providers & Services - 0.3% | ||||
Omnicare, Inc. 3.25% 12/15/35 | 7,000 | 4,891 | ||
Life Sciences Tools & Services - 1.5% | ||||
Charles River Laboratories International, Inc. 2.25% 6/15/13 (g) | 4,000 | 3,586 | ||
Fisher Scientific International, Inc.: | ||||
2.5% 10/1/23 (g) | 3,300 | 5,482 | ||
2.5% 10/1/23 | 7,400 | 12,293 | ||
Nektar Therapeutics 3.25% 9/28/12 | 9,000 | 6,467 | ||
| 27,828 | |||
TOTAL HEALTH CARE | 102,517 | |||
INDUSTRIALS - 7.7% | ||||
Aerospace & Defense - 0.8% | ||||
Alliant Techsystems, Inc. 2.75% 9/15/11 | 14,000 | 14,790 | ||
Airlines - 1.1% | ||||
AirTran Holdings, Inc. 7% 7/1/23 | 10,000 | 9,400 | ||
UAL Corp.: | ||||
4.5% 6/30/21 (g) | 10,500 | 4,095 | ||
4.5% 6/30/21 | 5,000 | 1,950 | ||
US Airways Group, Inc. 7% 9/30/20 (g) | 4,810 | 3,944 | ||
| 19,389 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INDUSTRIALS - continued | ||||
Construction & Engineering - 0.4% | ||||
Quanta Services, Inc. 3.75% 4/30/26 (g) | $ 7,000 | $ 7,849 | ||
Electrical Equipment - 2.2% | ||||
C&D Technologies, Inc.: | ||||
5.25% 11/1/25 (g) | 4,400 | 2,695 | ||
5.25% 11/1/25 | 32,596 | 19,965 | ||
Evergreen Solar, Inc. 4% 7/15/13 | 4,000 | 1,445 | ||
General Cable Corp. 1% 10/15/12 (g) | 16,000 | 12,480 | ||
Sunpower Corp. 4.75% 4/15/14 | 2,020 | 2,511 | ||
| 39,096 | |||
Industrial Conglomerates - 0.1% | ||||
Textron, Inc. 4.5% 5/1/13 | 1,440 | 1,599 | ||
Machinery - 0.6% | ||||
Greenbrier Companies, Inc.: | ||||
2.375% 5/15/26 (g) | 5,500 | 2,214 | ||
2.375% 5/15/26 | 8,000 | 3,220 | ||
Terex Corp. 4% 6/1/15 | 1,090 | 1,143 | ||
Trinity Industries, Inc. 3.875% 6/1/36 | 7,000 | 3,868 | ||
| 10,445 | |||
Marine - 1.9% | ||||
Excel Maritime Carriers Ltd. 1.875% 10/15/27 (g) | 34,000 | 12,920 | ||
Horizon Lines, Inc. 4.25% 8/15/12 (g) | 35,000 | 21,746 | ||
| 34,666 | |||
Road & Rail - 0.6% | ||||
Hertz Global Holdings, Inc. 5.25% 6/1/14 | 10,000 | 10,147 | ||
TOTAL INDUSTRIALS | 137,981 | |||
INFORMATION TECHNOLOGY - 16.3% | ||||
Communications Equipment - 2.0% | ||||
Finisar Corp. 2.5% 10/15/10 | 15,760 | 9,149 | ||
JDS Uniphase Corp. 1% 5/15/26 (g) | 14,000 | 9,660 | ||
L-3 Communications Corp. 3% 8/1/35 | 3,000 | 2,948 | ||
Lucent Technologies, Inc. 2.875% 6/15/25 | 10,000 | 6,316 | ||
Nortel Networks Corp. 2.125% 4/15/14 (d)(g) | 10,000 | 2,875 | ||
Symmetricom, Inc. 3.25% 6/15/25 | 5,214 | 4,342 | ||
| 35,290 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Computers & Peripherals - 1.6% | ||||
EMC Corp. 1.75% 12/1/13 (g) | $ 17,000 | $ 16,625 | ||
Hutchinson Technology, Inc. 3.25% 1/15/26 | 11,000 | 3,960 | ||
SanDisk Corp. 1% 5/15/13 | 13,000 | 8,392 | ||
| 28,977 | |||
Electronic Equipment & Components - 1.8% | ||||
Anixter International, Inc. 1% 2/15/13 (g) | 4,540 | 3,865 | ||
Itron, Inc. 2.5% 8/1/26 | 7,000 | 7,912 | ||
Merix Corp.: | ||||
4% 5/15/13 (g) | 11,250 | 3,938 | ||
4% 5/15/13 | 7,600 | 2,660 | ||
Newport Corp. 2.5% 2/15/12 (g) | 3,750 | 2,814 | ||
SYNNEX Corp. 4% 5/15/18 (g) | 10,000 | 10,571 | ||
| 31,760 | |||
Internet Software & Services - 0.8% | ||||
GSI Commerce, Inc. 2.5% 6/1/27 (g) | 10,000 | 6,713 | ||
VeriSign, Inc. 3.25% 8/15/37 | 10,000 | 8,143 | ||
| 14,856 | |||
IT Services - 1.8% | ||||
Alliance Data Systems Corp. 1.75% 8/1/13 (g) | 14,788 | 10,807 | ||
BearingPoint, Inc. 3.1% 12/15/24 (g) | 8,000 | 4 | ||
CACI International, Inc. 2.125% 5/1/14 | 6,000 | 5,355 | ||
DST Systems, Inc. Series A, 4.125% 8/15/23 | 16,100 | 15,939 | ||
| 32,105 | |||
Semiconductors & Semiconductor Equipment - 7.7% | ||||
Advanced Micro Devices, Inc.: | ||||
5.75% 8/15/12 | 40,000 | 24,850 | ||
6% 5/1/15 | 15,000 | 7,200 | ||
Amkor Technology, Inc. 6% 4/15/14 (g) | 5,890 | 9,422 | ||
Conexant Systems, Inc. 4% 3/1/26 | 7,000 | 2,065 | ||
Intel Corp. 2.95% 12/15/35 | 48,000 | 39,264 | ||
LTX-Credence Corp. 3.5% 5/15/11 | 10,333 | 1,391 | ||
Micron Technology, Inc.: | ||||
1.875% 6/1/14 | 10,000 | 5,837 | ||
4.25% 10/15/13 | 1,130 | 1,326 | ||
ON Semiconductor Corp.: | ||||
1.875% 12/15/25 (g) | 3,750 | 4,152 | ||
2.625% 12/15/26 | 35,330 | 31,857 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Semiconductors & Semiconductor Equipment - continued | ||||
PMC-Sierra, Inc. 2.25% 10/15/25 | $ 10,000 | $ 10,426 | ||
Spansion, Inc. 2.25% 6/15/16 (d)(g) | 7,267 | 33 | ||
| 137,823 | |||
Software - 0.6% | ||||
Borland Software Corp. 2.75% 2/15/12 (g) | 6,000 | 5,625 | ||
Symantec Corp. 1% 6/15/13 | 5,000 | 5,089 | ||
| 10,714 | |||
TOTAL INFORMATION TECHNOLOGY | 291,525 | |||
MATERIALS - 0.5% | ||||
Metals & Mining - 0.5% | ||||
ArcelorMittal SA 5% 5/15/14 | 2,170 | 2,748 | ||
Newmont Mining Corp. 3% 2/15/12 | 2,120 | 2,620 | ||
United States Steel Corp. 4% 5/15/14 | 2,670 | 3,331 | ||
| 8,699 | |||
TELECOMMUNICATION SERVICES - 1.6% | ||||
Diversified Telecommunication Services - 0.8% | ||||
Level 3 Communications, Inc. 3.5% 6/15/12 | 16,000 | 9,498 | ||
Time Warner Telecom, Inc. 2.375% 4/1/26 | 6,000 | 5,333 | ||
| 14,831 | |||
Wireless Telecommunication Services - 0.8% | ||||
Leap Wireless International, Inc. 4.5% 7/15/14 (g) | 16,000 | 13,160 | ||
TOTAL TELECOMMUNICATION SERVICES | 27,991 | |||
TOTAL CONVERTIBLE BONDS | 959,413 | |||
Nonconvertible Bonds - 1.5% | ||||
CONSUMER DISCRETIONARY - 0.3% | ||||
Auto Components - 0.3% | ||||
TRW Automotive, Inc.: | ||||
7% 3/15/14 (g) | 1,300 | 956 | ||
7.25% 3/15/17 (g) | 6,230 | 4,361 | ||
| 5,317 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Nonconvertible Bonds - continued | ||||
CONSUMER STAPLES - 0.2% | ||||
Personal Products - 0.2% | ||||
Revlon Consumer Products Corp. 9.5% 4/1/11 | $ 3,745 | $ 3,314 | ||
FINANCIALS - 0.4% | ||||
Consumer Finance - 0.4% | ||||
GMAC LLC: | ||||
7.5% 12/31/13 (g) | 4,264 | 3,539 | ||
8% 12/31/18 (g) | 3,812 | 2,745 | ||
| 6,284 | |||
INFORMATION TECHNOLOGY - 0.6% | ||||
Semiconductors & Semiconductor Equipment - 0.6% | ||||
Amkor Technology, Inc.: | ||||
7.75% 5/15/13 | 1,995 | 1,786 | ||
9.25% 6/1/16 | 5,935 | 5,163 | ||
Freescale Semiconductor, Inc. 9.875% 12/15/14 pay-in-kind (h) | 20,000 | 4,689 | ||
| 11,638 | |||
TOTAL NONCONVERTIBLE BONDS | 26,553 | |||
TOTAL CORPORATE BONDS (Cost $1,234,619) | 985,966 |
Common Stocks - 10.8% | |||
Shares |
| ||
CONSUMER DISCRETIONARY - 0.9% | |||
Diversified Consumer Services - 0.4% | |||
Service Corp. International | 1,143,000 | 6,115 | |
Hotels, Restaurants & Leisure - 0.5% | |||
Domino's Pizza, Inc. (a) | 170,400 | 1,544 | |
Las Vegas Sands Corp. (a)(f) | 801,000 | 7,938 | |
| 9,482 | ||
TOTAL CONSUMER DISCRETIONARY | 15,597 | ||
ENERGY - 0.2% | |||
Oil, Gas & Consumable Fuels - 0.2% | |||
McMoRan Exploration Co. (a)(f) | 500,000 | 3,390 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - 8.4% | |||
Commercial Banks - 1.7% | |||
Huntington Bancshares, Inc. (f) | 5,820,500 | $ 22,816 | |
KeyCorp | 1,297,800 | 6,489 | |
| 29,305 | ||
Diversified Financial Services - 6.7% | |||
Bank of America Corp. | 10,622,385 | 119,710 | |
CIT Group, Inc. (f) | 136,300 | 522 | |
| 120,232 | ||
Thrifts & Mortgage Finance - 0.0% | |||
Washington Mutual, Inc. | 2,959,042 | 296 | |
TOTAL FINANCIALS | 149,833 | ||
INFORMATION TECHNOLOGY - 1.1% | |||
Electronic Equipment & Components - 0.0% | |||
L-1 Identity Solutions, Inc. (a) | 100,000 | 867 | |
Semiconductors & Semiconductor Equipment - 1.1% | |||
Amkor Technology, Inc. (a) | 843,200 | 3,828 | |
EMCORE Corp. (a)(f) | 172,258 | 226 | |
ON Semiconductor Corp. (a) | 2,169,500 | 14,861 | |
| 18,915 | ||
TOTAL INFORMATION TECHNOLOGY | 19,782 | ||
UTILITIES - 0.2% | |||
Independent Power Producers & Energy Traders - 0.2% | |||
NRG Energy, Inc. (a) | 200,000 | 4,500 | |
TOTAL COMMON STOCKS (Cost $208,268) | 193,102 | ||
Convertible Preferred Stocks - 28.5% | |||
|
|
|
|
CONSUMER DISCRETIONARY - 0.5% | |||
Automobiles - 0.5% | |||
Ford Motor Co. Capital Trust II 6.50% | 450,000 | 9,113 | |
CONSUMER STAPLES - 3.0% | |||
Food Products - 3.0% | |||
Archer Daniels Midland Co. 6.25% | 600,000 | 21,150 | |
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Food Products - continued | |||
Bunge Ltd.: | |||
4.875% | 237,000 | $ 19,521 | |
5.125% | 22,000 | 13,459 | |
| 54,130 | ||
ENERGY - 5.9% | |||
Oil, Gas & Consumable Fuels - 5.9% | |||
El Paso Corp. 4.99% (g) | 119,290 | 99,719 | |
Goodrich Petroleum Corp. 5.375% | 100,000 | 4,861 | |
| 104,580 | ||
FINANCIALS - 8.2% | |||
Commercial Banks - 6.2% | |||
Huntington Bancshares, Inc. 8.50% | 2,100 | 1,334 | |
KeyCorp Series A, 7.75% | 300,000 | 19,989 | |
Wells Fargo & Co. 7.50% | 120,550 | 89,810 | |
| 111,133 | ||
Diversified Financial Services - 2.0% | |||
Bank of America Corp. Series L, 7.25% | 47,085 | 35,785 | |
CIT Group, Inc. Series C, 8.75% | 25,300 | 604 | |
| 36,389 | ||
TOTAL FINANCIALS | 147,522 | ||
MATERIALS - 10.9% | |||
Chemicals - 4.5% | |||
Celanese Corp. 4.25% | 2,893,200 | 81,154 | |
Metals & Mining - 6.4% | |||
Freeport-McMoRan Copper & Gold, Inc.: | |||
5.50% | 18,400 | 22,274 | |
6.75% | 1,093,500 | 92,395 | |
| 114,669 | ||
TOTAL MATERIALS | 195,823 | ||
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $641,369) | 511,168 |
Floating Rate Loans - 0.7% | ||||
| Principal Amount (000s) | Value (000s) | ||
CONSUMER DISCRETIONARY - 0.1% | ||||
Media - 0.1% | ||||
Education Media and Publishing Group Ltd. Tranche 2LN, term loan 10.16% 12/12/14 (h) | $ 7,471 | $ 1,121 | ||
FINANCIALS - 0.4% | ||||
Diversified Financial Services - 0.4% | ||||
CCO Holdings, LLC Tranche 3LN, term loan 6.75% 9/6/14 (h) | 9,000 | 6,570 | ||
MATERIALS - 0.2% | ||||
Chemicals - 0.2% | ||||
Georgia Gulf Corp. term loan 8.911% 10/3/13 (h) | 6,605 | 4,491 | ||
TOTAL FLOATING RATE LOANS (Cost $17,656) | 12,182 |
Money Market Funds - 5.0% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.53% (b) | 69,302,548 | 69,303 | |
Fidelity Securities Lending Cash Central Fund, 0.28% (b)(c) | 20,552,025 | 20,552 | |
TOTAL MONEY MARKET FUNDS (Cost $89,855) | 89,855 | ||
Cash Equivalents - 0.0% | |||
Maturity Amount (000s) |
| ||
Investments in repurchase agreements in a joint trading account at 0.17%, dated 5/29/09 due 6/1/09 (Collateralized by U.S. Treasury Obligations) # | $ 22 | 22 | |
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $2,191,789) | 1,792,295 | ||
NET OTHER ASSETS - (0.1)% | (2,168) | ||
NET ASSETS - 100% | $ 1,790,127 |
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) Non-income producing - Issuer is in default. |
(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 $432,395,000 or 24.2% of net assets. |
(h) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$22,000 due 6/01/09 at 0.17% | |
BNP Paribas Securities Corp. | $ 1 |
Bank of America, NA | 2 |
Barclays Capital, Inc. | 3 |
Deutsche Bank Securities, Inc. | 3 |
HSBC Securities (USA), Inc. | 3 |
ING Financial Markets LLC | 1 |
J.P. Morgan Securities, Inc. | 7 |
Mizuho Securities USA, Inc. | 1 |
Societe Generale, New York Branch | 1 |
| $ 22 |
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 | $ 148 |
Fidelity Securities Lending Cash Central Fund | 86 |
Total | $ 234 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2009, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 1,792,295 | $ 408,552 | $ 1,381,231 | $ 2,512 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
(Amounts in thousands) | Investments in Securities |
Beginning Balance | $ 11,213 |
Total Realized Gain (Loss) | (7,308) |
Total Unrealized Gain (Loss) | 1,782 |
Cost of Purchases | 1,626 |
Proceeds of Sales | (1,178) |
Amortization/Accretion | 321 |
Transfer in/out of Level 3 | (3,944) |
Ending Balance | $ 2,512 |
The information used in the above reconciliation represents fiscal year to date activity for any Investment Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 3.9% |
BBB | 3.4% |
BB | 10.8% |
B | 11.7% |
CCC,CC,C | 10.3% |
D | 0.4% |
Not Rated | 15.3% |
Equities | 39.3% |
Short-Term Investments and Net Other Assets | 4.9% |
| 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. All ratings are as of the report date and do not reflect subsequent downgrades. |
Income Tax Information |
At November 30, 2008, the fund had a capital loss carryforward of approximately $52,524,000 all of which will expire on November 30, 2016. |
The fund intends to elect to defer to its fiscal year ending November 30, 2009 approximately $89,513,000 of losses recognized during the period November 1, 2008 to November 30, 2008. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $19,554 and repurchase agreements of $22) - See accompanying schedule: Unaffiliated issuers (cost $2,101,934) | $ 1,702,440 |
|
Fidelity Central Funds (cost $89,855) | 89,855 |
|
Total Investments (cost $2,191,789) |
| $ 1,792,295 |
Receivable for investments sold | 3,564 | |
Receivable for fund shares sold | 3,960 | |
Dividends receivable | 3,989 | |
Interest receivable | 14,214 | |
Distributions receivable from Fidelity Central Funds | 53 | |
Prepaid expenses | 12 | |
Total assets | 1,818,087 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 5,017 | |
Payable for fund shares redeemed | 1,336 | |
Accrued management fee | 542 | |
Distribution fees payable | 1 | |
Other affiliated payables | 475 | |
Other payables and accrued expenses | 37 | |
Collateral on securities loaned, at value | 20,552 | |
Total liabilities | 27,960 | |
|
|
|
Net Assets | $ 1,790,127 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,574,329 | |
Undistributed net investment income | 27,448 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (412,156) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (399,494) | |
Net Assets | $ 1,790,127 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Calculation of Maximum Offering Price | $ 17.51 | |
|
|
|
Maximum offering price per share (100/94.25 of $17.51) | $ 18.58 | |
Class T: | $ 17.50 | |
|
|
|
Maximum offering price per share (100/96.50 of $17.50) | $ 18.13 | |
Class B: | $ 17.48 | |
|
|
|
Class C: | $ 17.48 | |
|
|
|
Convertible Securities: | $ 17.52 | |
|
|
|
Institutional Class: | $ 17.52 |
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, 2009 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 32,964 |
Interest |
| 29,842 |
Income from Fidelity Central Funds |
| 234 |
Total income |
| 63,040 |
|
|
|
Expenses | ||
Management fee | $ 3,457 | |
Performance adjustment | (1,582) | |
Transfer agent fees | 2,190 | |
Distribution fees | 2 | |
Accounting and security lending fees | 247 | |
Custodian fees and expenses | 9 | |
Independent trustees' compensation | 6 | |
Registration fees | 113 | |
Audit | 45 | |
Legal | 11 | |
Miscellaneous | 19 | |
Total expenses before reductions | 4,517 | |
Expense reductions | (57) | 4,460 |
Net investment income (loss) | 58,580 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (264,817) | |
Foreign currency transactions | (14) | |
Total net realized gain (loss) |
| (264,831) |
Change in net unrealized appreciation (depreciation) on investment securities | 669,997 | |
Net gain (loss) | 405,166 | |
Net increase (decrease) in net assets resulting from operations | $ 463,746 |
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, 2009 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 58,580 | $ 86,298 |
Net realized gain (loss) | (264,831) | (146,923) |
Change in net unrealized appreciation (depreciation) | 669,997 | (1,573,541) |
Net increase (decrease) in net assets resulting | 463,746 | (1,634,166) |
Distributions to shareholders from net investment income | (62,825) | (70,992) |
Distributions to shareholders from net realized gain | - | (86,711) |
Total distributions | (62,825) | (157,703) |
Share transactions - net increase (decrease) | (49,978) | 312,218 |
Total increase (decrease) in net assets | 350,943 | (1,479,651) |
|
|
|
Net Assets | ||
Beginning of period | 1,439,184 | 2,918,835 |
End of period (including undistributed net investment income of $27,448 and undistributed net investment income of $31,693, respectively) | $ 1,790,127 | $ 1,439,184 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss)D | .27 |
Net realized and unrealized gain (loss) | 4.73 |
Total from investment operations | 5.00 |
Distributions from net investment income | (.28) |
Net asset value, end of period | $ 17.51 |
Total Return B, C | 39.54% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | .88% A |
Expenses net of fee waivers, if any | .88% A |
Expenses net of all reductions | .88% A |
Net investment income (loss) | 6.39% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 602 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the sales charges.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) D | .26 |
Net realized and unrealized gain (loss) | 4.73 |
Total from investment operations | 4.99 |
Distributions from net investment income | (.28) |
Net asset value, end of period | $ 17.50 |
Total Return B, C | 39.47% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | 1.08% A |
Expenses net of fee waivers, if any | 1.08% A |
Expenses net of all reductions | 1.08% A |
Net investment income (loss) | 6.14% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 755 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the sales charges.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) D | .24 |
Net realized and unrealized gain (loss) | 4.72 |
Total from investment operations | 4.96 |
Distributions from net investment income | (.27) |
Net asset value, end of period | $ 17.48 |
Total Return B, C | 39.23% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | 1.62% A |
Expenses net of fee waivers, if any | 1.62% A |
Expenses net of all reductions | 1.62% A |
Net investment income (loss) | 5.71% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 273 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the contingent deferred sales charge.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) D | .21 |
Net realized and unrealized gain (loss) | 4.75 |
Total from investment operations | 4.96 |
Distributions from net investment income | (.27) |
Net asset value, end of period | $ 17.48 |
Total Return B, C | 39.27% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | 1.59% A |
Expenses net of fee waivers, if any | 1.59% A |
Expenses net of all reductions | 1.59% A |
Net investment income (loss) | 5.02% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 640 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the contingent deferred sales charge.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Convertible Securities
| Six months ended May 31, 2009 | Years ended November 30, | ||||
(Unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 | $ 21.06 | $ 19.71 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .56 | .76 | .59 | .49 | .41 | .46 |
Net realized and unrealized gain (loss) | 4.02 | (14.43) | 3.43 | 3.09 | 1.03 | 1.55 |
Total from investment operations | 4.58 | (13.67) | 4.02 | 3.58 | 1.44 | 2.01 |
Distributions from net investment income | (.61) | (.64) | (.50) | (.50) | (.34) | (.66) |
Distributions from net realized gain | - | (.85) | (.02) | (.01) | (.02) | - |
Total distributions | (.61) | (1.49) | (.52) | (.51) | (.36) | (.66) |
Net asset value, end of period | $ 17.52 | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 | $ 21.06 |
Total Return B, C | 35.11% | (50.09)% | 16.02% | 16.38% | 6.91% | 10.39% |
Ratios to Average Net Assets E, G |
|
|
|
|
| |
Expenses before reductions | .61% A | .78% | .79% | .83% | .70% | .67% |
Expenses net of fee waivers, if any | .60% A | .78% | .79% | .83% | .70% | .67% |
Expenses net of all reductions | .60% A | .78% | .79% | .83% | .69% | .66% |
Net investment income (loss) | 7.91% A | 3.06% | 2.11% | 2.09% | 1.95% | 2.26% |
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (in millions) | $ 1,787 | $ 1,439 | $ 2,919 | $ 2,083 | $ 1,754 | $ 1,835 |
Portfolio turnover rate F | 27% A | 39% | 24% | 35% | 81% | 112% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Institutional Class
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) C | .27 |
Net realized and unrealized gain (loss) | 4.74 |
Total from investment operations | 5.01 |
Distributions from net investment income | (.28) |
Net asset value, end of period | $ 17.52 |
Total Return B | 39.67% |
Ratios to Average Net Assets D, G |
|
Expenses before reductions | .59% A |
Expenses net of fee waivers, if any | .59% A |
Expenses net of all reductions | .59% A |
Net investment income (loss) | 6.37% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,190 |
Portfolio turnover rate E | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of 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, 2009 (Unaudited)
1. Organization.
Fidelity Convertible Securities Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, Convertible Securities and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. The Fund commenced sale of Class A, Class T, Class B, Class C, and Institutional Class shares and the existing class was designated Convertible Securities on February 19, 2009. In order to disclose class level financial information dollar amounts presented in the notes are unrounded. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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, 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. Certain of the Fund's securities are valued at period end by a single source or dealer. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of May 31, 2009, for the Fund's investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectability of interest is reasonably assured.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Semiannual Report
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 market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 80,236,636 |
Unrealized depreciation | (473,433,996) |
Net unrealized appreciation (depreciation) | $ (393,197,360) |
Cost for federal income tax purposes | $ 2,185,492,728 |
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.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Operating Policies - continued
Loans and Other Direct Debt Instruments - continued
supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $194,429,517 and $301,930,440, 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 .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .15% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Convertible Securities as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .25% 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.
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 144 | $ 86 |
Class T | .25% | .25% | 536 | 147 |
Class B | .75% | .25% | 494 | 450 |
Class C | .75% | .25% | 907 | 612 |
|
|
| $ 2,081 | $ 1,295 |
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 | $ 1,628 |
Class T | 76 |
Class C* | 571 |
| $ 2,275 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 182 | .32 |
Class T | 275 | .26 |
Class B | 146 | .30 |
Class C | 251 | .28 |
Convertible Securities | 2,189,074 | .30 |
Institutional Class | 398 | .27 |
| $ 2,190,326 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $7,148 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $4,631 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
Semiannual Report
8. Security Lending - continued
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 $85,818.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Convertible Securities operating expenses. During the period, this reimbursement reduced the Fund's expenses by $57,475.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income |
|
|
Class A | $ 2,698 | $ - |
Class T | 6,805 | - |
Class B | 2,799 | - |
Class C | 5,988 | - |
Convertible Securities | 62,801,283 | 70,991,794 |
Institutional Class | 5,728 | - |
Total | $ 62,825,301 | $ 70,991,794 |
From net realized gain |
|
|
Convertible Securities | $ - | $ 86,711,275 |
A Distributions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
11. 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 | 34,218 | - | $ 527,787 | $ - |
Reinvestment of distributions | 181 | - | 2,619 | - |
Net increase (decrease) | 34,399 | - | $ 530,406 | $ - |
Class T |
|
|
|
|
Shares sold | 43,804 | - | $ 632,602 | $ - |
Reinvestment of distributions | 450 | - | 6,498 | - |
Shares redeemed | (1,072) | - | (17,323) | - |
Net increase (decrease) | 43,182 | - | $ 621,777 | $ - |
Class B |
|
|
|
|
Shares sold | 15,521 | - | $ 213,523 | $ - |
Reinvestment of distributions | 194 | - | 2,799 | - |
Shares redeemed | (107) | - | (1,735) | - |
Net increase (decrease) | 15,608 | - | $ 214,587 | $ - |
Class C |
|
|
|
|
Shares sold | 40,485 | - | $ 587,508 | $ - |
Reinvestment of distributions | 415 | - | 5,988 | - |
Shares redeemed | (4,253) | - | (70,917) | - |
Net increase (decrease) | 36,647 | - | $ 522,579 | $ - |
Convertible Securities |
|
|
|
|
Shares sold | 15,173,844 | 47,041,632 | $ 218,986,744 | $ 1,227,244,254 |
Reinvestment of distributions | 4,101,191 | 5,508,343 | 56,373,483 | 144,171,892 |
Shares redeemed | (23,528,491) | (47,983,510) | (328,231,680) | (1,059,198,942) |
Net increase (decrease) | (4,253,456) | 4,566,465 | $ (52,871,453) | $ 312,217,204 |
Institutional Class |
|
|
|
|
Shares sold | 67,565 | - | $ 1,000,408 | $ - |
Reinvestment of distributions | 369 | - | 5,324 | - |
Net increase (decrease) | 67,934 | - | $ 1,005,732 | $ - |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
Semiannual Report
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
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Semiannual Report
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Semiannual Report
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Fidelity Advisor
Convertible Securities
Fund - Class A, Class T, Class B
and Class C
Semiannual Report
May 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Class A, Class T, Class B, and Class C are classes of Fidelity® Convertible Securities Fund
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
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 LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Although there has been some encouraging news in the capital markets this spring, many economic uncertainties remain - including still-weak corporate earnings and sluggish consumer spending - which could call into question the sustainability and overall strength of the markets' recent forward momentum. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help 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 can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today,
more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/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, 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 actual expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2008 to May 31, 2009) for Convertible Securities and for the entire period (February 19, 2009 to May 1, 2009) for Class A, Class T, Class B, Class C and Institutional Class. The hypothetical expense Example is based on an investment of $1,000 invested for the one-half year period (December 1, 2008 to May 31, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Semiannual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,395.40 | $ 2.95 B |
Hypothetical A |
| $ 1,000.00 | $ 1,020.54 | $ 4.43 C |
Class T | 1.08% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,394.70 | $ 3.61 B |
Hypothetical A |
| $ 1,000.00 | $ 1,019.55 | $ 5.44 C |
Class B | 1.62% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,392.30 | $ 5.42 B |
Hypothetical A |
| $ 1,000.00 | $ 1,016.85 | $ 8.15 C |
Class C | 1.59% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,392.70 | $ 5.32 B |
Hypothetical A |
| $ 1,000.00 | $ 1,017.00 | $ 8.00 C |
Convertible Securities | .60% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,351.10 | $ 3.52 B |
Hypothetical A |
| $ 1,000.00 | $ 1,021.94 | $ 3.02 C |
Institutional Class | .59% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,396.70 | $ 1.98 B |
Hypothetical A |
| $ 1,000.00 | $ 1,021.99 | $ 2.97 C |
A 5% return per year before expenses
B Actual expenses are equal to each Class' annualized expense ratio (shown in the table above); multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period) for Convertible Securities and multiplied by 102/365 (to reflect the period February 19, 2009 to May 31, 2009) for Class A, Class T, Class B, Class C and Institutional Class.
C Hypothetical expenses are equal to each Class' annualized expense ratio (shown in the table above); multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Investments as of May 31, 2009 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
Bank of America Corp. | 6.7 | 0.0 |
El Paso Corp. 4.99% | 5.6 | 7.4 |
Freeport-McMoRan Copper & Gold, Inc. 6.75% | 5.2 | 2.8 |
Wells Fargo & Co. 7.50% | 5.0 | 5.3 |
Peabody Energy Corp. 4.75% 12/15/66 | 4.7 | 3.9 |
Celanese Corp. 4.25% | 4.5 | 3.2 |
Intel Corp. 2.95% 12/15/35 | 2.2 | 2.0 |
Bank of America Corp. Series L, 7.25% | 2.0 | 7.1 |
ON Semiconductor Corp. 2.625% 12/15/26 | 1.8 | 1.2 |
Chesapeake Energy Corp. 2.5% 5/15/37 | 1.4 | 3.6 |
| 39.1 | |
Top Five Market Sectors as of May 31, 2009 | ||
| % of fund's | % of fund's net assets |
Financials | 19.4 | 19.7 |
Information Technology | 18.0 | 17.4 |
Energy | 16.5 | 24.2 |
Materials | 11.6 | 7.9 |
Consumer Staples | 8.7 | 8.0 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2009 * | As of November 30, 2008 ** | ||||||
![]() | Convertible |
| ![]() | Convertible |
| ||
![]() | Stocks 10.8% |
| ![]() | Stocks 5.2% |
| ||
![]() | Nonconvertible |
| ![]() | Nonconvertible |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
![]() | Floating Rate |
| ![]() | Floating Rate |
| ||
* Foreign investments | 3.0% |
| ** Foreign investments | 6.0% |
|
Semiannual Report
Investments May 31, 2009 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 55.1% | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - 53.6% | ||||
CONSUMER DISCRETIONARY - 3.9% | ||||
Auto Components - 0.5% | ||||
BorgWarner, Inc. 3.5% 4/15/12 | $ 910 | $ 1,115 | ||
Johnson Controls, Inc. 6.5% 9/30/12 | 3,850 | 7,131 | ||
| 8,246 | |||
Diversified Consumer Services - 0.5% | ||||
Ingersoll-Rand Global Holding Co. Ltd. 4.5% 4/15/12 | 490 | 638 | ||
Stewart Enterprises, Inc. 3.375% 7/15/16 (g) | 11,000 | 7,508 | ||
| 8,146 | |||
Hotels, Restaurants & Leisure - 1.1% | ||||
Ambassadors International, Inc. 3.75% 4/15/27 (g) | 8,000 | 1,880 | ||
WMS Industries, Inc.: | ||||
2.75% 7/15/10 (g) | 4,000 | 10,759 | ||
2.75% 7/15/10 | 2,800 | 7,531 | ||
| 20,170 | |||
Household Durables - 0.0% | ||||
Newell Rubbermaid, Inc. 5.5% 3/15/14 | 590 | 898 | ||
Media - 1.2% | ||||
Regal Entertainment Group 6.25% 3/15/11 (g) | 19,297 | 18,334 | ||
XM Satellite Radio, Inc. 7% 12/1/14 (g) | 10,000 | 3,600 | ||
| 21,934 | |||
Specialty Retail - 0.6% | ||||
Asbury Automotive Group, Inc. 3% 9/15/12 (g) | 3,000 | 2,073 | ||
United Auto Group, Inc. 3.5% 4/1/26 | 9,533 | 8,134 | ||
| 10,207 | |||
TOTAL CONSUMER DISCRETIONARY | 69,601 | |||
CONSUMER STAPLES - 5.5% | ||||
Beverages - 0.9% | ||||
Molson Coors Brewing Co. 2.5% 7/30/13 | 14,000 | 15,371 | ||
Food & Staples Retailing - 2.8% | ||||
Nash-Finch Co. 1.6314% 3/15/35 (e) | 34,480 | 13,299 | ||
Rite Aid Corp. 8.5% 5/15/15 | 9,100 | 6,325 | ||
The Great Atlantic & Pacific Tea Co.: | ||||
5.125% 6/15/11 | 18,000 | 12,600 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
CONSUMER STAPLES - continued | ||||
Food & Staples Retailing - continued | ||||
The Great Atlantic & Pacific Tea Co.: - continued | ||||
6.75% 12/15/12 | $ 12,000 | $ 7,560 | ||
The Pantry, Inc. 3% 11/15/12 | 14,000 | 11,176 | ||
| 50,960 | |||
Food Products - 1.8% | ||||
Smithfield Foods, Inc. 4% 6/30/13 | 22,250 | 18,390 | ||
Tyson Foods, Inc. 3.25% 10/15/13 | 13,000 | 13,742 | ||
| 32,132 | |||
TOTAL CONSUMER STAPLES | 98,463 | |||
ENERGY - 10.4% | ||||
Energy Equipment & Services - 1.7% | ||||
Global Industries Ltd. 2.75% 8/1/27 (g) | 10,000 | 4,700 | ||
Hercules Offshore, Inc. 3.375% 6/1/38 (g) | 20,000 | 10,976 | ||
Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (e)(g) | 5,000 | 4,223 | ||
Oil States International, Inc. 2.375% 7/1/25 (g) | 4,500 | 4,627 | ||
SESI LLC 1.5% 12/15/26 (e)(g) | 7,000 | 6,020 | ||
| 30,546 | |||
Oil, Gas & Consumable Fuels - 8.7% | ||||
Alpha Natural Resources, Inc. 2.375% 4/15/15 | 30,000 | 23,733 | ||
Chesapeake Energy Corp. 2.5% 5/15/37 | 35,250 | 26,015 | ||
Goodrich Petroleum Corp. 3.25% 12/1/26 | 6,000 | 5,056 | ||
Patriot Coal Corp. 3.25% 5/31/13 (g) | 6,000 | 3,308 | ||
Peabody Energy Corp. 4.75% 12/15/66 | 107,250 | 83,451 | ||
Quicksilver Resources, Inc. 1.875% 11/1/24 (g) | 14,500 | 14,410 | ||
| 155,973 | |||
TOTAL ENERGY | 186,519 | |||
FINANCIALS - 2.0% | ||||
Diversified Financial Services - 1.4% | ||||
The NASDAQ Stock Market, Inc. 2.5% 8/15/13 | 30,000 | 24,363 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
FINANCIALS - continued | ||||
Real Estate Investment Trusts - 0.6% | ||||
Ventas, Inc. 3.875% 11/15/11 (g) | $ 12,000 | $ 11,754 | ||
TOTAL FINANCIALS | 36,117 | |||
HEALTH CARE - 5.7% | ||||
Health Care Equipment & Supplies - 3.9% | ||||
Beckman Coulter, Inc. 2.5% 12/15/36 (g) | 8,500 | 8,351 | ||
Inverness Medical Innovations, Inc.: | ||||
3% 5/15/16 (g) | 21,000 | 19,688 | ||
3% 5/15/16 | 10,000 | 9,375 | ||
Kinetic Concepts, Inc. 3.25% 4/15/15 (g) | 15,000 | 11,589 | ||
Medtronic, Inc. 1.625% 4/15/13 | 16,000 | 14,681 | ||
SonoSite, Inc. 3.75% 7/15/14 | 7,000 | 6,114 | ||
| 69,798 | |||
Health Care Providers & Services - 0.3% | ||||
Omnicare, Inc. 3.25% 12/15/35 | 7,000 | 4,891 | ||
Life Sciences Tools & Services - 1.5% | ||||
Charles River Laboratories International, Inc. 2.25% 6/15/13 (g) | 4,000 | 3,586 | ||
Fisher Scientific International, Inc.: | ||||
2.5% 10/1/23 (g) | 3,300 | 5,482 | ||
2.5% 10/1/23 | 7,400 | 12,293 | ||
Nektar Therapeutics 3.25% 9/28/12 | 9,000 | 6,467 | ||
| 27,828 | |||
TOTAL HEALTH CARE | 102,517 | |||
INDUSTRIALS - 7.7% | ||||
Aerospace & Defense - 0.8% | ||||
Alliant Techsystems, Inc. 2.75% 9/15/11 | 14,000 | 14,790 | ||
Airlines - 1.1% | ||||
AirTran Holdings, Inc. 7% 7/1/23 | 10,000 | 9,400 | ||
UAL Corp.: | ||||
4.5% 6/30/21 (g) | 10,500 | 4,095 | ||
4.5% 6/30/21 | 5,000 | 1,950 | ||
US Airways Group, Inc. 7% 9/30/20 (g) | 4,810 | 3,944 | ||
| 19,389 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INDUSTRIALS - continued | ||||
Construction & Engineering - 0.4% | ||||
Quanta Services, Inc. 3.75% 4/30/26 (g) | $ 7,000 | $ 7,849 | ||
Electrical Equipment - 2.2% | ||||
C&D Technologies, Inc.: | ||||
5.25% 11/1/25 (g) | 4,400 | 2,695 | ||
5.25% 11/1/25 | 32,596 | 19,965 | ||
Evergreen Solar, Inc. 4% 7/15/13 | 4,000 | 1,445 | ||
General Cable Corp. 1% 10/15/12 (g) | 16,000 | 12,480 | ||
Sunpower Corp. 4.75% 4/15/14 | 2,020 | 2,511 | ||
| 39,096 | |||
Industrial Conglomerates - 0.1% | ||||
Textron, Inc. 4.5% 5/1/13 | 1,440 | 1,599 | ||
Machinery - 0.6% | ||||
Greenbrier Companies, Inc.: | ||||
2.375% 5/15/26 (g) | 5,500 | 2,214 | ||
2.375% 5/15/26 | 8,000 | 3,220 | ||
Terex Corp. 4% 6/1/15 | 1,090 | 1,143 | ||
Trinity Industries, Inc. 3.875% 6/1/36 | 7,000 | 3,868 | ||
| 10,445 | |||
Marine - 1.9% | ||||
Excel Maritime Carriers Ltd. 1.875% 10/15/27 (g) | 34,000 | 12,920 | ||
Horizon Lines, Inc. 4.25% 8/15/12 (g) | 35,000 | 21,746 | ||
| 34,666 | |||
Road & Rail - 0.6% | ||||
Hertz Global Holdings, Inc. 5.25% 6/1/14 | 10,000 | 10,147 | ||
TOTAL INDUSTRIALS | 137,981 | |||
INFORMATION TECHNOLOGY - 16.3% | ||||
Communications Equipment - 2.0% | ||||
Finisar Corp. 2.5% 10/15/10 | 15,760 | 9,149 | ||
JDS Uniphase Corp. 1% 5/15/26 (g) | 14,000 | 9,660 | ||
L-3 Communications Corp. 3% 8/1/35 | 3,000 | 2,948 | ||
Lucent Technologies, Inc. 2.875% 6/15/25 | 10,000 | 6,316 | ||
Nortel Networks Corp. 2.125% 4/15/14 (d)(g) | 10,000 | 2,875 | ||
Symmetricom, Inc. 3.25% 6/15/25 | 5,214 | 4,342 | ||
| 35,290 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Computers & Peripherals - 1.6% | ||||
EMC Corp. 1.75% 12/1/13 (g) | $ 17,000 | $ 16,625 | ||
Hutchinson Technology, Inc. 3.25% 1/15/26 | 11,000 | 3,960 | ||
SanDisk Corp. 1% 5/15/13 | 13,000 | 8,392 | ||
| 28,977 | |||
Electronic Equipment & Components - 1.8% | ||||
Anixter International, Inc. 1% 2/15/13 (g) | 4,540 | 3,865 | ||
Itron, Inc. 2.5% 8/1/26 | 7,000 | 7,912 | ||
Merix Corp.: | ||||
4% 5/15/13 (g) | 11,250 | 3,938 | ||
4% 5/15/13 | 7,600 | 2,660 | ||
Newport Corp. 2.5% 2/15/12 (g) | 3,750 | 2,814 | ||
SYNNEX Corp. 4% 5/15/18 (g) | 10,000 | 10,571 | ||
| 31,760 | |||
Internet Software & Services - 0.8% | ||||
GSI Commerce, Inc. 2.5% 6/1/27 (g) | 10,000 | 6,713 | ||
VeriSign, Inc. 3.25% 8/15/37 | 10,000 | 8,143 | ||
| 14,856 | |||
IT Services - 1.8% | ||||
Alliance Data Systems Corp. 1.75% 8/1/13 (g) | 14,788 | 10,807 | ||
BearingPoint, Inc. 3.1% 12/15/24 (g) | 8,000 | 4 | ||
CACI International, Inc. 2.125% 5/1/14 | 6,000 | 5,355 | ||
DST Systems, Inc. Series A, 4.125% 8/15/23 | 16,100 | 15,939 | ||
| 32,105 | |||
Semiconductors & Semiconductor Equipment - 7.7% | ||||
Advanced Micro Devices, Inc.: | ||||
5.75% 8/15/12 | 40,000 | 24,850 | ||
6% 5/1/15 | 15,000 | 7,200 | ||
Amkor Technology, Inc. 6% 4/15/14 (g) | 5,890 | 9,422 | ||
Conexant Systems, Inc. 4% 3/1/26 | 7,000 | 2,065 | ||
Intel Corp. 2.95% 12/15/35 | 48,000 | 39,264 | ||
LTX-Credence Corp. 3.5% 5/15/11 | 10,333 | 1,391 | ||
Micron Technology, Inc.: | ||||
1.875% 6/1/14 | 10,000 | 5,837 | ||
4.25% 10/15/13 | 1,130 | 1,326 | ||
ON Semiconductor Corp.: | ||||
1.875% 12/15/25 (g) | 3,750 | 4,152 | ||
2.625% 12/15/26 | 35,330 | 31,857 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Semiconductors & Semiconductor Equipment - continued | ||||
PMC-Sierra, Inc. 2.25% 10/15/25 | $ 10,000 | $ 10,426 | ||
Spansion, Inc. 2.25% 6/15/16 (d)(g) | 7,267 | 33 | ||
| 137,823 | |||
Software - 0.6% | ||||
Borland Software Corp. 2.75% 2/15/12 (g) | 6,000 | 5,625 | ||
Symantec Corp. 1% 6/15/13 | 5,000 | 5,089 | ||
| 10,714 | |||
TOTAL INFORMATION TECHNOLOGY | 291,525 | |||
MATERIALS - 0.5% | ||||
Metals & Mining - 0.5% | ||||
ArcelorMittal SA 5% 5/15/14 | 2,170 | 2,748 | ||
Newmont Mining Corp. 3% 2/15/12 | 2,120 | 2,620 | ||
United States Steel Corp. 4% 5/15/14 | 2,670 | 3,331 | ||
| 8,699 | |||
TELECOMMUNICATION SERVICES - 1.6% | ||||
Diversified Telecommunication Services - 0.8% | ||||
Level 3 Communications, Inc. 3.5% 6/15/12 | 16,000 | 9,498 | ||
Time Warner Telecom, Inc. 2.375% 4/1/26 | 6,000 | 5,333 | ||
| 14,831 | |||
Wireless Telecommunication Services - 0.8% | ||||
Leap Wireless International, Inc. 4.5% 7/15/14 (g) | 16,000 | 13,160 | ||
TOTAL TELECOMMUNICATION SERVICES | 27,991 | |||
TOTAL CONVERTIBLE BONDS | 959,413 | |||
Nonconvertible Bonds - 1.5% | ||||
CONSUMER DISCRETIONARY - 0.3% | ||||
Auto Components - 0.3% | ||||
TRW Automotive, Inc.: | ||||
7% 3/15/14 (g) | 1,300 | 956 | ||
7.25% 3/15/17 (g) | 6,230 | 4,361 | ||
| 5,317 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Nonconvertible Bonds - continued | ||||
CONSUMER STAPLES - 0.2% | ||||
Personal Products - 0.2% | ||||
Revlon Consumer Products Corp. 9.5% 4/1/11 | $ 3,745 | $ 3,314 | ||
FINANCIALS - 0.4% | ||||
Consumer Finance - 0.4% | ||||
GMAC LLC: | ||||
7.5% 12/31/13 (g) | 4,264 | 3,539 | ||
8% 12/31/18 (g) | 3,812 | 2,745 | ||
| 6,284 | |||
INFORMATION TECHNOLOGY - 0.6% | ||||
Semiconductors & Semiconductor Equipment - 0.6% | ||||
Amkor Technology, Inc.: | ||||
7.75% 5/15/13 | 1,995 | 1,786 | ||
9.25% 6/1/16 | 5,935 | 5,163 | ||
Freescale Semiconductor, Inc. 9.875% 12/15/14 pay-in-kind (h) | 20,000 | 4,689 | ||
| 11,638 | |||
TOTAL NONCONVERTIBLE BONDS | 26,553 | |||
TOTAL CORPORATE BONDS (Cost $1,234,619) | 985,966 |
Common Stocks - 10.8% | |||
Shares |
| ||
CONSUMER DISCRETIONARY - 0.9% | |||
Diversified Consumer Services - 0.4% | |||
Service Corp. International | 1,143,000 | 6,115 | |
Hotels, Restaurants & Leisure - 0.5% | |||
Domino's Pizza, Inc. (a) | 170,400 | 1,544 | |
Las Vegas Sands Corp. (a)(f) | 801,000 | 7,938 | |
| 9,482 | ||
TOTAL CONSUMER DISCRETIONARY | 15,597 | ||
ENERGY - 0.2% | |||
Oil, Gas & Consumable Fuels - 0.2% | |||
McMoRan Exploration Co. (a)(f) | 500,000 | 3,390 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - 8.4% | |||
Commercial Banks - 1.7% | |||
Huntington Bancshares, Inc. (f) | 5,820,500 | $ 22,816 | |
KeyCorp | 1,297,800 | 6,489 | |
| 29,305 | ||
Diversified Financial Services - 6.7% | |||
Bank of America Corp. | 10,622,385 | 119,710 | |
CIT Group, Inc. (f) | 136,300 | 522 | |
| 120,232 | ||
Thrifts & Mortgage Finance - 0.0% | |||
Washington Mutual, Inc. | 2,959,042 | 296 | |
TOTAL FINANCIALS | 149,833 | ||
INFORMATION TECHNOLOGY - 1.1% | |||
Electronic Equipment & Components - 0.0% | |||
L-1 Identity Solutions, Inc. (a) | 100,000 | 867 | |
Semiconductors & Semiconductor Equipment - 1.1% | |||
Amkor Technology, Inc. (a) | 843,200 | 3,828 | |
EMCORE Corp. (a)(f) | 172,258 | 226 | |
ON Semiconductor Corp. (a) | 2,169,500 | 14,861 | |
| 18,915 | ||
TOTAL INFORMATION TECHNOLOGY | 19,782 | ||
UTILITIES - 0.2% | |||
Independent Power Producers & Energy Traders - 0.2% | |||
NRG Energy, Inc. (a) | 200,000 | 4,500 | |
TOTAL COMMON STOCKS (Cost $208,268) | 193,102 | ||
Convertible Preferred Stocks - 28.5% | |||
|
|
|
|
CONSUMER DISCRETIONARY - 0.5% | |||
Automobiles - 0.5% | |||
Ford Motor Co. Capital Trust II 6.50% | 450,000 | 9,113 | |
CONSUMER STAPLES - 3.0% | |||
Food Products - 3.0% | |||
Archer Daniels Midland Co. 6.25% | 600,000 | 21,150 | |
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Food Products - continued | |||
Bunge Ltd.: | |||
4.875% | 237,000 | $ 19,521 | |
5.125% | 22,000 | 13,459 | |
| 54,130 | ||
ENERGY - 5.9% | |||
Oil, Gas & Consumable Fuels - 5.9% | |||
El Paso Corp. 4.99% (g) | 119,290 | 99,719 | |
Goodrich Petroleum Corp. 5.375% | 100,000 | 4,861 | |
| 104,580 | ||
FINANCIALS - 8.2% | |||
Commercial Banks - 6.2% | |||
Huntington Bancshares, Inc. 8.50% | 2,100 | 1,334 | |
KeyCorp Series A, 7.75% | 300,000 | 19,989 | |
Wells Fargo & Co. 7.50% | 120,550 | 89,810 | |
| 111,133 | ||
Diversified Financial Services - 2.0% | |||
Bank of America Corp. Series L, 7.25% | 47,085 | 35,785 | |
CIT Group, Inc. Series C, 8.75% | 25,300 | 604 | |
| 36,389 | ||
TOTAL FINANCIALS | 147,522 | ||
MATERIALS - 10.9% | |||
Chemicals - 4.5% | |||
Celanese Corp. 4.25% | 2,893,200 | 81,154 | |
Metals & Mining - 6.4% | |||
Freeport-McMoRan Copper & Gold, Inc.: | |||
5.50% | 18,400 | 22,274 | |
6.75% | 1,093,500 | 92,395 | |
| 114,669 | ||
TOTAL MATERIALS | 195,823 | ||
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $641,369) | 511,168 |
Floating Rate Loans - 0.7% | ||||
| Principal Amount (000s) | Value (000s) | ||
CONSUMER DISCRETIONARY - 0.1% | ||||
Media - 0.1% | ||||
Education Media and Publishing Group Ltd. Tranche 2LN, term loan 10.16% 12/12/14 (h) | $ 7,471 | $ 1,121 | ||
FINANCIALS - 0.4% | ||||
Diversified Financial Services - 0.4% | ||||
CCO Holdings, LLC Tranche 3LN, term loan 6.75% 9/6/14 (h) | 9,000 | 6,570 | ||
MATERIALS - 0.2% | ||||
Chemicals - 0.2% | ||||
Georgia Gulf Corp. term loan 8.911% 10/3/13 (h) | 6,605 | 4,491 | ||
TOTAL FLOATING RATE LOANS (Cost $17,656) | 12,182 |
Money Market Funds - 5.0% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.53% (b) | 69,302,548 | 69,303 | |
Fidelity Securities Lending Cash Central Fund, 0.28% (b)(c) | 20,552,025 | 20,552 | |
TOTAL MONEY MARKET FUNDS (Cost $89,855) | 89,855 | ||
Cash Equivalents - 0.0% | |||
Maturity Amount (000s) |
| ||
Investments in repurchase agreements in a joint trading account at 0.17%, dated 5/29/09 due 6/1/09 (Collateralized by U.S. Treasury Obligations) # | $ 22 | 22 | |
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $2,191,789) | 1,792,295 | ||
NET OTHER ASSETS - (0.1)% | (2,168) | ||
NET ASSETS - 100% | $ 1,790,127 |
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) Non-income producing - Issuer is in default. |
(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 $432,395,000 or 24.2% of net assets. |
(h) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$22,000 due 6/01/09 at 0.17% | |
BNP Paribas Securities Corp. | $ 1 |
Bank of America, NA | 2 |
Barclays Capital, Inc. | 3 |
Deutsche Bank Securities, Inc. | 3 |
HSBC Securities (USA), Inc. | 3 |
ING Financial Markets LLC | 1 |
J.P. Morgan Securities, Inc. | 7 |
Mizuho Securities USA, Inc. | 1 |
Societe Generale, New York Branch | 1 |
| $ 22 |
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 | $ 148 |
Fidelity Securities Lending Cash Central Fund | 86 |
Total | $ 234 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2009, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 1,792,295 | $ 408,552 | $ 1,381,231 | $ 2,512 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
(Amounts in thousands) | Investments in Securities |
Beginning Balance | $ 11,213 |
Total Realized Gain (Loss) | (7,308) |
Total Unrealized Gain (Loss) | 1,782 |
Cost of Purchases | 1,626 |
Proceeds of Sales | (1,178) |
Amortization/Accretion | 321 |
Transfer in/out of Level 3 | (3,944) |
Ending Balance | $ 2,512 |
The information used in the above reconciliation represents fiscal year to date activity for any Investment Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 3.9% |
BBB | 3.4% |
BB | 10.8% |
B | 11.7% |
CCC,CC,C | 10.3% |
D | 0.4% |
Not Rated | 15.3% |
Equities | 39.3% |
Short-Term Investments and Net Other Assets | 4.9% |
| 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. All ratings are as of the report date and do not reflect subsequent downgrades. |
Income Tax Information |
At November 30, 2008, the fund had a capital loss carryforward of approximately $52,524,000 all of which will expire on November 30, 2016. |
The fund intends to elect to defer to its fiscal year ending November 30, 2009 approximately $89,513,000 of losses recognized during the period November 1, 2008 to November 30, 2008. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $19,554 and repurchase agreements of $22) - See accompanying schedule: Unaffiliated issuers (cost $2,101,934) | $ 1,702,440 |
|
Fidelity Central Funds (cost $89,855) | 89,855 |
|
Total Investments (cost $2,191,789) |
| $ 1,792,295 |
Receivable for investments sold | 3,564 | |
Receivable for fund shares sold | 3,960 | |
Dividends receivable | 3,989 | |
Interest receivable | 14,214 | |
Distributions receivable from Fidelity Central Funds | 53 | |
Prepaid expenses | 12 | |
Total assets | 1,818,087 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 5,017 | |
Payable for fund shares redeemed | 1,336 | |
Accrued management fee | 542 | |
Distribution fees payable | 1 | |
Other affiliated payables | 475 | |
Other payables and accrued expenses | 37 | |
Collateral on securities loaned, at value | 20,552 | |
Total liabilities | 27,960 | |
|
|
|
Net Assets | $ 1,790,127 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,574,329 | |
Undistributed net investment income | 27,448 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (412,156) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (399,494) | |
Net Assets | $ 1,790,127 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Calculation of Maximum Offering Price | $ 17.51 | |
|
|
|
Maximum offering price per share (100/94.25 of $17.51) | $ 18.58 | |
Class T: | $ 17.50 | |
|
|
|
Maximum offering price per share (100/96.50 of $17.50) | $ 18.13 | |
Class B: | $ 17.48 | |
|
|
|
Class C: | $ 17.48 | |
|
|
|
Convertible Securities: | $ 17.52 | |
|
|
|
Institutional Class: | $ 17.52 |
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, 2009 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 32,964 |
Interest |
| 29,842 |
Income from Fidelity Central Funds |
| 234 |
Total income |
| 63,040 |
|
|
|
Expenses | ||
Management fee | $ 3,457 | |
Performance adjustment | (1,582) | |
Transfer agent fees | 2,190 | |
Distribution fees | 2 | |
Accounting and security lending fees | 247 | |
Custodian fees and expenses | 9 | |
Independent trustees' compensation | 6 | |
Registration fees | 113 | |
Audit | 45 | |
Legal | 11 | |
Miscellaneous | 19 | |
Total expenses before reductions | 4,517 | |
Expense reductions | (57) | 4,460 |
Net investment income (loss) | 58,580 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (264,817) | |
Foreign currency transactions | (14) | |
Total net realized gain (loss) |
| (264,831) |
Change in net unrealized appreciation (depreciation) on investment securities | 669,997 | |
Net gain (loss) | 405,166 | |
Net increase (decrease) in net assets resulting from operations | $ 463,746 |
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, 2009 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 58,580 | $ 86,298 |
Net realized gain (loss) | (264,831) | (146,923) |
Change in net unrealized appreciation (depreciation) | 669,997 | (1,573,541) |
Net increase (decrease) in net assets resulting | 463,746 | (1,634,166) |
Distributions to shareholders from net investment income | (62,825) | (70,992) |
Distributions to shareholders from net realized gain | - | (86,711) |
Total distributions | (62,825) | (157,703) |
Share transactions - net increase (decrease) | (49,978) | 312,218 |
Total increase (decrease) in net assets | 350,943 | (1,479,651) |
|
|
|
Net Assets | ||
Beginning of period | 1,439,184 | 2,918,835 |
End of period (including undistributed net investment income of $27,448 and undistributed net investment income of $31,693, respectively) | $ 1,790,127 | $ 1,439,184 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss)D | .27 |
Net realized and unrealized gain (loss) | 4.73 |
Total from investment operations | 5.00 |
Distributions from net investment income | (.28) |
Net asset value, end of period | $ 17.51 |
Total Return B, C | 39.54% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | .88% A |
Expenses net of fee waivers, if any | .88% A |
Expenses net of all reductions | .88% A |
Net investment income (loss) | 6.39% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 602 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the sales charges.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) D | .26 |
Net realized and unrealized gain (loss) | 4.73 |
Total from investment operations | 4.99 |
Distributions from net investment income | (.28) |
Net asset value, end of period | $ 17.50 |
Total Return B, C | 39.47% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | 1.08% A |
Expenses net of fee waivers, if any | 1.08% A |
Expenses net of all reductions | 1.08% A |
Net investment income (loss) | 6.14% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 755 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the sales charges.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) D | .24 |
Net realized and unrealized gain (loss) | 4.72 |
Total from investment operations | 4.96 |
Distributions from net investment income | (.27) |
Net asset value, end of period | $ 17.48 |
Total Return B, C | 39.23% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | 1.62% A |
Expenses net of fee waivers, if any | 1.62% A |
Expenses net of all reductions | 1.62% A |
Net investment income (loss) | 5.71% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 273 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the contingent deferred sales charge.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) D | .21 |
Net realized and unrealized gain (loss) | 4.75 |
Total from investment operations | 4.96 |
Distributions from net investment income | (.27) |
Net asset value, end of period | $ 17.48 |
Total Return B, C | 39.27% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | 1.59% A |
Expenses net of fee waivers, if any | 1.59% A |
Expenses net of all reductions | 1.59% A |
Net investment income (loss) | 5.02% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 640 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the contingent deferred sales charge.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Convertible Securities
| Six months ended May 31, 2009 | Years ended November 30, | ||||
(Unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 | $ 21.06 | $ 19.71 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .56 | .76 | .59 | .49 | .41 | .46 |
Net realized and unrealized gain (loss) | 4.02 | (14.43) | 3.43 | 3.09 | 1.03 | 1.55 |
Total from investment operations | 4.58 | (13.67) | 4.02 | 3.58 | 1.44 | 2.01 |
Distributions from net investment income | (.61) | (.64) | (.50) | (.50) | (.34) | (.66) |
Distributions from net realized gain | - | (.85) | (.02) | (.01) | (.02) | - |
Total distributions | (.61) | (1.49) | (.52) | (.51) | (.36) | (.66) |
Net asset value, end of period | $ 17.52 | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 | $ 21.06 |
Total Return B, C | 35.11% | (50.09)% | 16.02% | 16.38% | 6.91% | 10.39% |
Ratios to Average Net Assets E, G |
|
|
|
|
| |
Expenses before reductions | .61% A | .78% | .79% | .83% | .70% | .67% |
Expenses net of fee waivers, if any | .60% A | .78% | .79% | .83% | .70% | .67% |
Expenses net of all reductions | .60% A | .78% | .79% | .83% | .69% | .66% |
Net investment income (loss) | 7.91% A | 3.06% | 2.11% | 2.09% | 1.95% | 2.26% |
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (in millions) | $ 1,787 | $ 1,439 | $ 2,919 | $ 2,083 | $ 1,754 | $ 1,835 |
Portfolio turnover rate F | 27% A | 39% | 24% | 35% | 81% | 112% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Institutional Class
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) C | .27 |
Net realized and unrealized gain (loss) | 4.74 |
Total from investment operations | 5.01 |
Distributions from net investment income | (.28) |
Net asset value, end of period | $ 17.52 |
Total Return B | 39.67% |
Ratios to Average Net Assets D, G |
|
Expenses before reductions | .59% A |
Expenses net of fee waivers, if any | .59% A |
Expenses net of all reductions | .59% A |
Net investment income (loss) | 6.37% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,190 |
Portfolio turnover rate E | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of 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, 2009 (Unaudited)
1. Organization.
Fidelity Convertible Securities Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, Convertible Securities and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. The Fund commenced sale of Class A, Class T, Class B, Class C, and Institutional Class shares and the existing class was designated Convertible Securities on February 19, 2009. In order to disclose class level financial information dollar amounts presented in the notes are unrounded. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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, 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. Certain of the Fund's securities are valued at period end by a single source or dealer. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of May 31, 2009, for the Fund's investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectability of interest is reasonably assured.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Semiannual Report
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 market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 80,236,636 |
Unrealized depreciation | (473,433,996) |
Net unrealized appreciation (depreciation) | $ (393,197,360) |
Cost for federal income tax purposes | $ 2,185,492,728 |
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.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Operating Policies - continued
Loans and Other Direct Debt Instruments - continued
supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $194,429,517 and $301,930,440, 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 .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .15% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Convertible Securities as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .25% 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.
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 144 | $ 86 |
Class T | .25% | .25% | 536 | 147 |
Class B | .75% | .25% | 494 | 450 |
Class C | .75% | .25% | 907 | 612 |
|
|
| $ 2,081 | $ 1,295 |
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 | $ 1,628 |
Class T | 76 |
Class C* | 571 |
| $ 2,275 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 182 | .32 |
Class T | 275 | .26 |
Class B | 146 | .30 |
Class C | 251 | .28 |
Convertible Securities | 2,189,074 | .30 |
Institutional Class | 398 | .27 |
| $ 2,190,326 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $7,148 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $4,631 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
Semiannual Report
8. Security Lending - continued
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 $85,818.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Convertible Securities operating expenses. During the period, this reimbursement reduced the Fund's expenses by $57,475.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income |
|
|
Class A | $ 2,698 | $ - |
Class T | 6,805 | - |
Class B | 2,799 | - |
Class C | 5,988 | - |
Convertible Securities | 62,801,283 | 70,991,794 |
Institutional Class | 5,728 | - |
Total | $ 62,825,301 | $ 70,991,794 |
From net realized gain |
|
|
Convertible Securities | $ - | $ 86,711,275 |
A Distributions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
11. 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 | 34,218 | - | $ 527,787 | $ - |
Reinvestment of distributions | 181 | - | 2,619 | - |
Net increase (decrease) | 34,399 | - | $ 530,406 | $ - |
Class T |
|
|
|
|
Shares sold | 43,804 | - | $ 632,602 | $ - |
Reinvestment of distributions | 450 | - | 6,498 | - |
Shares redeemed | (1,072) | - | (17,323) | - |
Net increase (decrease) | 43,182 | - | $ 621,777 | $ - |
Class B |
|
|
|
|
Shares sold | 15,521 | - | $ 213,523 | $ - |
Reinvestment of distributions | 194 | - | 2,799 | - |
Shares redeemed | (107) | - | (1,735) | - |
Net increase (decrease) | 15,608 | - | $ 214,587 | $ - |
Class C |
|
|
|
|
Shares sold | 40,485 | - | $ 587,508 | $ - |
Reinvestment of distributions | 415 | - | 5,988 | - |
Shares redeemed | (4,253) | - | (70,917) | - |
Net increase (decrease) | 36,647 | - | $ 522,579 | $ - |
Convertible Securities |
|
|
|
|
Shares sold | 15,173,844 | 47,041,632 | $ 218,986,744 | $ 1,227,244,254 |
Reinvestment of distributions | 4,101,191 | 5,508,343 | 56,373,483 | 144,171,892 |
Shares redeemed | (23,528,491) | (47,983,510) | (328,231,680) | (1,059,198,942) |
Net increase (decrease) | (4,253,456) | 4,566,465 | $ (52,871,453) | $ 312,217,204 |
Institutional Class |
|
|
|
|
Shares sold | 67,565 | - | $ 1,000,408 | $ - |
Reinvestment of distributions | 369 | - | 5,324 | - |
Net increase (decrease) | 67,934 | - | $ 1,005,732 | $ - |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
Semiannual Report
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
Fidelity Investments Japan Limited
Fidelity International
Investment Advisors
Fidelity International Investment
Advisors (U.K.) Limited
Fidelity Management & Research
Company (Hong Kong) Limited
Fidelity Management & Research
Company (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
ACVS-USAN-0709 1.884069.100
(Fidelity Investment logo)(registered trademark)
Fidelity Advisor
Convertible Securities
Fund - Institutional Class
Semiannual Report
May 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Institutional Class is a class
of Fidelity® Convertible
Securities Fund
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
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 LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Although there has been some encouraging news in the capital markets this spring, many economic uncertainties remain - including still-weak corporate earnings and sluggish consumer spending - which could call into question the sustainability and overall strength of the markets' recent forward momentum. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help 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 can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today,
more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/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, 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 actual expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2008 to May 31, 2009) for Convertible Securities and for the entire period (February 19, 2009 to May 1, 2009) for Class A, Class T, Class B, Class C and Institutional Class. The hypothetical expense Example is based on an investment of $1,000 invested for the one-half year period (December 1, 2008 to May 31, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Semiannual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Class A | .88% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,395.40 | $ 2.95 B |
Hypothetical A |
| $ 1,000.00 | $ 1,020.54 | $ 4.43 C |
Class T | 1.08% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,394.70 | $ 3.61 B |
Hypothetical A |
| $ 1,000.00 | $ 1,019.55 | $ 5.44 C |
Class B | 1.62% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,392.30 | $ 5.42 B |
Hypothetical A |
| $ 1,000.00 | $ 1,016.85 | $ 8.15 C |
Class C | 1.59% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,392.70 | $ 5.32 B |
Hypothetical A |
| $ 1,000.00 | $ 1,017.00 | $ 8.00 C |
Convertible Securities | .60% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,351.10 | $ 3.52 B |
Hypothetical A |
| $ 1,000.00 | $ 1,021.94 | $ 3.02 C |
Institutional Class | .59% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,396.70 | $ 1.98 B |
Hypothetical A |
| $ 1,000.00 | $ 1,021.99 | $ 2.97 C |
A 5% return per year before expenses
B Actual expenses are equal to each Class' annualized expense ratio (shown in the table above); multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period) for Convertible Securities and multiplied by 102/365 (to reflect the period February 19, 2009 to May 31, 2009) for Class A, Class T, Class B, Class C and Institutional Class.
C Hypothetical expenses are equal to each Class' annualized expense ratio (shown in the table above); multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Investments as of May 31, 2009 | ||
(excluding cash equivalents) | % of fund's | % of fund's net assets |
Bank of America Corp. | 6.7 | 0.0 |
El Paso Corp. 4.99% | 5.6 | 7.4 |
Freeport-McMoRan Copper & Gold, Inc. 6.75% | 5.2 | 2.8 |
Wells Fargo & Co. 7.50% | 5.0 | 5.3 |
Peabody Energy Corp. 4.75% 12/15/66 | 4.7 | 3.9 |
Celanese Corp. 4.25% | 4.5 | 3.2 |
Intel Corp. 2.95% 12/15/35 | 2.2 | 2.0 |
Bank of America Corp. Series L, 7.25% | 2.0 | 7.1 |
ON Semiconductor Corp. 2.625% 12/15/26 | 1.8 | 1.2 |
Chesapeake Energy Corp. 2.5% 5/15/37 | 1.4 | 3.6 |
| 39.1 | |
Top Five Market Sectors as of May 31, 2009 | ||
| % of fund's | % of fund's net assets |
Financials | 19.4 | 19.7 |
Information Technology | 18.0 | 17.4 |
Energy | 16.5 | 24.2 |
Materials | 11.6 | 7.9 |
Consumer Staples | 8.7 | 8.0 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2009 * | As of November 30, 2008 ** | ||||||
![]() | Convertible |
| ![]() | Convertible |
| ||
![]() | Stocks 10.8% |
| ![]() | Stocks 5.2% |
| ||
![]() | Nonconvertible |
| ![]() | Nonconvertible |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
![]() | Floating Rate |
| ![]() | Floating Rate |
| ||
* Foreign investments | 3.0% |
| ** Foreign investments | 6.0% |
|
Semiannual Report
Investments May 31, 2009 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 55.1% | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - 53.6% | ||||
CONSUMER DISCRETIONARY - 3.9% | ||||
Auto Components - 0.5% | ||||
BorgWarner, Inc. 3.5% 4/15/12 | $ 910 | $ 1,115 | ||
Johnson Controls, Inc. 6.5% 9/30/12 | 3,850 | 7,131 | ||
| 8,246 | |||
Diversified Consumer Services - 0.5% | ||||
Ingersoll-Rand Global Holding Co. Ltd. 4.5% 4/15/12 | 490 | 638 | ||
Stewart Enterprises, Inc. 3.375% 7/15/16 (g) | 11,000 | 7,508 | ||
| 8,146 | |||
Hotels, Restaurants & Leisure - 1.1% | ||||
Ambassadors International, Inc. 3.75% 4/15/27 (g) | 8,000 | 1,880 | ||
WMS Industries, Inc.: | ||||
2.75% 7/15/10 (g) | 4,000 | 10,759 | ||
2.75% 7/15/10 | 2,800 | 7,531 | ||
| 20,170 | |||
Household Durables - 0.0% | ||||
Newell Rubbermaid, Inc. 5.5% 3/15/14 | 590 | 898 | ||
Media - 1.2% | ||||
Regal Entertainment Group 6.25% 3/15/11 (g) | 19,297 | 18,334 | ||
XM Satellite Radio, Inc. 7% 12/1/14 (g) | 10,000 | 3,600 | ||
| 21,934 | |||
Specialty Retail - 0.6% | ||||
Asbury Automotive Group, Inc. 3% 9/15/12 (g) | 3,000 | 2,073 | ||
United Auto Group, Inc. 3.5% 4/1/26 | 9,533 | 8,134 | ||
| 10,207 | |||
TOTAL CONSUMER DISCRETIONARY | 69,601 | |||
CONSUMER STAPLES - 5.5% | ||||
Beverages - 0.9% | ||||
Molson Coors Brewing Co. 2.5% 7/30/13 | 14,000 | 15,371 | ||
Food & Staples Retailing - 2.8% | ||||
Nash-Finch Co. 1.6314% 3/15/35 (e) | 34,480 | 13,299 | ||
Rite Aid Corp. 8.5% 5/15/15 | 9,100 | 6,325 | ||
The Great Atlantic & Pacific Tea Co.: | ||||
5.125% 6/15/11 | 18,000 | 12,600 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
CONSUMER STAPLES - continued | ||||
Food & Staples Retailing - continued | ||||
The Great Atlantic & Pacific Tea Co.: - continued | ||||
6.75% 12/15/12 | $ 12,000 | $ 7,560 | ||
The Pantry, Inc. 3% 11/15/12 | 14,000 | 11,176 | ||
| 50,960 | |||
Food Products - 1.8% | ||||
Smithfield Foods, Inc. 4% 6/30/13 | 22,250 | 18,390 | ||
Tyson Foods, Inc. 3.25% 10/15/13 | 13,000 | 13,742 | ||
| 32,132 | |||
TOTAL CONSUMER STAPLES | 98,463 | |||
ENERGY - 10.4% | ||||
Energy Equipment & Services - 1.7% | ||||
Global Industries Ltd. 2.75% 8/1/27 (g) | 10,000 | 4,700 | ||
Hercules Offshore, Inc. 3.375% 6/1/38 (g) | 20,000 | 10,976 | ||
Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (e)(g) | 5,000 | 4,223 | ||
Oil States International, Inc. 2.375% 7/1/25 (g) | 4,500 | 4,627 | ||
SESI LLC 1.5% 12/15/26 (e)(g) | 7,000 | 6,020 | ||
| 30,546 | |||
Oil, Gas & Consumable Fuels - 8.7% | ||||
Alpha Natural Resources, Inc. 2.375% 4/15/15 | 30,000 | 23,733 | ||
Chesapeake Energy Corp. 2.5% 5/15/37 | 35,250 | 26,015 | ||
Goodrich Petroleum Corp. 3.25% 12/1/26 | 6,000 | 5,056 | ||
Patriot Coal Corp. 3.25% 5/31/13 (g) | 6,000 | 3,308 | ||
Peabody Energy Corp. 4.75% 12/15/66 | 107,250 | 83,451 | ||
Quicksilver Resources, Inc. 1.875% 11/1/24 (g) | 14,500 | 14,410 | ||
| 155,973 | |||
TOTAL ENERGY | 186,519 | |||
FINANCIALS - 2.0% | ||||
Diversified Financial Services - 1.4% | ||||
The NASDAQ Stock Market, Inc. 2.5% 8/15/13 | 30,000 | 24,363 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
FINANCIALS - continued | ||||
Real Estate Investment Trusts - 0.6% | ||||
Ventas, Inc. 3.875% 11/15/11 (g) | $ 12,000 | $ 11,754 | ||
TOTAL FINANCIALS | 36,117 | |||
HEALTH CARE - 5.7% | ||||
Health Care Equipment & Supplies - 3.9% | ||||
Beckman Coulter, Inc. 2.5% 12/15/36 (g) | 8,500 | 8,351 | ||
Inverness Medical Innovations, Inc.: | ||||
3% 5/15/16 (g) | 21,000 | 19,688 | ||
3% 5/15/16 | 10,000 | 9,375 | ||
Kinetic Concepts, Inc. 3.25% 4/15/15 (g) | 15,000 | 11,589 | ||
Medtronic, Inc. 1.625% 4/15/13 | 16,000 | 14,681 | ||
SonoSite, Inc. 3.75% 7/15/14 | 7,000 | 6,114 | ||
| 69,798 | |||
Health Care Providers & Services - 0.3% | ||||
Omnicare, Inc. 3.25% 12/15/35 | 7,000 | 4,891 | ||
Life Sciences Tools & Services - 1.5% | ||||
Charles River Laboratories International, Inc. 2.25% 6/15/13 (g) | 4,000 | 3,586 | ||
Fisher Scientific International, Inc.: | ||||
2.5% 10/1/23 (g) | 3,300 | 5,482 | ||
2.5% 10/1/23 | 7,400 | 12,293 | ||
Nektar Therapeutics 3.25% 9/28/12 | 9,000 | 6,467 | ||
| 27,828 | |||
TOTAL HEALTH CARE | 102,517 | |||
INDUSTRIALS - 7.7% | ||||
Aerospace & Defense - 0.8% | ||||
Alliant Techsystems, Inc. 2.75% 9/15/11 | 14,000 | 14,790 | ||
Airlines - 1.1% | ||||
AirTran Holdings, Inc. 7% 7/1/23 | 10,000 | 9,400 | ||
UAL Corp.: | ||||
4.5% 6/30/21 (g) | 10,500 | 4,095 | ||
4.5% 6/30/21 | 5,000 | 1,950 | ||
US Airways Group, Inc. 7% 9/30/20 (g) | 4,810 | 3,944 | ||
| 19,389 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INDUSTRIALS - continued | ||||
Construction & Engineering - 0.4% | ||||
Quanta Services, Inc. 3.75% 4/30/26 (g) | $ 7,000 | $ 7,849 | ||
Electrical Equipment - 2.2% | ||||
C&D Technologies, Inc.: | ||||
5.25% 11/1/25 (g) | 4,400 | 2,695 | ||
5.25% 11/1/25 | 32,596 | 19,965 | ||
Evergreen Solar, Inc. 4% 7/15/13 | 4,000 | 1,445 | ||
General Cable Corp. 1% 10/15/12 (g) | 16,000 | 12,480 | ||
Sunpower Corp. 4.75% 4/15/14 | 2,020 | 2,511 | ||
| 39,096 | |||
Industrial Conglomerates - 0.1% | ||||
Textron, Inc. 4.5% 5/1/13 | 1,440 | 1,599 | ||
Machinery - 0.6% | ||||
Greenbrier Companies, Inc.: | ||||
2.375% 5/15/26 (g) | 5,500 | 2,214 | ||
2.375% 5/15/26 | 8,000 | 3,220 | ||
Terex Corp. 4% 6/1/15 | 1,090 | 1,143 | ||
Trinity Industries, Inc. 3.875% 6/1/36 | 7,000 | 3,868 | ||
| 10,445 | |||
Marine - 1.9% | ||||
Excel Maritime Carriers Ltd. 1.875% 10/15/27 (g) | 34,000 | 12,920 | ||
Horizon Lines, Inc. 4.25% 8/15/12 (g) | 35,000 | 21,746 | ||
| 34,666 | |||
Road & Rail - 0.6% | ||||
Hertz Global Holdings, Inc. 5.25% 6/1/14 | 10,000 | 10,147 | ||
TOTAL INDUSTRIALS | 137,981 | |||
INFORMATION TECHNOLOGY - 16.3% | ||||
Communications Equipment - 2.0% | ||||
Finisar Corp. 2.5% 10/15/10 | 15,760 | 9,149 | ||
JDS Uniphase Corp. 1% 5/15/26 (g) | 14,000 | 9,660 | ||
L-3 Communications Corp. 3% 8/1/35 | 3,000 | 2,948 | ||
Lucent Technologies, Inc. 2.875% 6/15/25 | 10,000 | 6,316 | ||
Nortel Networks Corp. 2.125% 4/15/14 (d)(g) | 10,000 | 2,875 | ||
Symmetricom, Inc. 3.25% 6/15/25 | 5,214 | 4,342 | ||
| 35,290 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Computers & Peripherals - 1.6% | ||||
EMC Corp. 1.75% 12/1/13 (g) | $ 17,000 | $ 16,625 | ||
Hutchinson Technology, Inc. 3.25% 1/15/26 | 11,000 | 3,960 | ||
SanDisk Corp. 1% 5/15/13 | 13,000 | 8,392 | ||
| 28,977 | |||
Electronic Equipment & Components - 1.8% | ||||
Anixter International, Inc. 1% 2/15/13 (g) | 4,540 | 3,865 | ||
Itron, Inc. 2.5% 8/1/26 | 7,000 | 7,912 | ||
Merix Corp.: | ||||
4% 5/15/13 (g) | 11,250 | 3,938 | ||
4% 5/15/13 | 7,600 | 2,660 | ||
Newport Corp. 2.5% 2/15/12 (g) | 3,750 | 2,814 | ||
SYNNEX Corp. 4% 5/15/18 (g) | 10,000 | 10,571 | ||
| 31,760 | |||
Internet Software & Services - 0.8% | ||||
GSI Commerce, Inc. 2.5% 6/1/27 (g) | 10,000 | 6,713 | ||
VeriSign, Inc. 3.25% 8/15/37 | 10,000 | 8,143 | ||
| 14,856 | |||
IT Services - 1.8% | ||||
Alliance Data Systems Corp. 1.75% 8/1/13 (g) | 14,788 | 10,807 | ||
BearingPoint, Inc. 3.1% 12/15/24 (g) | 8,000 | 4 | ||
CACI International, Inc. 2.125% 5/1/14 | 6,000 | 5,355 | ||
DST Systems, Inc. Series A, 4.125% 8/15/23 | 16,100 | 15,939 | ||
| 32,105 | |||
Semiconductors & Semiconductor Equipment - 7.7% | ||||
Advanced Micro Devices, Inc.: | ||||
5.75% 8/15/12 | 40,000 | 24,850 | ||
6% 5/1/15 | 15,000 | 7,200 | ||
Amkor Technology, Inc. 6% 4/15/14 (g) | 5,890 | 9,422 | ||
Conexant Systems, Inc. 4% 3/1/26 | 7,000 | 2,065 | ||
Intel Corp. 2.95% 12/15/35 | 48,000 | 39,264 | ||
LTX-Credence Corp. 3.5% 5/15/11 | 10,333 | 1,391 | ||
Micron Technology, Inc.: | ||||
1.875% 6/1/14 | 10,000 | 5,837 | ||
4.25% 10/15/13 | 1,130 | 1,326 | ||
ON Semiconductor Corp.: | ||||
1.875% 12/15/25 (g) | 3,750 | 4,152 | ||
2.625% 12/15/26 | 35,330 | 31,857 | ||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - continued | ||||
INFORMATION TECHNOLOGY - continued | ||||
Semiconductors & Semiconductor Equipment - continued | ||||
PMC-Sierra, Inc. 2.25% 10/15/25 | $ 10,000 | $ 10,426 | ||
Spansion, Inc. 2.25% 6/15/16 (d)(g) | 7,267 | 33 | ||
| 137,823 | |||
Software - 0.6% | ||||
Borland Software Corp. 2.75% 2/15/12 (g) | 6,000 | 5,625 | ||
Symantec Corp. 1% 6/15/13 | 5,000 | 5,089 | ||
| 10,714 | |||
TOTAL INFORMATION TECHNOLOGY | 291,525 | |||
MATERIALS - 0.5% | ||||
Metals & Mining - 0.5% | ||||
ArcelorMittal SA 5% 5/15/14 | 2,170 | 2,748 | ||
Newmont Mining Corp. 3% 2/15/12 | 2,120 | 2,620 | ||
United States Steel Corp. 4% 5/15/14 | 2,670 | 3,331 | ||
| 8,699 | |||
TELECOMMUNICATION SERVICES - 1.6% | ||||
Diversified Telecommunication Services - 0.8% | ||||
Level 3 Communications, Inc. 3.5% 6/15/12 | 16,000 | 9,498 | ||
Time Warner Telecom, Inc. 2.375% 4/1/26 | 6,000 | 5,333 | ||
| 14,831 | |||
Wireless Telecommunication Services - 0.8% | ||||
Leap Wireless International, Inc. 4.5% 7/15/14 (g) | 16,000 | 13,160 | ||
TOTAL TELECOMMUNICATION SERVICES | 27,991 | |||
TOTAL CONVERTIBLE BONDS | 959,413 | |||
Nonconvertible Bonds - 1.5% | ||||
CONSUMER DISCRETIONARY - 0.3% | ||||
Auto Components - 0.3% | ||||
TRW Automotive, Inc.: | ||||
7% 3/15/14 (g) | 1,300 | 956 | ||
7.25% 3/15/17 (g) | 6,230 | 4,361 | ||
| 5,317 | |||
Corporate Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
Nonconvertible Bonds - continued | ||||
CONSUMER STAPLES - 0.2% | ||||
Personal Products - 0.2% | ||||
Revlon Consumer Products Corp. 9.5% 4/1/11 | $ 3,745 | $ 3,314 | ||
FINANCIALS - 0.4% | ||||
Consumer Finance - 0.4% | ||||
GMAC LLC: | ||||
7.5% 12/31/13 (g) | 4,264 | 3,539 | ||
8% 12/31/18 (g) | 3,812 | 2,745 | ||
| 6,284 | |||
INFORMATION TECHNOLOGY - 0.6% | ||||
Semiconductors & Semiconductor Equipment - 0.6% | ||||
Amkor Technology, Inc.: | ||||
7.75% 5/15/13 | 1,995 | 1,786 | ||
9.25% 6/1/16 | 5,935 | 5,163 | ||
Freescale Semiconductor, Inc. 9.875% 12/15/14 pay-in-kind (h) | 20,000 | 4,689 | ||
| 11,638 | |||
TOTAL NONCONVERTIBLE BONDS | 26,553 | |||
TOTAL CORPORATE BONDS (Cost $1,234,619) | 985,966 |
Common Stocks - 10.8% | |||
Shares |
| ||
CONSUMER DISCRETIONARY - 0.9% | |||
Diversified Consumer Services - 0.4% | |||
Service Corp. International | 1,143,000 | 6,115 | |
Hotels, Restaurants & Leisure - 0.5% | |||
Domino's Pizza, Inc. (a) | 170,400 | 1,544 | |
Las Vegas Sands Corp. (a)(f) | 801,000 | 7,938 | |
| 9,482 | ||
TOTAL CONSUMER DISCRETIONARY | 15,597 | ||
ENERGY - 0.2% | |||
Oil, Gas & Consumable Fuels - 0.2% | |||
McMoRan Exploration Co. (a)(f) | 500,000 | 3,390 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - 8.4% | |||
Commercial Banks - 1.7% | |||
Huntington Bancshares, Inc. (f) | 5,820,500 | $ 22,816 | |
KeyCorp | 1,297,800 | 6,489 | |
| 29,305 | ||
Diversified Financial Services - 6.7% | |||
Bank of America Corp. | 10,622,385 | 119,710 | |
CIT Group, Inc. (f) | 136,300 | 522 | |
| 120,232 | ||
Thrifts & Mortgage Finance - 0.0% | |||
Washington Mutual, Inc. | 2,959,042 | 296 | |
TOTAL FINANCIALS | 149,833 | ||
INFORMATION TECHNOLOGY - 1.1% | |||
Electronic Equipment & Components - 0.0% | |||
L-1 Identity Solutions, Inc. (a) | 100,000 | 867 | |
Semiconductors & Semiconductor Equipment - 1.1% | |||
Amkor Technology, Inc. (a) | 843,200 | 3,828 | |
EMCORE Corp. (a)(f) | 172,258 | 226 | |
ON Semiconductor Corp. (a) | 2,169,500 | 14,861 | |
| 18,915 | ||
TOTAL INFORMATION TECHNOLOGY | 19,782 | ||
UTILITIES - 0.2% | |||
Independent Power Producers & Energy Traders - 0.2% | |||
NRG Energy, Inc. (a) | 200,000 | 4,500 | |
TOTAL COMMON STOCKS (Cost $208,268) | 193,102 | ||
Convertible Preferred Stocks - 28.5% | |||
|
|
|
|
CONSUMER DISCRETIONARY - 0.5% | |||
Automobiles - 0.5% | |||
Ford Motor Co. Capital Trust II 6.50% | 450,000 | 9,113 | |
CONSUMER STAPLES - 3.0% | |||
Food Products - 3.0% | |||
Archer Daniels Midland Co. 6.25% | 600,000 | 21,150 | |
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Food Products - continued | |||
Bunge Ltd.: | |||
4.875% | 237,000 | $ 19,521 | |
5.125% | 22,000 | 13,459 | |
| 54,130 | ||
ENERGY - 5.9% | |||
Oil, Gas & Consumable Fuels - 5.9% | |||
El Paso Corp. 4.99% (g) | 119,290 | 99,719 | |
Goodrich Petroleum Corp. 5.375% | 100,000 | 4,861 | |
| 104,580 | ||
FINANCIALS - 8.2% | |||
Commercial Banks - 6.2% | |||
Huntington Bancshares, Inc. 8.50% | 2,100 | 1,334 | |
KeyCorp Series A, 7.75% | 300,000 | 19,989 | |
Wells Fargo & Co. 7.50% | 120,550 | 89,810 | |
| 111,133 | ||
Diversified Financial Services - 2.0% | |||
Bank of America Corp. Series L, 7.25% | 47,085 | 35,785 | |
CIT Group, Inc. Series C, 8.75% | 25,300 | 604 | |
| 36,389 | ||
TOTAL FINANCIALS | 147,522 | ||
MATERIALS - 10.9% | |||
Chemicals - 4.5% | |||
Celanese Corp. 4.25% | 2,893,200 | 81,154 | |
Metals & Mining - 6.4% | |||
Freeport-McMoRan Copper & Gold, Inc.: | |||
5.50% | 18,400 | 22,274 | |
6.75% | 1,093,500 | 92,395 | |
| 114,669 | ||
TOTAL MATERIALS | 195,823 | ||
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $641,369) | 511,168 |
Floating Rate Loans - 0.7% | ||||
| Principal Amount (000s) | Value (000s) | ||
CONSUMER DISCRETIONARY - 0.1% | ||||
Media - 0.1% | ||||
Education Media and Publishing Group Ltd. Tranche 2LN, term loan 10.16% 12/12/14 (h) | $ 7,471 | $ 1,121 | ||
FINANCIALS - 0.4% | ||||
Diversified Financial Services - 0.4% | ||||
CCO Holdings, LLC Tranche 3LN, term loan 6.75% 9/6/14 (h) | 9,000 | 6,570 | ||
MATERIALS - 0.2% | ||||
Chemicals - 0.2% | ||||
Georgia Gulf Corp. term loan 8.911% 10/3/13 (h) | 6,605 | 4,491 | ||
TOTAL FLOATING RATE LOANS (Cost $17,656) | 12,182 |
Money Market Funds - 5.0% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.53% (b) | 69,302,548 | 69,303 | |
Fidelity Securities Lending Cash Central Fund, 0.28% (b)(c) | 20,552,025 | 20,552 | |
TOTAL MONEY MARKET FUNDS (Cost $89,855) | 89,855 | ||
Cash Equivalents - 0.0% | |||
Maturity Amount (000s) |
| ||
Investments in repurchase agreements in a joint trading account at 0.17%, dated 5/29/09 due 6/1/09 (Collateralized by U.S. Treasury Obligations) # | $ 22 | 22 | |
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $2,191,789) | 1,792,295 | ||
NET OTHER ASSETS - (0.1)% | (2,168) | ||
NET ASSETS - 100% | $ 1,790,127 |
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) Non-income producing - Issuer is in default. |
(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 $432,395,000 or 24.2% of net assets. |
(h) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. |
# Additional Information on each counterparty to the repurchase agreement is as follows: |
Repurchase Agreement / Counterparty | Value |
$22,000 due 6/01/09 at 0.17% | |
BNP Paribas Securities Corp. | $ 1 |
Bank of America, NA | 2 |
Barclays Capital, Inc. | 3 |
Deutsche Bank Securities, Inc. | 3 |
HSBC Securities (USA), Inc. | 3 |
ING Financial Markets LLC | 1 |
J.P. Morgan Securities, Inc. | 7 |
Mizuho Securities USA, Inc. | 1 |
Societe Generale, New York Branch | 1 |
| $ 22 |
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 | $ 148 |
Fidelity Securities Lending Cash Central Fund | 86 |
Total | $ 234 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2009, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 1,792,295 | $ 408,552 | $ 1,381,231 | $ 2,512 |
The following is a reconciliation of assets for which Level 3 inputs were used in determining value: |
(Amounts in thousands) | Investments in Securities |
Beginning Balance | $ 11,213 |
Total Realized Gain (Loss) | (7,308) |
Total Unrealized Gain (Loss) | 1,782 |
Cost of Purchases | 1,626 |
Proceeds of Sales | (1,178) |
Amortization/Accretion | 321 |
Transfer in/out of Level 3 | (3,944) |
Ending Balance | $ 2,512 |
The information used in the above reconciliation represents fiscal year to date activity for any Investment Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represents either the beginning value (for transfers in), or the ending value (for transfers out) of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. |
The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited): |
AAA,AA,A | 3.9% |
BBB | 3.4% |
BB | 10.8% |
B | 11.7% |
CCC,CC,C | 10.3% |
D | 0.4% |
Not Rated | 15.3% |
Equities | 39.3% |
Short-Term Investments and Net Other Assets | 4.9% |
| 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. All ratings are as of the report date and do not reflect subsequent downgrades. |
Income Tax Information |
At November 30, 2008, the fund had a capital loss carryforward of approximately $52,524,000 all of which will expire on November 30, 2016. |
The fund intends to elect to defer to its fiscal year ending November 30, 2009 approximately $89,513,000 of losses recognized during the period November 1, 2008 to November 30, 2008. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $19,554 and repurchase agreements of $22) - See accompanying schedule: Unaffiliated issuers (cost $2,101,934) | $ 1,702,440 |
|
Fidelity Central Funds (cost $89,855) | 89,855 |
|
Total Investments (cost $2,191,789) |
| $ 1,792,295 |
Receivable for investments sold | 3,564 | |
Receivable for fund shares sold | 3,960 | |
Dividends receivable | 3,989 | |
Interest receivable | 14,214 | |
Distributions receivable from Fidelity Central Funds | 53 | |
Prepaid expenses | 12 | |
Total assets | 1,818,087 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 5,017 | |
Payable for fund shares redeemed | 1,336 | |
Accrued management fee | 542 | |
Distribution fees payable | 1 | |
Other affiliated payables | 475 | |
Other payables and accrued expenses | 37 | |
Collateral on securities loaned, at value | 20,552 | |
Total liabilities | 27,960 | |
|
|
|
Net Assets | $ 1,790,127 | |
Net Assets consist of: |
| |
Paid in capital | $ 2,574,329 | |
Undistributed net investment income | 27,448 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (412,156) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (399,494) | |
Net Assets | $ 1,790,127 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Calculation of Maximum Offering Price | $ 17.51 | |
|
|
|
Maximum offering price per share (100/94.25 of $17.51) | $ 18.58 | |
Class T: | $ 17.50 | |
|
|
|
Maximum offering price per share (100/96.50 of $17.50) | $ 18.13 | |
Class B: | $ 17.48 | |
|
|
|
Class C: | $ 17.48 | |
|
|
|
Convertible Securities: | $ 17.52 | |
|
|
|
Institutional Class: | $ 17.52 |
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, 2009 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 32,964 |
Interest |
| 29,842 |
Income from Fidelity Central Funds |
| 234 |
Total income |
| 63,040 |
|
|
|
Expenses | ||
Management fee | $ 3,457 | |
Performance adjustment | (1,582) | |
Transfer agent fees | 2,190 | |
Distribution fees | 2 | |
Accounting and security lending fees | 247 | |
Custodian fees and expenses | 9 | |
Independent trustees' compensation | 6 | |
Registration fees | 113 | |
Audit | 45 | |
Legal | 11 | |
Miscellaneous | 19 | |
Total expenses before reductions | 4,517 | |
Expense reductions | (57) | 4,460 |
Net investment income (loss) | 58,580 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (264,817) | |
Foreign currency transactions | (14) | |
Total net realized gain (loss) |
| (264,831) |
Change in net unrealized appreciation (depreciation) on investment securities | 669,997 | |
Net gain (loss) | 405,166 | |
Net increase (decrease) in net assets resulting from operations | $ 463,746 |
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, 2009 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 58,580 | $ 86,298 |
Net realized gain (loss) | (264,831) | (146,923) |
Change in net unrealized appreciation (depreciation) | 669,997 | (1,573,541) |
Net increase (decrease) in net assets resulting | 463,746 | (1,634,166) |
Distributions to shareholders from net investment income | (62,825) | (70,992) |
Distributions to shareholders from net realized gain | - | (86,711) |
Total distributions | (62,825) | (157,703) |
Share transactions - net increase (decrease) | (49,978) | 312,218 |
Total increase (decrease) in net assets | 350,943 | (1,479,651) |
|
|
|
Net Assets | ||
Beginning of period | 1,439,184 | 2,918,835 |
End of period (including undistributed net investment income of $27,448 and undistributed net investment income of $31,693, respectively) | $ 1,790,127 | $ 1,439,184 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class A
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss)D | .27 |
Net realized and unrealized gain (loss) | 4.73 |
Total from investment operations | 5.00 |
Distributions from net investment income | (.28) |
Net asset value, end of period | $ 17.51 |
Total Return B, C | 39.54% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | .88% A |
Expenses net of fee waivers, if any | .88% A |
Expenses net of all reductions | .88% A |
Net investment income (loss) | 6.39% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 602 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the sales charges.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) D | .26 |
Net realized and unrealized gain (loss) | 4.73 |
Total from investment operations | 4.99 |
Distributions from net investment income | (.28) |
Net asset value, end of period | $ 17.50 |
Total Return B, C | 39.47% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | 1.08% A |
Expenses net of fee waivers, if any | 1.08% A |
Expenses net of all reductions | 1.08% A |
Net investment income (loss) | 6.14% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 755 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the sales charges.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) D | .24 |
Net realized and unrealized gain (loss) | 4.72 |
Total from investment operations | 4.96 |
Distributions from net investment income | (.27) |
Net asset value, end of period | $ 17.48 |
Total Return B, C | 39.23% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | 1.62% A |
Expenses net of fee waivers, if any | 1.62% A |
Expenses net of all reductions | 1.62% A |
Net investment income (loss) | 5.71% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 273 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the contingent deferred sales charge.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) D | .21 |
Net realized and unrealized gain (loss) | 4.75 |
Total from investment operations | 4.96 |
Distributions from net investment income | (.27) |
Net asset value, end of period | $ 17.48 |
Total Return B, C | 39.27% |
Ratios to Average Net Assets E, H |
|
Expenses before reductions | 1.59% A |
Expenses net of fee waivers, if any | 1.59% A |
Expenses net of all reductions | 1.59% A |
Net investment income (loss) | 5.02% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 640 |
Portfolio turnover rate F | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not include the effect of the contingent deferred sales charge.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Convertible Securities
| Six months ended May 31, 2009 | Years ended November 30, | ||||
(Unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 | $ 21.06 | $ 19.71 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .56 | .76 | .59 | .49 | .41 | .46 |
Net realized and unrealized gain (loss) | 4.02 | (14.43) | 3.43 | 3.09 | 1.03 | 1.55 |
Total from investment operations | 4.58 | (13.67) | 4.02 | 3.58 | 1.44 | 2.01 |
Distributions from net investment income | (.61) | (.64) | (.50) | (.50) | (.34) | (.66) |
Distributions from net realized gain | - | (.85) | (.02) | (.01) | (.02) | - |
Total distributions | (.61) | (1.49) | (.52) | (.51) | (.36) | (.66) |
Net asset value, end of period | $ 17.52 | $ 13.55 | $ 28.71 | $ 25.21 | $ 22.14 | $ 21.06 |
Total Return B, C | 35.11% | (50.09)% | 16.02% | 16.38% | 6.91% | 10.39% |
Ratios to Average Net Assets E, G |
|
|
|
|
| |
Expenses before reductions | .61% A | .78% | .79% | .83% | .70% | .67% |
Expenses net of fee waivers, if any | .60% A | .78% | .79% | .83% | .70% | .67% |
Expenses net of all reductions | .60% A | .78% | .79% | .83% | .69% | .66% |
Net investment income (loss) | 7.91% A | 3.06% | 2.11% | 2.09% | 1.95% | 2.26% |
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (in millions) | $ 1,787 | $ 1,439 | $ 2,919 | $ 2,083 | $ 1,754 | $ 1,835 |
Portfolio turnover rate F | 27% A | 39% | 24% | 35% | 81% | 112% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Institutional Class
| Period ended |
(Unaudited) | |
Selected Per-Share Data |
|
Net asset value, beginning of period | $ 12.79 |
Income from Investment Operations |
|
Net investment income (loss) C | .27 |
Net realized and unrealized gain (loss) | 4.74 |
Total from investment operations | 5.01 |
Distributions from net investment income | (.28) |
Net asset value, end of period | $ 17.52 |
Total Return B | 39.67% |
Ratios to Average Net Assets D, G |
|
Expenses before reductions | .59% A |
Expenses net of fee waivers, if any | .59% A |
Expenses net of all reductions | .59% A |
Net investment income (loss) | 6.37% A |
Supplemental Data |
|
Net assets, end of period (000 omitted) | $ 1,190 |
Portfolio turnover rate E | 27% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Calculated based on average shares outstanding during the period.
D 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.
E Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
F For the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of 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, 2009 (Unaudited)
1. Organization.
Fidelity Convertible Securities Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class B, Class C, Convertible Securities and Institutional Class shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. The Fund commenced sale of Class A, Class T, Class B, Class C, and Institutional Class shares and the existing class was designated Convertible Securities on February 19, 2009. In order to disclose class level financial information dollar amounts presented in the notes are unrounded. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
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, 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. Certain of the Fund's securities are valued at period end by a single source or dealer. 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of May 31, 2009, for the Fund's investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectability of interest is reasonably assured.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Semiannual Report
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 market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 80,236,636 |
Unrealized depreciation | (473,433,996) |
Net unrealized appreciation (depreciation) | $ (393,197,360) |
Cost for federal income tax purposes | $ 2,185,492,728 |
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.
Loans and Other Direct Debt Instruments. The Fund may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments, including revolving credit facilities, that obligate the Fund to
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
4. Operating Policies - continued
Loans and Other Direct Debt Instruments - continued
supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $194,429,517 and $301,930,440, 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 .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .15% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class of the Fund, Convertible Securities as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .25% 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.
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan - continued
For the period, the Distribution and Service Fee rates and the total amounts paid to and retained by FDC were as follows:
| Distribution | Service | Paid to | Retained |
Class A | -% | .25% | $ 144 | $ 86 |
Class T | .25% | .25% | 536 | 147 |
Class B | .75% | .25% | 494 | 450 |
Class C | .75% | .25% | 907 | 612 |
|
|
| $ 2,081 | $ 1,295 |
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 | $ 1,628 |
Class T | 76 |
Class C* | 571 |
| $ 2,275 |
* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees - continued
For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Class A | $ 182 | .32 |
Class T | 275 | .26 |
Class B | 146 | .30 |
Class C | 251 | .28 |
Convertible Securities | 2,189,074 | .30 |
Institutional Class | 398 | .27 |
| $ 2,190,326 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $7,148 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $4,631 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
Semiannual Report
8. Security Lending - continued
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 $85,818.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Convertible Securities operating expenses. During the period, this reimbursement reduced the Fund's expenses by $57,475.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income |
|
|
Class A | $ 2,698 | $ - |
Class T | 6,805 | - |
Class B | 2,799 | - |
Class C | 5,988 | - |
Convertible Securities | 62,801,283 | 70,991,794 |
Institutional Class | 5,728 | - |
Total | $ 62,825,301 | $ 70,991,794 |
From net realized gain |
|
|
Convertible Securities | $ - | $ 86,711,275 |
A Distributions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
11. 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 | 34,218 | - | $ 527,787 | $ - |
Reinvestment of distributions | 181 | - | 2,619 | - |
Net increase (decrease) | 34,399 | - | $ 530,406 | $ - |
Class T |
|
|
|
|
Shares sold | 43,804 | - | $ 632,602 | $ - |
Reinvestment of distributions | 450 | - | 6,498 | - |
Shares redeemed | (1,072) | - | (17,323) | - |
Net increase (decrease) | 43,182 | - | $ 621,777 | $ - |
Class B |
|
|
|
|
Shares sold | 15,521 | - | $ 213,523 | $ - |
Reinvestment of distributions | 194 | - | 2,799 | - |
Shares redeemed | (107) | - | (1,735) | - |
Net increase (decrease) | 15,608 | - | $ 214,587 | $ - |
Class C |
|
|
|
|
Shares sold | 40,485 | - | $ 587,508 | $ - |
Reinvestment of distributions | 415 | - | 5,988 | - |
Shares redeemed | (4,253) | - | (70,917) | - |
Net increase (decrease) | 36,647 | - | $ 522,579 | $ - |
Convertible Securities |
|
|
|
|
Shares sold | 15,173,844 | 47,041,632 | $ 218,986,744 | $ 1,227,244,254 |
Reinvestment of distributions | 4,101,191 | 5,508,343 | 56,373,483 | 144,171,892 |
Shares redeemed | (23,528,491) | (47,983,510) | (328,231,680) | (1,059,198,942) |
Net increase (decrease) | (4,253,456) | 4,566,465 | $ (52,871,453) | $ 312,217,204 |
Institutional Class |
|
|
|
|
Shares sold | 67,565 | - | $ 1,000,408 | $ - |
Reinvestment of distributions | 369 | - | 5,324 | - |
Net increase (decrease) | 67,934 | - | $ 1,005,732 | $ - |
A Share transactions for Class A, Class T, Class B, Class C and Institutional Class are for the period February 19, 2009 (commencement of sale of shares) to May 31, 2009.
Semiannual Report
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Research & Analysis Company
Fidelity Management & Research
(U.K.) Inc.
Fidelity Investments Japan Limited
Fidelity International
Investment Advisors
Fidelity International Investment
Advisors (U.K.) Limited
Fidelity Management & Research
Company (Hong Kong) Limited
Fidelity Management & Research
Company (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
ACVSI-USAN-0709 1.884061.100
Fidelity®
Equity-Income II
Fund
Semiannual Report
May 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
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 LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Although there has been some encouraging news in the capital markets this spring, many economic uncertainties remain - including still-weak corporate earnings and sluggish consumer spending - which could call into question the sustainability and overall strength of the markets' recent forward momentum. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help 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 can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today,
more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/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, 2008 to May 31, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Semiannual Report
Shareholder Expense Example - continued
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Equity-Income II | .78% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,031.10 | $ 3.95 |
Hypothetical A |
| $ 1,000.00 | $ 1,021.04 | $ 3.93 |
Class K | .56% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,033.00 | $ 2.84 |
Hypothetical A |
| $ 1,000.00 | $ 1,022.14 | $ 2.82 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of May 31, 2009 | ||
| % of fund's | % of fund's net assets |
JPMorgan Chase & Co. | 4.3 | 3.5 |
AT&T, Inc. | 3.8 | 1.5 |
Wells Fargo & Co. | 3.5 | 3.5 |
Exxon Mobil Corp. | 3.4 | 6.3 |
Chevron Corp. | 3.3 | 6.0 |
Bank of America Corp. | 2.6 | 1.4 |
ConocoPhillips | 2.0 | 2.2 |
Verizon Communications, Inc. | 1.9 | 2.0 |
Pfizer, Inc. | 1.8 | 0.0 |
Toll Brothers, Inc. | 1.7 | 1.7 |
| 28.3 | |
Top Five Market Sectors as of May 31, 2009 | ||
| % of fund's | % of fund's net assets |
Financials | 23.4 | 32.4 |
Energy | 17.3 | 17.7 |
Consumer Discretionary | 14.1 | 4.5 |
Industrials | 8.9 | 13.2 |
Health Care | 8.6 | 10.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2009 * | As of November 30, 2008 ** | ||||||
![]() | Stocks 97.5% |
| ![]() | Stocks 99.6% |
| ||
![]() | Convertible |
| ![]() | Convertible |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 10.4% |
| ** Foreign investments | 2.9% |
|
Semiannual Report
Investments May 31, 2009 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.5% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 13.8% | |||
Auto Components - 1.4% | |||
Gentex Corp. | 565,800 | $ 6,671 | |
Johnson Controls, Inc. | 1,450,000 | 28,899 | |
Magna International, Inc. Class A | 223,600 | 7,414 | |
The Goodyear Tire & Rubber Co. (a) | 2,228,400 | 25,515 | |
| 68,499 | ||
Automobiles - 0.5% | |||
Fiat SpA (a) | 943,300 | 10,132 | |
Harley-Davidson, Inc. (d) | 807,558 | 13,704 | |
| 23,836 | ||
Diversified Consumer Services - 0.5% | |||
H&R Block, Inc. | 1,793,200 | 26,181 | |
Hotels, Restaurants & Leisure - 0.4% | |||
Starbucks Corp. (a) | 1,379,200 | 19,847 | |
Household Durables - 3.1% | |||
Black & Decker Corp. | 314,029 | 10,071 | |
Lennar Corp. Class A | 334,900 | 3,185 | |
Newell Rubbermaid, Inc. | 1,684,800 | 19,392 | |
The Stanley Works | 279,800 | 9,989 | |
Toll Brothers, Inc. (a) | 4,600,000 | 85,468 | |
Whirlpool Corp. | 529,300 | 22,305 | |
| 150,410 | ||
Media - 2.9% | |||
Belo Corp. Series A | 912,073 | 1,642 | |
Comcast Corp. Class A | 2,378,600 | 32,753 | |
DreamWorks Animation SKG, Inc. Class A (a) | 64,018 | 1,784 | |
Informa PLC | 249,480 | 982 | |
Interpublic Group of Companies, Inc. (a) | 901,400 | 4,723 | |
Liberty Global, Inc. Class A (a) | 405,734 | 5,607 | |
Scripps Networks Interactive, Inc. Class A | 501,756 | 13,919 | |
The Walt Disney Co. | 1,001,800 | 24,264 | |
Time Warner, Inc. | 1,615,617 | 37,838 | |
Viacom, Inc. Class B (non-vtg.) (a) | 441,100 | 9,779 | |
Virgin Media, Inc. | 912,900 | 7,942 | |
| 141,233 | ||
Multiline Retail - 2.0% | |||
JCPenney Co., Inc. | 143,500 | 3,744 | |
Kohl's Corp. (a) | 1,036,071 | 44,002 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Multiline Retail - continued | |||
Macy's, Inc. | 837,319 | $ 9,780 | |
Target Corp. | 985,900 | 38,746 | |
| 96,272 | ||
Specialty Retail - 3.0% | |||
Home Depot, Inc. | 2,770,900 | 64,174 | |
Lowe's Companies, Inc. | 919,100 | 17,472 | |
OfficeMax, Inc. | 237,000 | 1,955 | |
RadioShack Corp. | 355,800 | 4,782 | |
Staples, Inc. | 1,783,700 | 36,477 | |
Tiffany & Co., Inc. | 565,400 | 16,040 | |
Williams-Sonoma, Inc. | 665,300 | 8,609 | |
| 149,509 | ||
Textiles, Apparel & Luxury Goods - 0.0% | |||
Liz Claiborne, Inc. | 523,482 | 2,356 | |
TOTAL CONSUMER DISCRETIONARY | 678,143 | ||
CONSUMER STAPLES - 5.9% | |||
Beverages - 1.3% | |||
Carlsberg AS Series B (d) | 511,788 | 32,680 | |
The Coca-Cola Co. | 663,100 | 32,598 | |
| 65,278 | ||
Food & Staples Retailing - 1.3% | |||
CVS Caremark Corp. | 474,800 | 14,149 | |
Wal-Mart Stores, Inc. | 672,000 | 33,425 | |
Walgreen Co. | 303,900 | 9,053 | |
Winn-Dixie Stores, Inc. (a) | 433,600 | 6,617 | |
| 63,244 | ||
Food Products - 0.9% | |||
Nestle SA (Reg.) | 666,265 | 24,263 | |
Tyson Foods, Inc. Class A | 1,464,769 | 19,511 | |
| 43,774 | ||
Household Products - 1.0% | |||
Kimberly-Clark Corp. | 458,700 | 23,802 | |
Procter & Gamble Co. | 527,800 | 27,414 | |
| 51,216 | ||
Personal Products - 0.5% | |||
Avon Products, Inc. | 839,804 | 22,305 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Tobacco - 0.9% | |||
Philip Morris International, Inc. | 1,048,059 | $ 44,689 | |
TOTAL CONSUMER STAPLES | 290,506 | ||
ENERGY - 17.3% | |||
Energy Equipment & Services - 3.1% | |||
BJ Services Co. | 388,100 | 6,070 | |
Halliburton Co. | 804,100 | 18,438 | |
Nabors Industries Ltd. (a) | 921,600 | 16,478 | |
Noble Corp. | 1,362,200 | 46,819 | |
Pride International, Inc. (a) | 401,529 | 9,725 | |
Schlumberger Ltd. (NY Shares) | 945,300 | 54,100 | |
| 151,630 | ||
Oil, Gas & Consumable Fuels - 14.2% | |||
Anadarko Petroleum Corp. | 175,898 | 8,404 | |
Apache Corp. | 396,100 | 33,375 | |
Chesapeake Energy Corp. | 219,300 | 4,969 | |
Chevron Corp. | 2,422,200 | 161,488 | |
ConocoPhillips | 2,177,100 | 99,798 | |
CONSOL Energy, Inc. | 222,500 | 9,158 | |
Devon Energy Corp. | 142,786 | 9,030 | |
El Paso Corp. | 194,651 | 1,898 | |
EOG Resources, Inc. | 482,486 | 35,313 | |
Exxon Mobil Corp. | 2,426,400 | 168,271 | |
Hess Corp. | 308,767 | 20,561 | |
Marathon Oil Corp. | 527,045 | 16,802 | |
Occidental Petroleum Corp. | 645,795 | 43,339 | |
Peabody Energy Corp. | 213,300 | 7,248 | |
Royal Dutch Shell PLC: | |||
Class A sponsored ADR | 1,014,700 | 54,702 | |
Class B ADR | 235,100 | 12,832 | |
Williams Companies, Inc. | 770,100 | 12,922 | |
| 700,110 | ||
TOTAL ENERGY | 851,740 | ||
FINANCIALS - 22.9% | |||
Capital Markets - 6.2% | |||
Bank of New York Mellon Corp. | 2,530,824 | 70,306 | |
Credit Suisse Group sponsored ADR | 672,900 | 30,166 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Goldman Sachs Group, Inc. | 581,000 | $ 83,995 | |
Morgan Stanley | 2,642,899 | 80,133 | |
State Street Corp. | 357,900 | 16,624 | |
T. Rowe Price Group, Inc. | 161,600 | 6,556 | |
UBS AG (NY Shares) | 1,091,300 | 16,402 | |
| 304,182 | ||
Commercial Banks - 6.4% | |||
Associated Banc-Corp. | 772,100 | 11,172 | |
Comerica, Inc. | 334,800 | 7,258 | |
Huntington Bancshares, Inc. | 385,900 | 1,513 | |
KeyCorp | 1,455,374 | 7,277 | |
Mitsubishi UFJ Financial Group, Inc. sponsored ADR | 3,591,900 | 22,773 | |
PNC Financial Services Group, Inc. | 1,376,500 | 62,700 | |
U.S. Bancorp, Delaware | 1,588,900 | 30,507 | |
Wells Fargo & Co. | 6,663,000 | 169,907 | |
| 313,107 | ||
Consumer Finance - 0.4% | |||
Capital One Financial Corp. | 507,100 | 12,394 | |
SLM Corp. (a) | 867,281 | 5,733 | |
| 18,127 | ||
Diversified Financial Services - 7.4% | |||
Bank of America Corp. | 11,373,473 | 128,179 | |
CIT Group, Inc. | 1,330,351 | 5,095 | |
Citigroup, Inc. (d) | 2,004,400 | 7,456 | |
CME Group, Inc. | 27,900 | 8,974 | |
JPMorgan Chase & Co. | 5,739,700 | 211,798 | |
| 361,502 | ||
Insurance - 1.9% | |||
ACE Ltd. | 680,000 | 29,913 | |
Hartford Financial Services Group, Inc. | 600,700 | 8,614 | |
MBIA, Inc. (a) | 300,630 | 1,939 | |
MetLife, Inc. | 326,200 | 10,275 | |
Montpelier Re Holdings Ltd. | 1,094,500 | 14,644 | |
The Travelers Companies, Inc. | 753,133 | 30,622 | |
| 96,007 | ||
Real Estate Investment Trusts - 0.4% | |||
HCP, Inc. | 572,600 | 13,301 | |
Senior Housing Properties Trust (SBI) | 472,882 | 7,921 | |
| 21,222 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - 0.2% | |||
New York Community Bancorp, Inc. (d) | 868,560 | $ 9,606 | |
TOTAL FINANCIALS | 1,123,753 | ||
HEALTH CARE - 8.3% | |||
Biotechnology - 0.6% | |||
Amgen, Inc. (a) | 606,900 | 30,309 | |
Health Care Equipment & Supplies - 0.7% | |||
Boston Scientific Corp. (a) | 1,329,105 | 12,494 | |
Covidien Ltd. | 544,000 | 19,432 | |
| 31,926 | ||
Health Care Providers & Services - 0.1% | |||
Fresenius Medical Care AG & Co. KGaA | 159,300 | 6,730 | |
Pharmaceuticals - 6.9% | |||
Abbott Laboratories | 318,600 | 14,356 | |
Bristol-Myers Squibb Co. | 1,046,046 | 20,837 | |
Johnson & Johnson | 961,700 | 53,047 | |
Merck & Co., Inc. | 1,530,600 | 42,214 | |
Pfizer, Inc. | 5,891,200 | 89,487 | |
Schering-Plough Corp. | 1,404,600 | 34,272 | |
Wyeth | 1,901,800 | 85,315 | |
| 339,528 | ||
TOTAL HEALTH CARE | 408,493 | ||
INDUSTRIALS - 8.8% | |||
Aerospace & Defense - 2.9% | |||
General Dynamics Corp. | 167,083 | 9,507 | |
Honeywell International, Inc. | 1,645,700 | 54,571 | |
Spirit AeroSystems Holdings, Inc. Class A (a) | 756,800 | 10,406 | |
The Boeing Co. | 514,717 | 23,085 | |
United Technologies Corp. | 831,728 | 43,757 | |
| 141,326 | ||
Building Products - 0.3% | |||
Masco Corp. | 1,254,600 | 12,998 | |
Commercial Services & Supplies - 0.2% | |||
Avery Dennison Corp. | 399,500 | 11,010 | |
Electrical Equipment - 0.1% | |||
Rockwell Automation, Inc. | 146,500 | 4,496 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Industrial Conglomerates - 2.9% | |||
General Electric Co. | 4,663,100 | $ 62,859 | |
Rheinmetall AG | 287,642 | 11,980 | |
Siemens AG sponsored ADR | 514,300 | 37,770 | |
Textron, Inc. | 1,326,600 | 15,256 | |
Tyco International Ltd. | 621,400 | 17,157 | |
| 145,022 | ||
Machinery - 1.9% | |||
Briggs & Stratton Corp. | 208,902 | 3,175 | |
Caterpillar, Inc. | 147,200 | 5,220 | |
Cummins, Inc. | 412,900 | 13,390 | |
Danaher Corp. | 292,400 | 17,646 | |
Eaton Corp. | 382,200 | 16,626 | |
Illinois Tool Works, Inc. | 288,772 | 9,324 | |
Ingersoll-Rand Co. Ltd. Class A | 585,553 | 11,846 | |
Kennametal, Inc. | 445,800 | 8,417 | |
SPX Corp. | 107,600 | 4,940 | |
Vallourec SA | 39,900 | 5,043 | |
| 95,627 | ||
Professional Services - 0.1% | |||
Equifax, Inc. | 179,509 | 4,886 | |
Road & Rail - 0.4% | |||
Burlington Northern Santa Fe Corp. | 88,500 | 6,411 | |
Union Pacific Corp. | 265,200 | 13,066 | |
| 19,477 | ||
TOTAL INDUSTRIALS | 434,842 | ||
INFORMATION TECHNOLOGY - 8.2% | |||
Communications Equipment - 1.1% | |||
Cisco Systems, Inc. (a) | 2,230,400 | 41,262 | |
Motorola, Inc. | 2,080,892 | 12,610 | |
| 53,872 | ||
Computers & Peripherals - 1.5% | |||
Dell, Inc. (a) | 479,800 | 5,556 | |
Hewlett-Packard Co. | 1,173,355 | 40,305 | |
International Business Machines Corp. | 243,300 | 25,858 | |
| 71,719 | ||
Electronic Equipment & Components - 0.7% | |||
Arrow Electronics, Inc. (a) | 237,538 | 5,746 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Electronic Equipment & Components - continued | |||
Avnet, Inc. (a) | 475,100 | $ 10,932 | |
Tyco Electronics Ltd. | 1,152,971 | 20,027 | |
| 36,705 | ||
IT Services - 0.3% | |||
MoneyGram International, Inc. (a) | 340,342 | 562 | |
The Western Union Co. | 758,764 | 13,377 | |
| 13,939 | ||
Office Electronics - 0.1% | |||
Xerox Corp. | 1,005,780 | 6,839 | |
Semiconductors & Semiconductor Equipment - 2.9% | |||
Analog Devices, Inc. | 868,993 | 21,212 | |
Applied Materials, Inc. | 3,100,000 | 34,906 | |
Intel Corp. | 3,490,800 | 54,875 | |
Micron Technology, Inc. (a) | 1,472,300 | 7,450 | |
National Semiconductor Corp. | 1,678,202 | 23,293 | |
| 141,736 | ||
Software - 1.6% | |||
Microsoft Corp. | 1,494,254 | 31,215 | |
Oracle Corp. | 1,600,000 | 31,344 | |
Symantec Corp. (a) | 1,029,833 | 16,055 | |
| 78,614 | ||
TOTAL INFORMATION TECHNOLOGY | 403,424 | ||
MATERIALS - 1.5% | |||
Chemicals - 0.7% | |||
Dow Chemical Co. | 414,932 | 7,336 | |
E.I. du Pont de Nemours & Co. | 782,009 | 22,264 | |
H.B. Fuller Co. | 370,276 | 6,302 | |
| 35,902 | ||
Metals & Mining - 0.8% | |||
Alcoa, Inc. | 1,207,232 | 11,131 | |
Commercial Metals Co. | 496,300 | 8,422 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 128,200 | 6,978 | |
Nucor Corp. | 249,600 | 10,960 | |
| 37,491 | ||
TOTAL MATERIALS | 73,393 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
TELECOMMUNICATION SERVICES - 7.2% | |||
Diversified Telecommunication Services - 6.5% | |||
AT&T, Inc. | 7,590,700 | $ 188,173 | |
Qwest Communications International, Inc. (d) | 8,350,400 | 36,408 | |
Verizon Communications, Inc. | 3,165,600 | 92,625 | |
| 317,206 | ||
Wireless Telecommunication Services - 0.7% | |||
Sprint Nextel Corp. (a) | 3,645,347 | 18,774 | |
Vodafone Group PLC sponsored ADR | 814,900 | 15,336 | |
| 34,110 | ||
TOTAL TELECOMMUNICATION SERVICES | 351,316 | ||
UTILITIES - 3.6% | |||
Electric Utilities - 1.7% | |||
Allegheny Energy, Inc. | 1,054,100 | 26,353 | |
Entergy Corp. | 400,500 | 29,885 | |
Exelon Corp. | 574,401 | 27,577 | |
| 83,815 | ||
Independent Power Producers & Energy Traders - 0.5% | |||
AES Corp. (a) | 2,279,900 | 22,776 | |
Multi-Utilities - 1.4% | |||
Public Service Enterprise Group, Inc. | 1,334,900 | 42,543 | |
Wisconsin Energy Corp. | 678,500 | 26,774 | |
| 69,317 | ||
TOTAL UTILITIES | 175,908 | ||
TOTAL COMMON STOCKS (Cost $4,775,454) | 4,791,518 | ||
Convertible Preferred Stocks - 1.1% | |||
|
|
|
|
FINANCIALS - 0.5% | |||
Commercial Banks - 0.1% | |||
Huntington Bancshares, Inc. 8.50% | 7,600 | 4,826 | |
Diversified Financial Services - 0.3% | |||
Citigroup, Inc. Series T, 6.50% | 370,400 | 14,422 | |
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Insurance - 0.1% | |||
American International Group, Inc. Series A, 8.50% | 466,700 | $ 4,154 | |
TOTAL FINANCIALS | 23,402 | ||
HEALTH CARE - 0.3% | |||
Pharmaceuticals - 0.3% | |||
Schering-Plough Corp. 6.00% | 76,000 | 16,591 | |
MATERIALS - 0.3% | |||
Metals & Mining - 0.3% | |||
Freeport-McMoRan Copper & Gold, Inc. 6.75% | 190,100 | 16,062 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $71,416) | 56,055 |
Convertible Bonds - 0.7% | ||||
| Principal Amount (000s) |
| ||
CONSUMER DISCRETIONARY - 0.3% | ||||
Auto Components - 0.1% | ||||
Johnson Controls, Inc. 6.5% 9/30/12 | $ 3,430 | 6,353 | ||
Diversified Consumer Services - 0.0% | ||||
Ingersoll-Rand Global Holding Co. Ltd. 4.5% 4/15/12 | 1,260 | 1,642 | ||
Hotels, Restaurants & Leisure - 0.1% | ||||
International Game Technology 3.25% 5/1/14 (e) | 2,250 | 2,503 | ||
Household Durables - 0.1% | ||||
Newell Rubbermaid, Inc. 5.5% 3/15/14 | 1,450 | 2,208 | ||
TOTAL CONSUMER DISCRETIONARY | 12,706 | |||
INDUSTRIALS - 0.1% | ||||
Electrical Equipment - 0.0% | ||||
Sunpower Corp. 4.75% 4/15/14 | 1,350 | 1,678 | ||
Industrial Conglomerates - 0.1% | ||||
Textron, Inc. 4.5% 5/1/13 | 1,840 | 2,043 | ||
Road & Rail - 0.0% | ||||
Hertz Global Holdings, Inc. 5.25% 6/1/14 | 2,005 | 2,034 | ||
TOTAL INDUSTRIALS | 5,755 | |||
Convertible Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
INFORMATION TECHNOLOGY - 0.0% | ||||
Semiconductors & Semiconductor Equipment - 0.0% | ||||
Micron Technology, Inc. 4.25% 10/15/13 | $ 1,820 | $ 2,136 | ||
MATERIALS - 0.3% | ||||
Metals & Mining - 0.3% | ||||
Alcoa, Inc. 5.25% 3/15/14 | 3,210 | 5,104 | ||
ArcelorMittal SA 5% 5/15/14 | 2,570 | 3,254 | ||
United States Steel Corp. 4% 5/15/14 | 4,290 | 5,352 | ||
| 13,710 | |||
TOTAL CONVERTIBLE BONDS (Cost $25,475) | 34,307 |
Money Market Funds - 1.6% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.53% (b) | 16,390,608 | 16,391 | |
Fidelity Securities Lending Cash Central Fund, 0.28% (b)(c) | 62,371,167 | 62,371 | |
TOTAL MONEY MARKET FUNDS (Cost $78,762) | 78,762 | ||
TOTAL INVESTMENT PORTFOLIO - 100.9% (Cost $4,951,107) | 4,960,642 | ||
NET OTHER ASSETS - (0.9)% | (45,479) | ||
NET ASSETS - 100% | $ 4,915,163 |
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) 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 $2,503,000 or 0.1% of net assets. |
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 | $ 123 |
Fidelity Securities Lending Cash Central Fund | 1,076 |
Total | $ 1,199 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2009, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 4,960,642 | $ 4,778,470 | $ 182,172 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.6% |
Switzerland | 3.4% |
United Kingdom | 1.7% |
Bermuda | 1.3% |
Germany | 1.1% |
Netherlands Antilles | 1.1% |
Others (individually less than 1%) | 1.8% |
| 100.0% |
Income Tax Information |
At November 30, 2008, the fund had a capital loss carryforward of approximately $1,317,781,000 all of which will expire on November 30, 2016. |
The fund intends to elect to defer to its fiscal year ending November 30, 2009 approximately $388,181,000 of losses recognized during the period November 1, 2008 to November 30, 2008. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $60,972) - See accompanying schedule: Unaffiliated issuers (cost $4,872,345) | $ 4,881,880 |
|
Fidelity Central Funds (cost $78,762) | 78,762 |
|
Total Investments (cost $4,951,107) |
| $ 4,960,642 |
Receivable for investments sold | 8,856 | |
Receivable for fund shares sold | 1,404 | |
Dividends receivable | 13,934 | |
Interest receivable | 144 | |
Distributions receivable from Fidelity Central Funds | 427 | |
Prepaid expenses | 39 | |
Other receivables | 251 | |
Total assets | 4,985,697 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,665 | |
Payable for fund shares redeemed | 3,258 | |
Accrued management fee | 1,875 | |
Other affiliated payables | 1,108 | |
Other payables and accrued expenses | 257 | |
Collateral on securities loaned, at value | 62,371 | |
Total liabilities | 70,534 | |
|
|
|
Net Assets | $ 4,915,163 | |
Net Assets consist of: |
| |
Paid in capital | $ 7,554,414 | |
Undistributed net investment income | 9,675 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,658,462) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 9,536 | |
Net Assets | $ 4,915,163 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Equity-Income II: Net Asset Value, offering price and redemption price per share ($4,724,928 ÷ 348,634 shares) | $ 13.55 | |
|
|
|
Class K: | $ 13.56 |
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, 2009 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 74,344 |
Interest |
| 147 |
Income from Fidelity Central Funds |
| 1,199 |
Total income |
| 75,690 |
|
|
|
Expenses | ||
Management fee | $ 10,772 | |
Transfer agent fees | 6,182 | |
Accounting and security lending fees | 582 | |
Custodian fees and expenses | 51 | |
Independent trustees' compensation | 18 | |
Registration fees | 38 | |
Audit | 44 | |
Legal | 14 | |
Interest | 3 | |
Miscellaneous | 62 | |
Total expenses before reductions | 17,766 | |
Expense reductions | (36) | 17,730 |
Net investment income (loss) | 57,960 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (844,448) | |
Foreign currency transactions | 30 | |
Total net realized gain (loss) |
| (844,418) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 875,269 | |
Assets and liabilities in foreign currencies | 1 | |
Total change in net unrealized appreciation (depreciation) |
| 875,270 |
Net gain (loss) | 30,852 | |
Net increase (decrease) in net assets resulting from operations | $ 88,812 |
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, 2009 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 57,960 | $ 143,404 |
Net realized gain (loss) | (844,418) | (1,804,306) |
Change in net unrealized appreciation (depreciation) | 875,270 | (2,333,977) |
Net increase (decrease) in net assets resulting | 88,812 | (3,994,879) |
Distributions to shareholders from net investment income | (64,949) | (154,072) |
Distributions to shareholders from net realized gain | - | (530,265) |
Total distributions | (64,949) | (684,337) |
Share transactions - net increase (decrease) | (474,812) | (484,222) |
Total increase (decrease) in net assets | (450,949) | (5,163,438) |
|
|
|
Net Assets | ||
Beginning of period | 5,366,112 | 10,529,550 |
End of period (including undistributed net investment income of $9,675 and undistributed net investment income of $16,664, respectively) | $ 4,915,163 | $ 5,366,112 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Equity-Income II
| Six months ended | Years ended November 30, | ||||
(Unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 13.32 | $ 24.29 | $ 25.12 | $ 24.57 | $ 23.90 | $ 21.52 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .15 | .33 | .33 | .35 | .35 | .35 G |
Net realized and unrealized gain (loss) | .25 | (9.72) | 1.29 | 2.44 | 1.36 | 2.49 |
Total from investment operations | .40 | (9.39) | 1.62 | 2.79 | 1.71 | 2.84 |
Distributions from net investment income | (.17) | (.36) | (.38) | (.33) | (.41) | (.29) |
Distributions from net realized gain | - | (1.22) | (2.07) | (1.91) | (.63) | (.17) |
Total distributions | (.17) | (1.58) | (2.45) | (2.24) | (1.04) | (.46) |
Net asset value, end of period | $ 13.55 | $ 13.32 | $ 24.29 | $ 25.12 | $ 24.57 | $ 23.90 |
Total Return B, C | 3.11% | (41.13)% | 6.90% | 12.28% | 7.41% | 13.32% |
Ratios to Average Net Assets E, H |
|
|
|
|
| |
Expenses before reductions | .78% A | .67% | .65% | .67% | .68% | .68% |
Expenses net of fee waivers, if any | .78% A | .67% | .65% | .67% | .68% | .68% |
Expenses net of all reductions | .78% A | .67% | .65% | .66% | .62% | .64% |
Net investment income (loss) | 2.50% A | 1.70% | 1.34% | 1.50% | 1.49% | 1.56% |
Supplemental Data |
|
|
|
|
| |
Net assets, end of period (in millions) | $ 4,725 | $ 5,212 | $ 10,530 | $ 11,635 | $ 12,248 | $ 12,632 |
Portfolio turnover rate F | 125% A | 76% | 47% | 160% | 143% | 123% |
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 Investment income per share reflects a special dividend which amounted to $.06 per share.
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. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class K
| Six months ended | Year ended November 30, |
(Unaudited) | 2008 G | |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 13.32 | $ 21.42 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .16 | .17 |
Net realized and unrealized gain (loss) | .26 | (8.08) |
Total from investment operations | .42 | (7.91) |
Distributions from net investment income | (.18) | (.19) |
Net asset value, end of period | $ 13.56 | $ 13.32 |
Total Return B, C | 3.30% | (37.13)% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .56% A | .54% A |
Expenses net of fee waivers, if any | .56% A | .54% A |
Expenses net of all reductions | .56% A | .54% A |
Net investment income (loss) | 2.72% A | 2.11% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 190 | $ 154 |
Portfolio turnover rate F | 125% A | 76% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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, 2009 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Equity-Income II Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Equity-Income II and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. After the commencement of Class K, the Fund began offering conversion privileges between Equity-Income II and Class K to eligible shareholders of Equity-Income II. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Security Valuation - continued
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, 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of May 31, 2009, for the Fund's investments, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
Semiannual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 564,074 |
|
Unrealized depreciation | (614,521) |
|
Net unrealized appreciation (depreciation) | $ (50,447) |
|
Cost for federal income tax purposes | $ 5,011,089 |
|
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 $2,894,028 and $3,386,131, 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 .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .47% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Equity-Income II. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Equity-Income II | $ 6,131 | .28 |
Class K | 51 | .06 |
| $ 6,182 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $113 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily Loan Balance | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 8,565 | .32% | $ 3 |
Semiannual Report
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $15 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 $1,076.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Equity-Income II's operating expenses. During the period, this reimbursement reduced the class' expenses by $1.
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 $35 for the period.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended | Year ended |
From net investment income |
|
|
Equity-Income II | $ 62,657 | $ 153,404 |
Class K | 2,292 | 668 |
Total | $ 64,949 | $ 154,072 |
From net realized gain |
|
|
Equity-Income II | $ - | $ 530,265 |
A Distributions for Class K are for the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Six months ended May 31, | Year ended | Six months ended May 31, | Year ended | |
Equity-Income II |
|
|
|
|
Shares sold | 13,016 | 36,424 | $ 154,378 | $ 723,646 |
Conversion to Class K | (1,316) | (11,240) | (16,026) | (186,499) |
Reinvestment of distributions | 4,781 | 29,836 | 59,539 | 653,499 |
Shares redeemed | (59,241) | (97,158) | (707,930) | (1,866,146) |
Net increase (decrease) | (42,760) | (42,138) | $ (510,039) | $ (675,500) |
Class K |
|
|
|
|
Shares sold | 3,768 | 731 | $ 47,168 | $ 10,900 |
Conversion from Equity-Income II | 1,315 | 11,236 | 16,026 | 186,499 |
Reinvestment of distributions | 185 | 41 | 2,292 | 668 |
Shares redeemed | (2,778) | (464) | (30,259) | (6,789) |
Net increase (decrease) | 2,490 | 11,544 | $ 35,227 | $ 191,278 |
A Share transactions for Class K are for the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
FIL Investment Advisors
Fidelity Investments Japan Limited
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Northern Trust Company
Chicago, IL
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
EII-USAN-0709 1.786811.106
Fidelity®
Equity-Income II
Fund -
Class K
Semiannual Report
May 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
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 LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Although there has been some encouraging news in the capital markets this spring, many economic uncertainties remain - including still-weak corporate earnings and sluggish consumer spending - which could call into question the sustainability and overall strength of the markets' recent forward momentum. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help 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 can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today,
more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/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, 2008 to May 31, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Semiannual Report
Shareholder Expense Example - continued
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Equity-Income II | .78% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,031.10 | $ 3.95 |
Hypothetical A |
| $ 1,000.00 | $ 1,021.04 | $ 3.93 |
Class K | .56% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,033.00 | $ 2.84 |
Hypothetical A |
| $ 1,000.00 | $ 1,022.14 | $ 2.82 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of May 31, 2009 | ||
| % of fund's | % of fund's net assets |
JPMorgan Chase & Co. | 4.3 | 3.5 |
AT&T, Inc. | 3.8 | 1.5 |
Wells Fargo & Co. | 3.5 | 3.5 |
Exxon Mobil Corp. | 3.4 | 6.3 |
Chevron Corp. | 3.3 | 6.0 |
Bank of America Corp. | 2.6 | 1.4 |
ConocoPhillips | 2.0 | 2.2 |
Verizon Communications, Inc. | 1.9 | 2.0 |
Pfizer, Inc. | 1.8 | 0.0 |
Toll Brothers, Inc. | 1.7 | 1.7 |
| 28.3 | |
Top Five Market Sectors as of May 31, 2009 | ||
| % of fund's | % of fund's net assets |
Financials | 23.4 | 32.4 |
Energy | 17.3 | 17.7 |
Consumer Discretionary | 14.1 | 4.5 |
Industrials | 8.9 | 13.2 |
Health Care | 8.6 | 10.6 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2009 * | As of November 30, 2008 ** | ||||||
![]() | Stocks 97.5% |
| ![]() | Stocks 99.6% |
| ||
![]() | Convertible |
| ![]() | Convertible |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 10.4% |
| ** Foreign investments | 2.9% |
|
Semiannual Report
Investments May 31, 2009 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.5% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 13.8% | |||
Auto Components - 1.4% | |||
Gentex Corp. | 565,800 | $ 6,671 | |
Johnson Controls, Inc. | 1,450,000 | 28,899 | |
Magna International, Inc. Class A | 223,600 | 7,414 | |
The Goodyear Tire & Rubber Co. (a) | 2,228,400 | 25,515 | |
| 68,499 | ||
Automobiles - 0.5% | |||
Fiat SpA (a) | 943,300 | 10,132 | |
Harley-Davidson, Inc. (d) | 807,558 | 13,704 | |
| 23,836 | ||
Diversified Consumer Services - 0.5% | |||
H&R Block, Inc. | 1,793,200 | 26,181 | |
Hotels, Restaurants & Leisure - 0.4% | |||
Starbucks Corp. (a) | 1,379,200 | 19,847 | |
Household Durables - 3.1% | |||
Black & Decker Corp. | 314,029 | 10,071 | |
Lennar Corp. Class A | 334,900 | 3,185 | |
Newell Rubbermaid, Inc. | 1,684,800 | 19,392 | |
The Stanley Works | 279,800 | 9,989 | |
Toll Brothers, Inc. (a) | 4,600,000 | 85,468 | |
Whirlpool Corp. | 529,300 | 22,305 | |
| 150,410 | ||
Media - 2.9% | |||
Belo Corp. Series A | 912,073 | 1,642 | |
Comcast Corp. Class A | 2,378,600 | 32,753 | |
DreamWorks Animation SKG, Inc. Class A (a) | 64,018 | 1,784 | |
Informa PLC | 249,480 | 982 | |
Interpublic Group of Companies, Inc. (a) | 901,400 | 4,723 | |
Liberty Global, Inc. Class A (a) | 405,734 | 5,607 | |
Scripps Networks Interactive, Inc. Class A | 501,756 | 13,919 | |
The Walt Disney Co. | 1,001,800 | 24,264 | |
Time Warner, Inc. | 1,615,617 | 37,838 | |
Viacom, Inc. Class B (non-vtg.) (a) | 441,100 | 9,779 | |
Virgin Media, Inc. | 912,900 | 7,942 | |
| 141,233 | ||
Multiline Retail - 2.0% | |||
JCPenney Co., Inc. | 143,500 | 3,744 | |
Kohl's Corp. (a) | 1,036,071 | 44,002 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - continued | |||
Multiline Retail - continued | |||
Macy's, Inc. | 837,319 | $ 9,780 | |
Target Corp. | 985,900 | 38,746 | |
| 96,272 | ||
Specialty Retail - 3.0% | |||
Home Depot, Inc. | 2,770,900 | 64,174 | |
Lowe's Companies, Inc. | 919,100 | 17,472 | |
OfficeMax, Inc. | 237,000 | 1,955 | |
RadioShack Corp. | 355,800 | 4,782 | |
Staples, Inc. | 1,783,700 | 36,477 | |
Tiffany & Co., Inc. | 565,400 | 16,040 | |
Williams-Sonoma, Inc. | 665,300 | 8,609 | |
| 149,509 | ||
Textiles, Apparel & Luxury Goods - 0.0% | |||
Liz Claiborne, Inc. | 523,482 | 2,356 | |
TOTAL CONSUMER DISCRETIONARY | 678,143 | ||
CONSUMER STAPLES - 5.9% | |||
Beverages - 1.3% | |||
Carlsberg AS Series B (d) | 511,788 | 32,680 | |
The Coca-Cola Co. | 663,100 | 32,598 | |
| 65,278 | ||
Food & Staples Retailing - 1.3% | |||
CVS Caremark Corp. | 474,800 | 14,149 | |
Wal-Mart Stores, Inc. | 672,000 | 33,425 | |
Walgreen Co. | 303,900 | 9,053 | |
Winn-Dixie Stores, Inc. (a) | 433,600 | 6,617 | |
| 63,244 | ||
Food Products - 0.9% | |||
Nestle SA (Reg.) | 666,265 | 24,263 | |
Tyson Foods, Inc. Class A | 1,464,769 | 19,511 | |
| 43,774 | ||
Household Products - 1.0% | |||
Kimberly-Clark Corp. | 458,700 | 23,802 | |
Procter & Gamble Co. | 527,800 | 27,414 | |
| 51,216 | ||
Personal Products - 0.5% | |||
Avon Products, Inc. | 839,804 | 22,305 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - continued | |||
Tobacco - 0.9% | |||
Philip Morris International, Inc. | 1,048,059 | $ 44,689 | |
TOTAL CONSUMER STAPLES | 290,506 | ||
ENERGY - 17.3% | |||
Energy Equipment & Services - 3.1% | |||
BJ Services Co. | 388,100 | 6,070 | |
Halliburton Co. | 804,100 | 18,438 | |
Nabors Industries Ltd. (a) | 921,600 | 16,478 | |
Noble Corp. | 1,362,200 | 46,819 | |
Pride International, Inc. (a) | 401,529 | 9,725 | |
Schlumberger Ltd. (NY Shares) | 945,300 | 54,100 | |
| 151,630 | ||
Oil, Gas & Consumable Fuels - 14.2% | |||
Anadarko Petroleum Corp. | 175,898 | 8,404 | |
Apache Corp. | 396,100 | 33,375 | |
Chesapeake Energy Corp. | 219,300 | 4,969 | |
Chevron Corp. | 2,422,200 | 161,488 | |
ConocoPhillips | 2,177,100 | 99,798 | |
CONSOL Energy, Inc. | 222,500 | 9,158 | |
Devon Energy Corp. | 142,786 | 9,030 | |
El Paso Corp. | 194,651 | 1,898 | |
EOG Resources, Inc. | 482,486 | 35,313 | |
Exxon Mobil Corp. | 2,426,400 | 168,271 | |
Hess Corp. | 308,767 | 20,561 | |
Marathon Oil Corp. | 527,045 | 16,802 | |
Occidental Petroleum Corp. | 645,795 | 43,339 | |
Peabody Energy Corp. | 213,300 | 7,248 | |
Royal Dutch Shell PLC: | |||
Class A sponsored ADR | 1,014,700 | 54,702 | |
Class B ADR | 235,100 | 12,832 | |
Williams Companies, Inc. | 770,100 | 12,922 | |
| 700,110 | ||
TOTAL ENERGY | 851,740 | ||
FINANCIALS - 22.9% | |||
Capital Markets - 6.2% | |||
Bank of New York Mellon Corp. | 2,530,824 | 70,306 | |
Credit Suisse Group sponsored ADR | 672,900 | 30,166 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Goldman Sachs Group, Inc. | 581,000 | $ 83,995 | |
Morgan Stanley | 2,642,899 | 80,133 | |
State Street Corp. | 357,900 | 16,624 | |
T. Rowe Price Group, Inc. | 161,600 | 6,556 | |
UBS AG (NY Shares) | 1,091,300 | 16,402 | |
| 304,182 | ||
Commercial Banks - 6.4% | |||
Associated Banc-Corp. | 772,100 | 11,172 | |
Comerica, Inc. | 334,800 | 7,258 | |
Huntington Bancshares, Inc. | 385,900 | 1,513 | |
KeyCorp | 1,455,374 | 7,277 | |
Mitsubishi UFJ Financial Group, Inc. sponsored ADR | 3,591,900 | 22,773 | |
PNC Financial Services Group, Inc. | 1,376,500 | 62,700 | |
U.S. Bancorp, Delaware | 1,588,900 | 30,507 | |
Wells Fargo & Co. | 6,663,000 | 169,907 | |
| 313,107 | ||
Consumer Finance - 0.4% | |||
Capital One Financial Corp. | 507,100 | 12,394 | |
SLM Corp. (a) | 867,281 | 5,733 | |
| 18,127 | ||
Diversified Financial Services - 7.4% | |||
Bank of America Corp. | 11,373,473 | 128,179 | |
CIT Group, Inc. | 1,330,351 | 5,095 | |
Citigroup, Inc. (d) | 2,004,400 | 7,456 | |
CME Group, Inc. | 27,900 | 8,974 | |
JPMorgan Chase & Co. | 5,739,700 | 211,798 | |
| 361,502 | ||
Insurance - 1.9% | |||
ACE Ltd. | 680,000 | 29,913 | |
Hartford Financial Services Group, Inc. | 600,700 | 8,614 | |
MBIA, Inc. (a) | 300,630 | 1,939 | |
MetLife, Inc. | 326,200 | 10,275 | |
Montpelier Re Holdings Ltd. | 1,094,500 | 14,644 | |
The Travelers Companies, Inc. | 753,133 | 30,622 | |
| 96,007 | ||
Real Estate Investment Trusts - 0.4% | |||
HCP, Inc. | 572,600 | 13,301 | |
Senior Housing Properties Trust (SBI) | 472,882 | 7,921 | |
| 21,222 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Thrifts & Mortgage Finance - 0.2% | |||
New York Community Bancorp, Inc. (d) | 868,560 | $ 9,606 | |
TOTAL FINANCIALS | 1,123,753 | ||
HEALTH CARE - 8.3% | |||
Biotechnology - 0.6% | |||
Amgen, Inc. (a) | 606,900 | 30,309 | |
Health Care Equipment & Supplies - 0.7% | |||
Boston Scientific Corp. (a) | 1,329,105 | 12,494 | |
Covidien Ltd. | 544,000 | 19,432 | |
| 31,926 | ||
Health Care Providers & Services - 0.1% | |||
Fresenius Medical Care AG & Co. KGaA | 159,300 | 6,730 | |
Pharmaceuticals - 6.9% | |||
Abbott Laboratories | 318,600 | 14,356 | |
Bristol-Myers Squibb Co. | 1,046,046 | 20,837 | |
Johnson & Johnson | 961,700 | 53,047 | |
Merck & Co., Inc. | 1,530,600 | 42,214 | |
Pfizer, Inc. | 5,891,200 | 89,487 | |
Schering-Plough Corp. | 1,404,600 | 34,272 | |
Wyeth | 1,901,800 | 85,315 | |
| 339,528 | ||
TOTAL HEALTH CARE | 408,493 | ||
INDUSTRIALS - 8.8% | |||
Aerospace & Defense - 2.9% | |||
General Dynamics Corp. | 167,083 | 9,507 | |
Honeywell International, Inc. | 1,645,700 | 54,571 | |
Spirit AeroSystems Holdings, Inc. Class A (a) | 756,800 | 10,406 | |
The Boeing Co. | 514,717 | 23,085 | |
United Technologies Corp. | 831,728 | 43,757 | |
| 141,326 | ||
Building Products - 0.3% | |||
Masco Corp. | 1,254,600 | 12,998 | |
Commercial Services & Supplies - 0.2% | |||
Avery Dennison Corp. | 399,500 | 11,010 | |
Electrical Equipment - 0.1% | |||
Rockwell Automation, Inc. | 146,500 | 4,496 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Industrial Conglomerates - 2.9% | |||
General Electric Co. | 4,663,100 | $ 62,859 | |
Rheinmetall AG | 287,642 | 11,980 | |
Siemens AG sponsored ADR | 514,300 | 37,770 | |
Textron, Inc. | 1,326,600 | 15,256 | |
Tyco International Ltd. | 621,400 | 17,157 | |
| 145,022 | ||
Machinery - 1.9% | |||
Briggs & Stratton Corp. | 208,902 | 3,175 | |
Caterpillar, Inc. | 147,200 | 5,220 | |
Cummins, Inc. | 412,900 | 13,390 | |
Danaher Corp. | 292,400 | 17,646 | |
Eaton Corp. | 382,200 | 16,626 | |
Illinois Tool Works, Inc. | 288,772 | 9,324 | |
Ingersoll-Rand Co. Ltd. Class A | 585,553 | 11,846 | |
Kennametal, Inc. | 445,800 | 8,417 | |
SPX Corp. | 107,600 | 4,940 | |
Vallourec SA | 39,900 | 5,043 | |
| 95,627 | ||
Professional Services - 0.1% | |||
Equifax, Inc. | 179,509 | 4,886 | |
Road & Rail - 0.4% | |||
Burlington Northern Santa Fe Corp. | 88,500 | 6,411 | |
Union Pacific Corp. | 265,200 | 13,066 | |
| 19,477 | ||
TOTAL INDUSTRIALS | 434,842 | ||
INFORMATION TECHNOLOGY - 8.2% | |||
Communications Equipment - 1.1% | |||
Cisco Systems, Inc. (a) | 2,230,400 | 41,262 | |
Motorola, Inc. | 2,080,892 | 12,610 | |
| 53,872 | ||
Computers & Peripherals - 1.5% | |||
Dell, Inc. (a) | 479,800 | 5,556 | |
Hewlett-Packard Co. | 1,173,355 | 40,305 | |
International Business Machines Corp. | 243,300 | 25,858 | |
| 71,719 | ||
Electronic Equipment & Components - 0.7% | |||
Arrow Electronics, Inc. (a) | 237,538 | 5,746 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INFORMATION TECHNOLOGY - continued | |||
Electronic Equipment & Components - continued | |||
Avnet, Inc. (a) | 475,100 | $ 10,932 | |
Tyco Electronics Ltd. | 1,152,971 | 20,027 | |
| 36,705 | ||
IT Services - 0.3% | |||
MoneyGram International, Inc. (a) | 340,342 | 562 | |
The Western Union Co. | 758,764 | 13,377 | |
| 13,939 | ||
Office Electronics - 0.1% | |||
Xerox Corp. | 1,005,780 | 6,839 | |
Semiconductors & Semiconductor Equipment - 2.9% | |||
Analog Devices, Inc. | 868,993 | 21,212 | |
Applied Materials, Inc. | 3,100,000 | 34,906 | |
Intel Corp. | 3,490,800 | 54,875 | |
Micron Technology, Inc. (a) | 1,472,300 | 7,450 | |
National Semiconductor Corp. | 1,678,202 | 23,293 | |
| 141,736 | ||
Software - 1.6% | |||
Microsoft Corp. | 1,494,254 | 31,215 | |
Oracle Corp. | 1,600,000 | 31,344 | |
Symantec Corp. (a) | 1,029,833 | 16,055 | |
| 78,614 | ||
TOTAL INFORMATION TECHNOLOGY | 403,424 | ||
MATERIALS - 1.5% | |||
Chemicals - 0.7% | |||
Dow Chemical Co. | 414,932 | 7,336 | |
E.I. du Pont de Nemours & Co. | 782,009 | 22,264 | |
H.B. Fuller Co. | 370,276 | 6,302 | |
| 35,902 | ||
Metals & Mining - 0.8% | |||
Alcoa, Inc. | 1,207,232 | 11,131 | |
Commercial Metals Co. | 496,300 | 8,422 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 128,200 | 6,978 | |
Nucor Corp. | 249,600 | 10,960 | |
| 37,491 | ||
TOTAL MATERIALS | 73,393 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
TELECOMMUNICATION SERVICES - 7.2% | |||
Diversified Telecommunication Services - 6.5% | |||
AT&T, Inc. | 7,590,700 | $ 188,173 | |
Qwest Communications International, Inc. (d) | 8,350,400 | 36,408 | |
Verizon Communications, Inc. | 3,165,600 | 92,625 | |
| 317,206 | ||
Wireless Telecommunication Services - 0.7% | |||
Sprint Nextel Corp. (a) | 3,645,347 | 18,774 | |
Vodafone Group PLC sponsored ADR | 814,900 | 15,336 | |
| 34,110 | ||
TOTAL TELECOMMUNICATION SERVICES | 351,316 | ||
UTILITIES - 3.6% | |||
Electric Utilities - 1.7% | |||
Allegheny Energy, Inc. | 1,054,100 | 26,353 | |
Entergy Corp. | 400,500 | 29,885 | |
Exelon Corp. | 574,401 | 27,577 | |
| 83,815 | ||
Independent Power Producers & Energy Traders - 0.5% | |||
AES Corp. (a) | 2,279,900 | 22,776 | |
Multi-Utilities - 1.4% | |||
Public Service Enterprise Group, Inc. | 1,334,900 | 42,543 | |
Wisconsin Energy Corp. | 678,500 | 26,774 | |
| 69,317 | ||
TOTAL UTILITIES | 175,908 | ||
TOTAL COMMON STOCKS (Cost $4,775,454) | 4,791,518 | ||
Convertible Preferred Stocks - 1.1% | |||
|
|
|
|
FINANCIALS - 0.5% | |||
Commercial Banks - 0.1% | |||
Huntington Bancshares, Inc. 8.50% | 7,600 | 4,826 | |
Diversified Financial Services - 0.3% | |||
Citigroup, Inc. Series T, 6.50% | 370,400 | 14,422 | |
Convertible Preferred Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Insurance - 0.1% | |||
American International Group, Inc. Series A, 8.50% | 466,700 | $ 4,154 | |
TOTAL FINANCIALS | 23,402 | ||
HEALTH CARE - 0.3% | |||
Pharmaceuticals - 0.3% | |||
Schering-Plough Corp. 6.00% | 76,000 | 16,591 | |
MATERIALS - 0.3% | |||
Metals & Mining - 0.3% | |||
Freeport-McMoRan Copper & Gold, Inc. 6.75% | 190,100 | 16,062 | |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $71,416) | 56,055 |
Convertible Bonds - 0.7% | ||||
| Principal Amount (000s) |
| ||
CONSUMER DISCRETIONARY - 0.3% | ||||
Auto Components - 0.1% | ||||
Johnson Controls, Inc. 6.5% 9/30/12 | $ 3,430 | 6,353 | ||
Diversified Consumer Services - 0.0% | ||||
Ingersoll-Rand Global Holding Co. Ltd. 4.5% 4/15/12 | 1,260 | 1,642 | ||
Hotels, Restaurants & Leisure - 0.1% | ||||
International Game Technology 3.25% 5/1/14 (e) | 2,250 | 2,503 | ||
Household Durables - 0.1% | ||||
Newell Rubbermaid, Inc. 5.5% 3/15/14 | 1,450 | 2,208 | ||
TOTAL CONSUMER DISCRETIONARY | 12,706 | |||
INDUSTRIALS - 0.1% | ||||
Electrical Equipment - 0.0% | ||||
Sunpower Corp. 4.75% 4/15/14 | 1,350 | 1,678 | ||
Industrial Conglomerates - 0.1% | ||||
Textron, Inc. 4.5% 5/1/13 | 1,840 | 2,043 | ||
Road & Rail - 0.0% | ||||
Hertz Global Holdings, Inc. 5.25% 6/1/14 | 2,005 | 2,034 | ||
TOTAL INDUSTRIALS | 5,755 | |||
Convertible Bonds - continued | ||||
| Principal Amount (000s) | Value (000s) | ||
INFORMATION TECHNOLOGY - 0.0% | ||||
Semiconductors & Semiconductor Equipment - 0.0% | ||||
Micron Technology, Inc. 4.25% 10/15/13 | $ 1,820 | $ 2,136 | ||
MATERIALS - 0.3% | ||||
Metals & Mining - 0.3% | ||||
Alcoa, Inc. 5.25% 3/15/14 | 3,210 | 5,104 | ||
ArcelorMittal SA 5% 5/15/14 | 2,570 | 3,254 | ||
United States Steel Corp. 4% 5/15/14 | 4,290 | 5,352 | ||
| 13,710 | |||
TOTAL CONVERTIBLE BONDS (Cost $25,475) | 34,307 |
Money Market Funds - 1.6% | |||
Shares |
| ||
Fidelity Cash Central Fund, 0.53% (b) | 16,390,608 | 16,391 | |
Fidelity Securities Lending Cash Central Fund, 0.28% (b)(c) | 62,371,167 | 62,371 | |
TOTAL MONEY MARKET FUNDS (Cost $78,762) | 78,762 | ||
TOTAL INVESTMENT PORTFOLIO - 100.9% (Cost $4,951,107) | 4,960,642 | ||
NET OTHER ASSETS - (0.9)% | (45,479) | ||
NET ASSETS - 100% | $ 4,915,163 |
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) 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 $2,503,000 or 0.1% of net assets. |
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 | $ 123 |
Fidelity Securities Lending Cash Central Fund | 1,076 |
Total | $ 1,199 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2009, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 4,960,642 | $ 4,778,470 | $ 182,172 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 89.6% |
Switzerland | 3.4% |
United Kingdom | 1.7% |
Bermuda | 1.3% |
Germany | 1.1% |
Netherlands Antilles | 1.1% |
Others (individually less than 1%) | 1.8% |
| 100.0% |
Income Tax Information |
At November 30, 2008, the fund had a capital loss carryforward of approximately $1,317,781,000 all of which will expire on November 30, 2016. |
The fund intends to elect to defer to its fiscal year ending November 30, 2009 approximately $388,181,000 of losses recognized during the period November 1, 2008 to November 30, 2008. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $60,972) - See accompanying schedule: Unaffiliated issuers (cost $4,872,345) | $ 4,881,880 |
|
Fidelity Central Funds (cost $78,762) | 78,762 |
|
Total Investments (cost $4,951,107) |
| $ 4,960,642 |
Receivable for investments sold | 8,856 | |
Receivable for fund shares sold | 1,404 | |
Dividends receivable | 13,934 | |
Interest receivable | 144 | |
Distributions receivable from Fidelity Central Funds | 427 | |
Prepaid expenses | 39 | |
Other receivables | 251 | |
Total assets | 4,985,697 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 1,665 | |
Payable for fund shares redeemed | 3,258 | |
Accrued management fee | 1,875 | |
Other affiliated payables | 1,108 | |
Other payables and accrued expenses | 257 | |
Collateral on securities loaned, at value | 62,371 | |
Total liabilities | 70,534 | |
|
|
|
Net Assets | $ 4,915,163 | |
Net Assets consist of: |
| |
Paid in capital | $ 7,554,414 | |
Undistributed net investment income | 9,675 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,658,462) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 9,536 | |
Net Assets | $ 4,915,163 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Equity-Income II: Net Asset Value, offering price and redemption price per share ($4,724,928 ÷ 348,634 shares) | $ 13.55 | |
|
|
|
Class K: | $ 13.56 |
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, 2009 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 74,344 |
Interest |
| 147 |
Income from Fidelity Central Funds |
| 1,199 |
Total income |
| 75,690 |
|
|
|
Expenses | ||
Management fee | $ 10,772 | |
Transfer agent fees | 6,182 | |
Accounting and security lending fees | 582 | |
Custodian fees and expenses | 51 | |
Independent trustees' compensation | 18 | |
Registration fees | 38 | |
Audit | 44 | |
Legal | 14 | |
Interest | 3 | |
Miscellaneous | 62 | |
Total expenses before reductions | 17,766 | |
Expense reductions | (36) | 17,730 |
Net investment income (loss) | 57,960 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (844,448) | |
Foreign currency transactions | 30 | |
Total net realized gain (loss) |
| (844,418) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 875,269 | |
Assets and liabilities in foreign currencies | 1 | |
Total change in net unrealized appreciation (depreciation) |
| 875,270 |
Net gain (loss) | 30,852 | |
Net increase (decrease) in net assets resulting from operations | $ 88,812 |
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, 2009 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 57,960 | $ 143,404 |
Net realized gain (loss) | (844,418) | (1,804,306) |
Change in net unrealized appreciation (depreciation) | 875,270 | (2,333,977) |
Net increase (decrease) in net assets resulting | 88,812 | (3,994,879) |
Distributions to shareholders from net investment income | (64,949) | (154,072) |
Distributions to shareholders from net realized gain | - | (530,265) |
Total distributions | (64,949) | (684,337) |
Share transactions - net increase (decrease) | (474,812) | (484,222) |
Total increase (decrease) in net assets | (450,949) | (5,163,438) |
|
|
|
Net Assets | ||
Beginning of period | 5,366,112 | 10,529,550 |
End of period (including undistributed net investment income of $9,675 and undistributed net investment income of $16,664, respectively) | $ 4,915,163 | $ 5,366,112 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Equity-Income II
| Six months ended | Years ended November 30, | ||||
(Unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 13.32 | $ 24.29 | $ 25.12 | $ 24.57 | $ 23.90 | $ 21.52 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .15 | .33 | .33 | .35 | .35 | .35 G |
Net realized and unrealized gain (loss) | .25 | (9.72) | 1.29 | 2.44 | 1.36 | 2.49 |
Total from investment operations | .40 | (9.39) | 1.62 | 2.79 | 1.71 | 2.84 |
Distributions from net investment income | (.17) | (.36) | (.38) | (.33) | (.41) | (.29) |
Distributions from net realized gain | - | (1.22) | (2.07) | (1.91) | (.63) | (.17) |
Total distributions | (.17) | (1.58) | (2.45) | (2.24) | (1.04) | (.46) |
Net asset value, end of period | $ 13.55 | $ 13.32 | $ 24.29 | $ 25.12 | $ 24.57 | $ 23.90 |
Total Return B, C | 3.11% | (41.13)% | 6.90% | 12.28% | 7.41% | 13.32% |
Ratios to Average Net Assets E, H |
|
|
|
|
| |
Expenses before reductions | .78% A | .67% | .65% | .67% | .68% | .68% |
Expenses net of fee waivers, if any | .78% A | .67% | .65% | .67% | .68% | .68% |
Expenses net of all reductions | .78% A | .67% | .65% | .66% | .62% | .64% |
Net investment income (loss) | 2.50% A | 1.70% | 1.34% | 1.50% | 1.49% | 1.56% |
Supplemental Data |
|
|
|
|
| |
Net assets, end of period (in millions) | $ 4,725 | $ 5,212 | $ 10,530 | $ 11,635 | $ 12,248 | $ 12,632 |
Portfolio turnover rate F | 125% A | 76% | 47% | 160% | 143% | 123% |
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 Investment income per share reflects a special dividend which amounted to $.06 per share.
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. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class K
| Six months ended | Year ended November 30, |
(Unaudited) | 2008 G | |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 13.32 | $ 21.42 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .16 | .17 |
Net realized and unrealized gain (loss) | .26 | (8.08) |
Total from investment operations | .42 | (7.91) |
Distributions from net investment income | (.18) | (.19) |
Net asset value, end of period | $ 13.56 | $ 13.32 |
Total Return B, C | 3.30% | (37.13)% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .56% A | .54% A |
Expenses net of fee waivers, if any | .56% A | .54% A |
Expenses net of all reductions | .56% A | .54% A |
Net investment income (loss) | 2.72% A | 2.11% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 190 | $ 154 |
Portfolio turnover rate F | 125% A | 76% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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, 2009 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Equity-Income II Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Equity-Income II and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. After the commencement of Class K, the Fund began offering conversion privileges between Equity-Income II and Class K to eligible shareholders of Equity-Income II. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Security Valuation - continued
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, 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of May 31, 2009, for the Fund's investments, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees 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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
Semiannual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 564,074 |
|
Unrealized depreciation | (614,521) |
|
Net unrealized appreciation (depreciation) | $ (50,447) |
|
Cost for federal income tax purposes | $ 5,011,089 |
|
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 $2,894,028 and $3,386,131, 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 .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .47% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Equity-Income II. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Equity-Income II | $ 6,131 | .28 |
Class K | 51 | .06 |
| $ 6,182 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $113 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily Loan Balance | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 8,565 | .32% | $ 3 |
Semiannual Report
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $15 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 $1,076.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Equity-Income II's operating expenses. During the period, this reimbursement reduced the class' expenses by $1.
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 $35 for the period.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended | Year ended |
From net investment income |
|
|
Equity-Income II | $ 62,657 | $ 153,404 |
Class K | 2,292 | 668 |
Total | $ 64,949 | $ 154,072 |
From net realized gain |
|
|
Equity-Income II | $ - | $ 530,265 |
A Distributions for Class K are for the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Six months ended May 31, | Year ended | Six months ended May 31, | Year ended | |
Equity-Income II |
|
|
|
|
Shares sold | 13,016 | 36,424 | $ 154,378 | $ 723,646 |
Conversion to Class K | (1,316) | (11,240) | (16,026) | (186,499) |
Reinvestment of distributions | 4,781 | 29,836 | 59,539 | 653,499 |
Shares redeemed | (59,241) | (97,158) | (707,930) | (1,866,146) |
Net increase (decrease) | (42,760) | (42,138) | $ (510,039) | $ (675,500) |
Class K |
|
|
|
|
Shares sold | 3,768 | 731 | $ 47,168 | $ 10,900 |
Conversion from Equity-Income II | 1,315 | 11,236 | 16,026 | 186,499 |
Reinvestment of distributions | 185 | 41 | 2,292 | 668 |
Shares redeemed | (2,778) | (464) | (30,259) | (6,789) |
Net increase (decrease) | 2,490 | 11,544 | $ 35,227 | $ 191,278 |
A Share transactions for Class K are for the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
FIL Investment Advisors
Fidelity Investments Japan Limited
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Northern Trust Company
Chicago, IL
EII-K-USAN-0709 1.863199.100
Fidelity®
Independence
Fund
Semiannual Report
May 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
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 LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Although there has been some encouraging news in the capital markets this spring, many economic uncertainties remain - including still-weak corporate earnings and sluggish consumer spending - which could call into question the sustainability and overall strength of the markets' recent forward momentum. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help 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 can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today,
more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/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, 2008 to May 31, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Semiannual Report
Shareholder Expense Example - continued
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Independence | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,126.10 | $ 4.61 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.59 | $ 4.38 |
Class K | .65% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.60 | $ 3.45 |
Hypothetical A |
| $ 1,000.00 | $ 1,021.69 | $ 3.28 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of May 31, 2009 | ||
| % of fund's | % of fund's net assets |
Wells Fargo & Co. | 4.6 | 1.3 |
JPMorgan Chase & Co. | 3.7 | 1.1 |
PNC Financial Services Group, Inc. | 3.3 | 0.5 |
Bank of America Corp. | 3.2 | 1.0 |
Express Scripts, Inc. | 2.8 | 1.2 |
Apple, Inc. | 2.3 | 0.8 |
Deutsche Bank AG (NY Shares) | 2.2 | 0.0 |
Transocean Ltd. | 2.2 | 0.0 |
Morgan Stanley | 2.1 | 0.4 |
Dow Chemical Co. | 2.0 | 0.0 |
| 28.4 | |
Top Five Market Sectors as of May 31, 2009 | ||
| % of fund's | % of fund's net assets |
Financials | 29.4 | 10.7 |
Energy | 13.5 | 20.7 |
Materials | 13.0 | 10.0 |
Consumer Discretionary | 12.4 | 6.3 |
Information Technology | 10.5 | 6.1 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2009 * | As of November 30, 2008 ** | ||||||
![]() | Stocks 99.9% |
| ![]() | Stocks 97.3% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 19.1% |
| ** Foreign investments | 12.3% |
|
Semiannual Report
Investments May 31, 2009 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 12.4% | |||
Auto Components - 1.2% | |||
Autoliv, Inc. | 800,000 | $ 22,224 | |
Magna International, Inc. Class A | 150,000 | 4,973 | |
The Goodyear Tire & Rubber Co. (a) | 1,500,000 | 17,175 | |
| 44,372 | ||
Automobiles - 0.3% | |||
Ford Motor Co. (a) | 2,000,000 | 11,500 | |
Hotels, Restaurants & Leisure - 0.5% | |||
California Pizza Kitchen, Inc. (a) | 450,000 | 6,278 | |
Ctrip.com International Ltd. sponsored ADR | 200,000 | 8,190 | |
The Cheesecake Factory, Inc. (a) | 250,000 | 4,278 | |
| 18,746 | ||
Household Durables - 0.7% | |||
Gafisa SA sponsored ADR (d) | 1,439,900 | 26,077 | |
Internet & Catalog Retail - 2.4% | |||
Amazon.com, Inc. | 800,000 | 62,392 | |
Priceline.com, Inc. (a)(d) | 200,000 | 22,022 | |
| 84,414 | ||
Media - 1.3% | |||
Comcast Corp. Class A (special) (non-vtg.) | 400,000 | 5,200 | |
The DIRECTV Group, Inc. (a) | 1,800,000 | 40,500 | |
| 45,700 | ||
Multiline Retail - 1.6% | |||
Target Corp. | 1,500,000 | 58,950 | |
Specialty Retail - 4.4% | |||
Abercrombie & Fitch Co. Class A | 700,000 | 21,077 | |
American Eagle Outfitters, Inc. | 1,000,000 | 14,810 | |
Best Buy Co., Inc. | 850,000 | 29,835 | |
Gamestop Corp. Class A (a) | 300,000 | 7,485 | |
Lowe's Companies, Inc. | 2,400,000 | 45,624 | |
Staples, Inc. | 1,000,000 | 20,450 | |
TJX Companies, Inc. | 600,000 | 17,706 | |
| 156,987 | ||
TOTAL CONSUMER DISCRETIONARY | 446,746 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - 2.2% | |||
Food & Staples Retailing - 2.1% | |||
Costco Wholesale Corp. | 800,000 | $ 38,816 | |
Wal-Mart Stores, Inc. | 714,700 | 35,549 | |
| 74,365 | ||
Personal Products - 0.1% | |||
Hengan International Group Co. Ltd. | 1,000,000 | 4,567 | |
TOTAL CONSUMER STAPLES | 78,932 | ||
ENERGY - 13.5% | |||
Energy Equipment & Services - 5.9% | |||
Nabors Industries Ltd. (a) | 300,000 | 5,364 | |
National Oilwell Varco, Inc. (a) | 300,000 | 11,586 | |
Noble Corp. | 1,000,000 | 34,370 | |
Oceaneering International, Inc. (a) | 200,000 | 10,284 | |
Schlumberger Ltd. (NY Shares) | 600,000 | 34,338 | |
Transocean Ltd. (a) | 1,000,000 | 79,480 | |
Weatherford International Ltd. (a) | 1,800,000 | 37,260 | |
| 212,682 | ||
Oil, Gas & Consumable Fuels - 7.6% | |||
Alpha Natural Resources, Inc. (a) | 300,000 | 8,265 | |
Apache Corp. | 175,000 | 14,746 | |
Chesapeake Energy Corp. | 2,010,400 | 45,556 | |
China Shenhua Energy Co. Ltd. (H Shares) | 6,085,000 | 20,559 | |
Concho Resources, Inc. (a) | 300,000 | 9,615 | |
EOG Resources, Inc. | 200,000 | 14,638 | |
Hess Corp. | 375,000 | 24,971 | |
Occidental Petroleum Corp. | 500,000 | 33,555 | |
Petro-Canada | 550,000 | 23,928 | |
PT Bumi Resources Tbk | 20,000,000 | 3,853 | |
Range Resources Corp. | 200,000 | 9,162 | |
Southwestern Energy Co. (a) | 1,100,000 | 47,817 | |
Suncor Energy, Inc. | 300,000 | 10,510 | |
Ultra Petroleum Corp. (a) | 133,079 | 6,026 | |
| 273,201 | ||
TOTAL ENERGY | 485,883 | ||
FINANCIALS - 29.4% | |||
Capital Markets - 7.8% | |||
Deutsche Bank AG (NY Shares) | 1,200,000 | 81,132 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Goldman Sachs Group, Inc. | 463,300 | $ 66,979 | |
Morgan Stanley | 2,465,300 | 74,748 | |
State Street Corp. | 850,000 | 39,483 | |
The Blackstone Group LP | 1,700,000 | 18,615 | |
| 280,957 | ||
Commercial Banks - 8.9% | |||
China Construction Bank Corp. (H Shares) | 15,279,000 | 9,973 | |
Industrial & Commercial Bank of China Ltd. | 14,700,000 | 9,370 | |
PNC Financial Services Group, Inc. | 2,650,000 | 120,708 | |
U.S. Bancorp, Delaware | 737,300 | 14,156 | |
Wells Fargo & Co. | 6,500,000 | 165,745 | |
| 319,952 | ||
Consumer Finance - 0.1% | |||
SLM Corp. (a) | 600,000 | 3,966 | |
Diversified Financial Services - 9.9% | |||
Apollo Global Management LLC (a)(e) | 1,703,400 | 5,962 | |
Bank of America Corp. | 10,139,081 | 114,267 | |
BM&F BOVESPA SA | 1,000,000 | 5,735 | |
CME Group, Inc. | 120,000 | 38,597 | |
Hong Kong Exchange & Clearing Ltd. | 1,000,000 | 15,626 | |
IntercontinentalExchange, Inc. (a) | 400,000 | 43,116 | |
JPMorgan Chase & Co. | 3,600,000 | 132,840 | |
| 356,143 | ||
Insurance - 2.6% | |||
Hartford Financial Services Group, Inc. | 1,100,000 | 15,774 | |
Lincoln National Corp. | 1,000,000 | 18,950 | |
MBIA, Inc. (a)(d) | 1,000,000 | 6,450 | |
Principal Financial Group, Inc. | 400,000 | 8,880 | |
Prudential Financial, Inc. | 400,000 | 15,964 | |
XL Capital Ltd. Class A | 2,800,000 | 28,336 | |
| 94,354 | ||
Real Estate Investment Trusts - 0.1% | |||
Host Hotels & Resorts, Inc. | 500,000 | 4,690 | |
TOTAL FINANCIALS | 1,060,062 | ||
HEALTH CARE - 10.4% | |||
Biotechnology - 4.6% | |||
Cephalon, Inc. (a)(d) | 500,000 | 29,155 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Biotechnology - continued | |||
Genzyme Corp. (a) | 100,000 | $ 5,914 | |
Gilead Sciences, Inc. (a) | 1,100,000 | 47,410 | |
Myriad Genetics, Inc. (a) | 1,100,000 | 39,776 | |
United Therapeutics Corp. (a) | 200,000 | 16,030 | |
Vertex Pharmaceuticals, Inc. (a) | 900,000 | 26,829 | |
| 165,114 | ||
Health Care Equipment & Supplies - 0.3% | |||
Covidien Ltd. | 350,000 | 12,502 | |
Health Care Providers & Services - 4.3% | |||
Express Scripts, Inc. (a) | 1,600,000 | 102,480 | |
Humana, Inc. (a) | 800,000 | 25,064 | |
Medco Health Solutions, Inc. (a) | 600,000 | 27,534 | |
| 155,078 | ||
Health Care Technology - 0.5% | |||
Cerner Corp. (a)(d) | 300,000 | 17,487 | |
Life Sciences Tools & Services - 0.4% | |||
Illumina, Inc. (a) | 400,000 | 14,684 | |
Pharmaceuticals - 0.3% | |||
Elan Corp. PLC sponsored ADR (a) | 1,399,000 | 9,765 | |
TOTAL HEALTH CARE | 374,630 | ||
INDUSTRIALS - 6.1% | |||
Aerospace & Defense - 0.3% | |||
AeroVironment, Inc. (a)(d) | 450,000 | 12,564 | |
Airlines - 3.1% | |||
AMR Corp. (a) | 2,500,000 | 11,125 | |
Continental Airlines, Inc. Class B (a) | 2,200,000 | 20,504 | |
Delta Air Lines, Inc. (a) | 11,796,875 | 68,540 | |
UAL Corp. (a)(d) | 2,250,000 | 10,485 | |
| 110,654 | ||
Construction & Engineering - 0.1% | |||
China Communications Construction Co. Ltd. (H Shares) | 2,000,000 | 2,811 | |
Electrical Equipment - 1.5% | |||
Energy Conversion Devices, Inc. (a)(d) | 405,711 | 6,982 | |
First Solar, Inc. (a)(d) | 260,000 | 49,400 | |
| 56,382 | ||
Industrial Conglomerates - 0.5% | |||
Textron, Inc. | 1,458,300 | 16,770 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Road & Rail - 0.6% | |||
CSX Corp. | 300,000 | $ 9,528 | |
Union Pacific Corp. | 250,000 | 12,318 | |
| 21,846 | ||
TOTAL INDUSTRIALS | 221,027 | ||
INFORMATION TECHNOLOGY - 10.5% | |||
Communications Equipment - 3.6% | |||
Cisco Systems, Inc. (a) | 1,018,800 | 18,848 | |
Juniper Networks, Inc. (a) | 800,000 | 19,784 | |
QUALCOMM, Inc. | 1,100,000 | 47,949 | |
Research In Motion Ltd. (a) | 550,000 | 43,252 | |
| 129,833 | ||
Computers & Peripherals - 2.4% | |||
Apple, Inc. (a) | 614,200 | 83,415 | |
HTC Corp. | 250,000 | 4,074 | |
| 87,489 | ||
Internet Software & Services - 3.3% | |||
Baidu.com, Inc. sponsored ADR (a) | 150,000 | 39,593 | |
Equinix, Inc. (a) | 300,000 | 22,320 | |
Google, Inc. Class A (sub. vtg.) (a) | 25,000 | 10,431 | |
Mercadolibre, Inc. (a)(d) | 900,000 | 19,476 | |
NetEase.com, Inc. sponsored ADR (a) | 300,000 | 10,374 | |
Tencent Holdings Ltd. | 1,500,000 | 16,847 | |
| 119,041 | ||
IT Services - 0.9% | |||
Visa, Inc. | 500,000 | 33,855 | |
Software - 0.3% | |||
BMC Software, Inc. (a) | 300,000 | 10,230 | |
TOTAL INFORMATION TECHNOLOGY | 380,448 | ||
MATERIALS - 13.0% | |||
Chemicals - 7.5% | |||
Ashland, Inc. | 800,000 | 21,440 | |
CF Industries Holdings, Inc. | 100,000 | 7,764 | |
Dow Chemical Co. | 4,000,000 | 70,720 | |
E.I. du Pont de Nemours & Co. | 900,000 | 25,623 | |
FMC Corp. | 800,000 | 43,480 | |
Potash Corp. of Saskatchewan, Inc. | 23,900 | 2,756 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Chemicals - continued | |||
Rockwood Holdings, Inc. (a) | 1,100,000 | $ 16,412 | |
Terra Industries, Inc. | 1,700,000 | 47,243 | |
The Mosaic Co. | 647,700 | 35,429 | |
| 270,867 | ||
Containers & Packaging - 0.3% | |||
Sealed Air Corp. | 500,000 | 10,005 | |
Metals & Mining - 5.2% | |||
Agnico-Eagle Mines Ltd. (Canada) | 526,400 | 32,540 | |
Alcoa, Inc. | 2,637,500 | 24,318 | |
Barrick Gold Corp. | 400,000 | 15,157 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 550,000 | 29,937 | |
Goldcorp, Inc. | 500,000 | 19,761 | |
Impala Platinum Holdings Ltd. | 920,800 | 22,337 | |
Newmont Mining Corp. | 449,000 | 21,943 | |
United States Steel Corp. | 634,800 | 21,634 | |
| 187,627 | ||
TOTAL MATERIALS | 468,499 | ||
TELECOMMUNICATION SERVICES - 2.4% | |||
Diversified Telecommunication Services - 0.6% | |||
China Telecom Corp. Ltd. sponsored ADR | 500,000 | 23,795 | |
Wireless Telecommunication Services - 1.8% | |||
Sprint Nextel Corp. (a) | 9,000,000 | 46,350 | |
Vivo Participacoes SA sponsored ADR | 900,000 | 18,153 | |
| 64,503 | ||
TOTAL TELECOMMUNICATION SERVICES | 88,298 | ||
TOTAL COMMON STOCKS (Cost $3,222,609) | 3,604,525 | ||
Money Market Funds - 1.8% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 0.53% (b) | 1,043,096 | $ 1,043 | |
Fidelity Securities Lending Cash Central Fund, 0.28% (b)(c) | 64,499,450 | 64,499 | |
TOTAL MONEY MARKET FUNDS (Cost $65,542) | 65,542 | ||
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $3,288,151) | 3,670,067 | ||
NET OTHER ASSETS - (1.7)% | (60,414) | ||
NET ASSETS - 100% | $ 3,609,653 |
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) 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 $5,962,000 or 0.2% of net assets. |
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 | $ 88 |
Fidelity Securities Lending Cash Central Fund | 1,370 |
Total | $ 1,458 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2009, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 3,670,067 | $ 3,582,387 | $ 87,680 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 80.9% |
Canada | 4.5% |
Switzerland | 4.2% |
China | 3.8% |
Germany | 2.2% |
Brazil | 1.3% |
Netherlands Antilles | 1.0% |
Others (individually less than 1%) | 2.1% |
| 100.0% |
Income Tax Information |
At November 30, 2008, the fund had a capital loss carryforward of approximately $1,272,786,000 all of which will expire on November 30, 2016. |
The fund intends to elect to defer to its fiscal year ending November 30, 2009 approximately $445,082,000 of losses recognized during the period November 1, 2008 to November 30, 2008. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $63,966) - See accompanying schedule: Unaffiliated issuers (cost $3,222,609) | $ 3,604,525 |
|
Fidelity Central Funds (cost $65,542) | 65,542 |
|
Total Investments (cost $3,288,151) |
| $ 3,670,067 |
Foreign currency held at value (cost $68) | 68 | |
Receivable for investments sold | 59,987 | |
Receivable for fund shares sold | 1,892 | |
Dividends receivable | 5,523 | |
Distributions receivable from Fidelity Central Funds | 620 | |
Prepaid expenses | 26 | |
Other receivables | 105 | |
Total assets | 3,738,288 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 57,763 | |
Payable for fund shares redeemed | 3,514 | |
Accrued management fee | 1,914 | |
Other affiliated payables | 827 | |
Other payables and accrued expenses | 118 | |
Collateral on securities loaned, at value | 64,499 | |
Total liabilities | 128,635 | |
|
|
|
Net Assets | $ 3,609,653 | |
Net Assets consist of: |
| |
Paid in capital | $ 5,698,809 | |
Undistributed net investment income | 10,976 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,482,080) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 381,948 | |
Net Assets | $ 3,609,653 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Independence: | $ 15.86 | |
|
|
|
Class K: | $ 15.86 |
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, 2009 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 29,187 |
Income from Fidelity Central Funds |
| 1,458 |
Total income |
| 30,645 |
|
|
|
Expenses | ||
Management fee | $ 9,197 | |
Performance adjustment | (452) | |
Transfer agent fees | 4,524 | |
Accounting and security lending fees | 496 | |
Custodian fees and expenses | 57 | |
Independent trustees' compensation | 13 | |
Registration fees | 58 | |
Audit | 37 | |
Legal | 13 | |
Interest | 2 | |
Miscellaneous | 42 | |
Total expenses before reductions | 13,987 | |
Expense reductions | (46) | 13,941 |
Net investment income (loss) | 16,704 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (681,673) | |
Foreign currency transactions | 178 | |
Total net realized gain (loss) |
| (681,495) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 1,046,603 | |
Assets and liabilities in foreign currencies | (50) | |
Total change in net unrealized appreciation (depreciation) |
| 1,046,553 |
Net gain (loss) | 365,058 | |
Net increase (decrease) in net assets resulting from operations | $ 381,762 |
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, 2009 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 16,704 | $ 20,479 |
Net realized gain (loss) | (681,495) | (1,790,977) |
Change in net unrealized appreciation (depreciation) | 1,046,553 | (1,587,052) |
Net increase (decrease) in net assets resulting | 381,762 | (3,357,550) |
Distributions to shareholders from net investment income | (20,945) | (2,158) |
Distributions to shareholders from net realized gain | - | (166,844) |
Total distributions | (20,945) | (169,002) |
Share transactions - net increase (decrease) | (235,671) | 1,111,831 |
Total increase (decrease) in net assets | 125,146 | (2,414,721) |
|
|
|
Net Assets | ||
Beginning of period | 3,484,507 | 5,899,228 |
End of period (including undistributed net investment income of $10,976 and undistributed net investment income of $15,566, respectively) | $ 3,609,653 | $ 3,484,507 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Independence
| Six months ended | Years ended November 30, | ||||
(Unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 14.17 | $ 27.60 | $ 22.03 | $ 19.46 | $ 17.39 | $ 15.45 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .07 | .08 | .07 | .08 | .04 | .11 G, I |
Net realized and unrealized gain (loss) | 1.71 | (12.75) | 5.60 | 2.54 | 2.14 | 1.93 |
Total from investment operations | 1.78 | (12.67) | 5.67 | 2.62 | 2.18 | 2.04 |
Distributions from net investment income | (.09) | (.01) | (.10) | (.05) | (.11) | (.10) |
Distributions from net realized gain | - | (.75) | - | - | - | - |
Total distributions | (.09) | (.76) | (.10) | (.05) | (.11) | (.10) |
Net asset value, end of period | $ 15.86 | $ 14.17 | $ 27.60 | $ 22.03 | $ 19.46 | $ 17.39 |
Total Return B, C | 12.61% | (47.19)% | 25.85% | 13.49% | 12.61% | 13.28% |
Ratios to Average Net Assets E, H |
|
|
|
|
| |
Expenses before reductions | .87% A | .91% | .90% | .87% | .77% | .76% |
Expenses net of fee waivers, if any | .87% A | .91% | .90% | .87% | .77% | .76% |
Expenses net of all reductions | .87% A | .90% | .89% | .86% | .72% | .71% |
Net investment income (loss) | 1.02% A | .34% | .31% | .41% | .24% | .66% I |
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (in millions) | $ 3,473 | $ 3,407 | $ 5,899 | $ 4,723 | $ 4,654 | $ 4,584 |
Portfolio turnover rate F | 218% A | 173% | 175% | 169% | 119% | 119% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.07 per share.
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. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I 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.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class K
| Six months ended | Year ended |
(Unaudited) | 2008 G | |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 14.18 | $ 28.56 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .09 | .09 |
Net realized and unrealized gain (loss) | 1.70 | (14.47) |
Total from investment operations | 1.79 | (14.38) |
Distributions from net investment income | (.11) | - |
Net asset value, end of period | $ 15.86 | $ 14.18 |
Total Return B, C | 12.76% | (50.35)% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .65% A | .79% A |
Expenses net of fee waivers, if any | .65% A | .79% A |
Expenses net of all reductions | .64% A | .78% A |
Net investment income (loss) | 1.25% A | 1.04% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 136 | $ 78 |
Portfolio turnover rate F | 218% A | 173% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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, 2009 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Independence Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Independence and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. After the commencement of Class K, the Fund began offering conversion privileges between Independence and Class K to eligible shareholders of Independence. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Security Valuation - continued
The aggregate value by input level, as of May 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
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
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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. 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, partnerships, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 603,535 |
|
Unrealized depreciation | (300,413) |
|
Net unrealized appreciation (depreciation) | $ 303,122 |
|
Cost for federal income tax purposes | $ 3,366,945 |
|
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 $3,538,398 and $3,684,906, 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 .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
of the Fund, Independence as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .54% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Independence. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Independence | $ 4,490 | .29 |
Class K | 34 | .06 |
| $ 4,524 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $113 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily Loan Balance | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 8,138 | .43% | $ 2 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $10 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 $1,370.
9. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $6,388. The weighted average interest rate was .83%. The interest expense amounted to two hundred and ninety four dollars under the bank borrowing program. At period end, there were no bank borrowings outstanding.
Semiannual Report
10. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Independence's operating expenses. During this period, this reimbursement reduced the class' expenses by $2.
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 $44 for the period.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income |
|
|
Independence | $ 20,326 | $ 2,158 |
Class K | 619 | - |
Total | $ 20,945 | $ 2,158 |
From net realized gain |
|
|
Independence | $ - | $ 166,844 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Six months ended May 31, | Year ended | Six months ended May 31, | Year ended | |
Independence |
|
|
|
|
Shares sold | 11,942 | 106,988 | $ 163,131 | $ 2,759,081 |
Conversion to Class K | (2,043) | (5,354) | (28,312) | (109,247) |
Reinvestment of distributions | 1,443 | 6,242 | 20,026 | 166,964 |
Shares redeemed | (32,746) | (81,243) | (431,409) | (1,816,192) |
Net increase (decrease) | (21,404) | 26,633 | $ (276,564) | $ 1,000,606 |
Class K |
|
|
|
|
Shares sold | 2,431 | 659 | $ 30,869 | $ 10,298 |
Conversion from Independence | 2,044 | 5,350 | 28,312 | 109,247 |
Reinvestment of distributions | 45 | - | 619 | - |
Shares redeemed | (1,400) | (523) | (18,907) | (8,320) |
Net increase (decrease) | 3,120 | 5,486 | $ 40,893 | $ 111,225 |
A Share transactions for Class K are for the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Semiannual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)
Making Changes
To Your Account
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)
For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
FIL Investment Advisors
Fidelity Investments Japan Limited
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Northern Trust Company
Chicago, Illinois
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
FRE-USAN-0709 1.786813.106
Fidelity®
Independence
Fund -
Class K
Semiannual Report
May 31, 2009
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | The Chairman's message to shareholders. | |
Shareholder Expense Example | An example of shareholder expenses. | |
Investment Changes | A summary of major shifts in the fund's investments over the past six months. | |
Investments | A complete list of the fund's investments with their market values. | |
Financial Statements | Statements of assets and liabilities, operations, and changes in net assets, | |
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 LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Although there has been some encouraging news in the capital markets this spring, many economic uncertainties remain - including still-weak corporate earnings and sluggish consumer spending - which could call into question the sustainability and overall strength of the markets' recent forward momentum. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help 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 can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today,
more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/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, 2008 to May 31, 2009).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Semiannual Report
Shareholder Expense Example - continued
| Annualized Expense Ratio | Beginning | Ending | Expenses Paid |
Independence | .87% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,126.10 | $ 4.61 |
Hypothetical A |
| $ 1,000.00 | $ 1,020.59 | $ 4.38 |
Class K | .65% |
|
|
|
Actual |
| $ 1,000.00 | $ 1,127.60 | $ 3.45 |
Hypothetical A |
| $ 1,000.00 | $ 1,021.69 | $ 3.28 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of May 31, 2009 | ||
| % of fund's | % of fund's net assets |
Wells Fargo & Co. | 4.6 | 1.3 |
JPMorgan Chase & Co. | 3.7 | 1.1 |
PNC Financial Services Group, Inc. | 3.3 | 0.5 |
Bank of America Corp. | 3.2 | 1.0 |
Express Scripts, Inc. | 2.8 | 1.2 |
Apple, Inc. | 2.3 | 0.8 |
Deutsche Bank AG (NY Shares) | 2.2 | 0.0 |
Transocean Ltd. | 2.2 | 0.0 |
Morgan Stanley | 2.1 | 0.4 |
Dow Chemical Co. | 2.0 | 0.0 |
| 28.4 | |
Top Five Market Sectors as of May 31, 2009 | ||
| % of fund's | % of fund's net assets |
Financials | 29.4 | 10.7 |
Energy | 13.5 | 20.7 |
Materials | 13.0 | 10.0 |
Consumer Discretionary | 12.4 | 6.3 |
Information Technology | 10.5 | 6.1 |
Asset Allocation (% of fund's net assets) | |||||||
As of May 31, 2009 * | As of November 30, 2008 ** | ||||||
![]() | Stocks 99.9% |
| ![]() | Stocks 97.3% |
| ||
![]() | Short-Term |
| ![]() | Short-Term |
| ||
* Foreign investments | 19.1% |
| ** Foreign investments | 12.3% |
|
Semiannual Report
Investments May 31, 2009 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 12.4% | |||
Auto Components - 1.2% | |||
Autoliv, Inc. | 800,000 | $ 22,224 | |
Magna International, Inc. Class A | 150,000 | 4,973 | |
The Goodyear Tire & Rubber Co. (a) | 1,500,000 | 17,175 | |
| 44,372 | ||
Automobiles - 0.3% | |||
Ford Motor Co. (a) | 2,000,000 | 11,500 | |
Hotels, Restaurants & Leisure - 0.5% | |||
California Pizza Kitchen, Inc. (a) | 450,000 | 6,278 | |
Ctrip.com International Ltd. sponsored ADR | 200,000 | 8,190 | |
The Cheesecake Factory, Inc. (a) | 250,000 | 4,278 | |
| 18,746 | ||
Household Durables - 0.7% | |||
Gafisa SA sponsored ADR (d) | 1,439,900 | 26,077 | |
Internet & Catalog Retail - 2.4% | |||
Amazon.com, Inc. | 800,000 | 62,392 | |
Priceline.com, Inc. (a)(d) | 200,000 | 22,022 | |
| 84,414 | ||
Media - 1.3% | |||
Comcast Corp. Class A (special) (non-vtg.) | 400,000 | 5,200 | |
The DIRECTV Group, Inc. (a) | 1,800,000 | 40,500 | |
| 45,700 | ||
Multiline Retail - 1.6% | |||
Target Corp. | 1,500,000 | 58,950 | |
Specialty Retail - 4.4% | |||
Abercrombie & Fitch Co. Class A | 700,000 | 21,077 | |
American Eagle Outfitters, Inc. | 1,000,000 | 14,810 | |
Best Buy Co., Inc. | 850,000 | 29,835 | |
Gamestop Corp. Class A (a) | 300,000 | 7,485 | |
Lowe's Companies, Inc. | 2,400,000 | 45,624 | |
Staples, Inc. | 1,000,000 | 20,450 | |
TJX Companies, Inc. | 600,000 | 17,706 | |
| 156,987 | ||
TOTAL CONSUMER DISCRETIONARY | 446,746 | ||
Common Stocks - continued | |||
Shares | Value (000s) | ||
CONSUMER STAPLES - 2.2% | |||
Food & Staples Retailing - 2.1% | |||
Costco Wholesale Corp. | 800,000 | $ 38,816 | |
Wal-Mart Stores, Inc. | 714,700 | 35,549 | |
| 74,365 | ||
Personal Products - 0.1% | |||
Hengan International Group Co. Ltd. | 1,000,000 | 4,567 | |
TOTAL CONSUMER STAPLES | 78,932 | ||
ENERGY - 13.5% | |||
Energy Equipment & Services - 5.9% | |||
Nabors Industries Ltd. (a) | 300,000 | 5,364 | |
National Oilwell Varco, Inc. (a) | 300,000 | 11,586 | |
Noble Corp. | 1,000,000 | 34,370 | |
Oceaneering International, Inc. (a) | 200,000 | 10,284 | |
Schlumberger Ltd. (NY Shares) | 600,000 | 34,338 | |
Transocean Ltd. (a) | 1,000,000 | 79,480 | |
Weatherford International Ltd. (a) | 1,800,000 | 37,260 | |
| 212,682 | ||
Oil, Gas & Consumable Fuels - 7.6% | |||
Alpha Natural Resources, Inc. (a) | 300,000 | 8,265 | |
Apache Corp. | 175,000 | 14,746 | |
Chesapeake Energy Corp. | 2,010,400 | 45,556 | |
China Shenhua Energy Co. Ltd. (H Shares) | 6,085,000 | 20,559 | |
Concho Resources, Inc. (a) | 300,000 | 9,615 | |
EOG Resources, Inc. | 200,000 | 14,638 | |
Hess Corp. | 375,000 | 24,971 | |
Occidental Petroleum Corp. | 500,000 | 33,555 | |
Petro-Canada | 550,000 | 23,928 | |
PT Bumi Resources Tbk | 20,000,000 | 3,853 | |
Range Resources Corp. | 200,000 | 9,162 | |
Southwestern Energy Co. (a) | 1,100,000 | 47,817 | |
Suncor Energy, Inc. | 300,000 | 10,510 | |
Ultra Petroleum Corp. (a) | 133,079 | 6,026 | |
| 273,201 | ||
TOTAL ENERGY | 485,883 | ||
FINANCIALS - 29.4% | |||
Capital Markets - 7.8% | |||
Deutsche Bank AG (NY Shares) | 1,200,000 | 81,132 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
FINANCIALS - continued | |||
Capital Markets - continued | |||
Goldman Sachs Group, Inc. | 463,300 | $ 66,979 | |
Morgan Stanley | 2,465,300 | 74,748 | |
State Street Corp. | 850,000 | 39,483 | |
The Blackstone Group LP | 1,700,000 | 18,615 | |
| 280,957 | ||
Commercial Banks - 8.9% | |||
China Construction Bank Corp. (H Shares) | 15,279,000 | 9,973 | |
Industrial & Commercial Bank of China Ltd. | 14,700,000 | 9,370 | |
PNC Financial Services Group, Inc. | 2,650,000 | 120,708 | |
U.S. Bancorp, Delaware | 737,300 | 14,156 | |
Wells Fargo & Co. | 6,500,000 | 165,745 | |
| 319,952 | ||
Consumer Finance - 0.1% | |||
SLM Corp. (a) | 600,000 | 3,966 | |
Diversified Financial Services - 9.9% | |||
Apollo Global Management LLC (a)(e) | 1,703,400 | 5,962 | |
Bank of America Corp. | 10,139,081 | 114,267 | |
BM&F BOVESPA SA | 1,000,000 | 5,735 | |
CME Group, Inc. | 120,000 | 38,597 | |
Hong Kong Exchange & Clearing Ltd. | 1,000,000 | 15,626 | |
IntercontinentalExchange, Inc. (a) | 400,000 | 43,116 | |
JPMorgan Chase & Co. | 3,600,000 | 132,840 | |
| 356,143 | ||
Insurance - 2.6% | |||
Hartford Financial Services Group, Inc. | 1,100,000 | 15,774 | |
Lincoln National Corp. | 1,000,000 | 18,950 | |
MBIA, Inc. (a)(d) | 1,000,000 | 6,450 | |
Principal Financial Group, Inc. | 400,000 | 8,880 | |
Prudential Financial, Inc. | 400,000 | 15,964 | |
XL Capital Ltd. Class A | 2,800,000 | 28,336 | |
| 94,354 | ||
Real Estate Investment Trusts - 0.1% | |||
Host Hotels & Resorts, Inc. | 500,000 | 4,690 | |
TOTAL FINANCIALS | 1,060,062 | ||
HEALTH CARE - 10.4% | |||
Biotechnology - 4.6% | |||
Cephalon, Inc. (a)(d) | 500,000 | 29,155 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
HEALTH CARE - continued | |||
Biotechnology - continued | |||
Genzyme Corp. (a) | 100,000 | $ 5,914 | |
Gilead Sciences, Inc. (a) | 1,100,000 | 47,410 | |
Myriad Genetics, Inc. (a) | 1,100,000 | 39,776 | |
United Therapeutics Corp. (a) | 200,000 | 16,030 | |
Vertex Pharmaceuticals, Inc. (a) | 900,000 | 26,829 | |
| 165,114 | ||
Health Care Equipment & Supplies - 0.3% | |||
Covidien Ltd. | 350,000 | 12,502 | |
Health Care Providers & Services - 4.3% | |||
Express Scripts, Inc. (a) | 1,600,000 | 102,480 | |
Humana, Inc. (a) | 800,000 | 25,064 | |
Medco Health Solutions, Inc. (a) | 600,000 | 27,534 | |
| 155,078 | ||
Health Care Technology - 0.5% | |||
Cerner Corp. (a)(d) | 300,000 | 17,487 | |
Life Sciences Tools & Services - 0.4% | |||
Illumina, Inc. (a) | 400,000 | 14,684 | |
Pharmaceuticals - 0.3% | |||
Elan Corp. PLC sponsored ADR (a) | 1,399,000 | 9,765 | |
TOTAL HEALTH CARE | 374,630 | ||
INDUSTRIALS - 6.1% | |||
Aerospace & Defense - 0.3% | |||
AeroVironment, Inc. (a)(d) | 450,000 | 12,564 | |
Airlines - 3.1% | |||
AMR Corp. (a) | 2,500,000 | 11,125 | |
Continental Airlines, Inc. Class B (a) | 2,200,000 | 20,504 | |
Delta Air Lines, Inc. (a) | 11,796,875 | 68,540 | |
UAL Corp. (a)(d) | 2,250,000 | 10,485 | |
| 110,654 | ||
Construction & Engineering - 0.1% | |||
China Communications Construction Co. Ltd. (H Shares) | 2,000,000 | 2,811 | |
Electrical Equipment - 1.5% | |||
Energy Conversion Devices, Inc. (a)(d) | 405,711 | 6,982 | |
First Solar, Inc. (a)(d) | 260,000 | 49,400 | |
| 56,382 | ||
Industrial Conglomerates - 0.5% | |||
Textron, Inc. | 1,458,300 | 16,770 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
INDUSTRIALS - continued | |||
Road & Rail - 0.6% | |||
CSX Corp. | 300,000 | $ 9,528 | |
Union Pacific Corp. | 250,000 | 12,318 | |
| 21,846 | ||
TOTAL INDUSTRIALS | 221,027 | ||
INFORMATION TECHNOLOGY - 10.5% | |||
Communications Equipment - 3.6% | |||
Cisco Systems, Inc. (a) | 1,018,800 | 18,848 | |
Juniper Networks, Inc. (a) | 800,000 | 19,784 | |
QUALCOMM, Inc. | 1,100,000 | 47,949 | |
Research In Motion Ltd. (a) | 550,000 | 43,252 | |
| 129,833 | ||
Computers & Peripherals - 2.4% | |||
Apple, Inc. (a) | 614,200 | 83,415 | |
HTC Corp. | 250,000 | 4,074 | |
| 87,489 | ||
Internet Software & Services - 3.3% | |||
Baidu.com, Inc. sponsored ADR (a) | 150,000 | 39,593 | |
Equinix, Inc. (a) | 300,000 | 22,320 | |
Google, Inc. Class A (sub. vtg.) (a) | 25,000 | 10,431 | |
Mercadolibre, Inc. (a)(d) | 900,000 | 19,476 | |
NetEase.com, Inc. sponsored ADR (a) | 300,000 | 10,374 | |
Tencent Holdings Ltd. | 1,500,000 | 16,847 | |
| 119,041 | ||
IT Services - 0.9% | |||
Visa, Inc. | 500,000 | 33,855 | |
Software - 0.3% | |||
BMC Software, Inc. (a) | 300,000 | 10,230 | |
TOTAL INFORMATION TECHNOLOGY | 380,448 | ||
MATERIALS - 13.0% | |||
Chemicals - 7.5% | |||
Ashland, Inc. | 800,000 | 21,440 | |
CF Industries Holdings, Inc. | 100,000 | 7,764 | |
Dow Chemical Co. | 4,000,000 | 70,720 | |
E.I. du Pont de Nemours & Co. | 900,000 | 25,623 | |
FMC Corp. | 800,000 | 43,480 | |
Potash Corp. of Saskatchewan, Inc. | 23,900 | 2,756 | |
Common Stocks - continued | |||
Shares | Value (000s) | ||
MATERIALS - continued | |||
Chemicals - continued | |||
Rockwood Holdings, Inc. (a) | 1,100,000 | $ 16,412 | |
Terra Industries, Inc. | 1,700,000 | 47,243 | |
The Mosaic Co. | 647,700 | 35,429 | |
| 270,867 | ||
Containers & Packaging - 0.3% | |||
Sealed Air Corp. | 500,000 | 10,005 | |
Metals & Mining - 5.2% | |||
Agnico-Eagle Mines Ltd. (Canada) | 526,400 | 32,540 | |
Alcoa, Inc. | 2,637,500 | 24,318 | |
Barrick Gold Corp. | 400,000 | 15,157 | |
Freeport-McMoRan Copper & Gold, Inc. Class B | 550,000 | 29,937 | |
Goldcorp, Inc. | 500,000 | 19,761 | |
Impala Platinum Holdings Ltd. | 920,800 | 22,337 | |
Newmont Mining Corp. | 449,000 | 21,943 | |
United States Steel Corp. | 634,800 | 21,634 | |
| 187,627 | ||
TOTAL MATERIALS | 468,499 | ||
TELECOMMUNICATION SERVICES - 2.4% | |||
Diversified Telecommunication Services - 0.6% | |||
China Telecom Corp. Ltd. sponsored ADR | 500,000 | 23,795 | |
Wireless Telecommunication Services - 1.8% | |||
Sprint Nextel Corp. (a) | 9,000,000 | 46,350 | |
Vivo Participacoes SA sponsored ADR | 900,000 | 18,153 | |
| 64,503 | ||
TOTAL TELECOMMUNICATION SERVICES | 88,298 | ||
TOTAL COMMON STOCKS (Cost $3,222,609) | 3,604,525 | ||
Money Market Funds - 1.8% | |||
Shares | Value (000s) | ||
Fidelity Cash Central Fund, 0.53% (b) | 1,043,096 | $ 1,043 | |
Fidelity Securities Lending Cash Central Fund, 0.28% (b)(c) | 64,499,450 | 64,499 | |
TOTAL MONEY MARKET FUNDS (Cost $65,542) | 65,542 | ||
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $3,288,151) | 3,670,067 | ||
NET OTHER ASSETS - (1.7)% | (60,414) | ||
NET ASSETS - 100% | $ 3,609,653 |
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) 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 $5,962,000 or 0.2% of net assets. |
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 | $ 88 |
Fidelity Securities Lending Cash Central Fund | 1,370 |
Total | $ 1,458 |
Other Information |
The following is a summary of the inputs used, as of May 31, 2009, involving the Fund's assets and liabilities carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 3,670,067 | $ 3,582,387 | $ 87,680 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 80.9% |
Canada | 4.5% |
Switzerland | 4.2% |
China | 3.8% |
Germany | 2.2% |
Brazil | 1.3% |
Netherlands Antilles | 1.0% |
Others (individually less than 1%) | 2.1% |
| 100.0% |
Income Tax Information |
At November 30, 2008, the fund had a capital loss carryforward of approximately $1,272,786,000 all of which will expire on November 30, 2016. |
The fund intends to elect to defer to its fiscal year ending November 30, 2009 approximately $445,082,000 of losses recognized during the period November 1, 2008 to November 30, 2008. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Assets | ||
Investment in securities, at value (including securities loaned of $63,966) - See accompanying schedule: Unaffiliated issuers (cost $3,222,609) | $ 3,604,525 |
|
Fidelity Central Funds (cost $65,542) | 65,542 |
|
Total Investments (cost $3,288,151) |
| $ 3,670,067 |
Foreign currency held at value (cost $68) | 68 | |
Receivable for investments sold | 59,987 | |
Receivable for fund shares sold | 1,892 | |
Dividends receivable | 5,523 | |
Distributions receivable from Fidelity Central Funds | 620 | |
Prepaid expenses | 26 | |
Other receivables | 105 | |
Total assets | 3,738,288 | |
|
|
|
Liabilities | ||
Payable for investments purchased | $ 57,763 | |
Payable for fund shares redeemed | 3,514 | |
Accrued management fee | 1,914 | |
Other affiliated payables | 827 | |
Other payables and accrued expenses | 118 | |
Collateral on securities loaned, at value | 64,499 | |
Total liabilities | 128,635 | |
|
|
|
Net Assets | $ 3,609,653 | |
Net Assets consist of: |
| |
Paid in capital | $ 5,698,809 | |
Undistributed net investment income | 10,976 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (2,482,080) | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 381,948 | |
Net Assets | $ 3,609,653 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities - continued
Amounts in thousands (except per-share amounts) | May 31, 2009 (Unaudited) | |
|
|
|
Independence: | $ 15.86 | |
|
|
|
Class K: | $ 15.86 |
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, 2009 (Unaudited) | |
|
|
|
Investment Income |
|
|
Dividends |
| $ 29,187 |
Income from Fidelity Central Funds |
| 1,458 |
Total income |
| 30,645 |
|
|
|
Expenses | ||
Management fee | $ 9,197 | |
Performance adjustment | (452) | |
Transfer agent fees | 4,524 | |
Accounting and security lending fees | 496 | |
Custodian fees and expenses | 57 | |
Independent trustees' compensation | 13 | |
Registration fees | 58 | |
Audit | 37 | |
Legal | 13 | |
Interest | 2 | |
Miscellaneous | 42 | |
Total expenses before reductions | 13,987 | |
Expense reductions | (46) | 13,941 |
Net investment income (loss) | 16,704 | |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | ||
Investment securities: |
|
|
Unaffiliated issuers | (681,673) | |
Foreign currency transactions | 178 | |
Total net realized gain (loss) |
| (681,495) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 1,046,603 | |
Assets and liabilities in foreign currencies | (50) | |
Total change in net unrealized appreciation (depreciation) |
| 1,046,553 |
Net gain (loss) | 365,058 | |
Net increase (decrease) in net assets resulting from operations | $ 381,762 |
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, 2009 | Year ended |
Increase (Decrease) in Net Assets |
|
|
Operations |
|
|
Net investment income (loss) | $ 16,704 | $ 20,479 |
Net realized gain (loss) | (681,495) | (1,790,977) |
Change in net unrealized appreciation (depreciation) | 1,046,553 | (1,587,052) |
Net increase (decrease) in net assets resulting | 381,762 | (3,357,550) |
Distributions to shareholders from net investment income | (20,945) | (2,158) |
Distributions to shareholders from net realized gain | - | (166,844) |
Total distributions | (20,945) | (169,002) |
Share transactions - net increase (decrease) | (235,671) | 1,111,831 |
Total increase (decrease) in net assets | 125,146 | (2,414,721) |
|
|
|
Net Assets | ||
Beginning of period | 3,484,507 | 5,899,228 |
End of period (including undistributed net investment income of $10,976 and undistributed net investment income of $15,566, respectively) | $ 3,609,653 | $ 3,484,507 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Independence
| Six months ended | Years ended November 30, | ||||
(Unaudited) | 2008 | 2007 | 2006 | 2005 | 2004 | |
Selected Per-Share Data |
|
|
|
|
| |
Net asset value, beginning of period | $ 14.17 | $ 27.60 | $ 22.03 | $ 19.46 | $ 17.39 | $ 15.45 |
Income from Investment Operations |
|
|
|
|
|
|
Net investment income (loss) D | .07 | .08 | .07 | .08 | .04 | .11 G, I |
Net realized and unrealized gain (loss) | 1.71 | (12.75) | 5.60 | 2.54 | 2.14 | 1.93 |
Total from investment operations | 1.78 | (12.67) | 5.67 | 2.62 | 2.18 | 2.04 |
Distributions from net investment income | (.09) | (.01) | (.10) | (.05) | (.11) | (.10) |
Distributions from net realized gain | - | (.75) | - | - | - | - |
Total distributions | (.09) | (.76) | (.10) | (.05) | (.11) | (.10) |
Net asset value, end of period | $ 15.86 | $ 14.17 | $ 27.60 | $ 22.03 | $ 19.46 | $ 17.39 |
Total Return B, C | 12.61% | (47.19)% | 25.85% | 13.49% | 12.61% | 13.28% |
Ratios to Average Net Assets E, H |
|
|
|
|
| |
Expenses before reductions | .87% A | .91% | .90% | .87% | .77% | .76% |
Expenses net of fee waivers, if any | .87% A | .91% | .90% | .87% | .77% | .76% |
Expenses net of all reductions | .87% A | .90% | .89% | .86% | .72% | .71% |
Net investment income (loss) | 1.02% A | .34% | .31% | .41% | .24% | .66% I |
Supplemental Data |
|
|
|
|
|
|
Net assets, end of period (in millions) | $ 3,473 | $ 3,407 | $ 5,899 | $ 4,723 | $ 4,654 | $ 4,584 |
Portfolio turnover rate F | 218% A | 173% | 175% | 169% | 119% | 119% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G Investment income per share reflects a special dividend which amounted to $.07 per share.
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. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I 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.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Class K
| Six months ended | Year ended |
(Unaudited) | 2008 G | |
Selected Per-Share Data |
|
|
Net asset value, beginning of period | $ 14.18 | $ 28.56 |
Income from Investment Operations |
|
|
Net investment income (loss) D | .09 | .09 |
Net realized and unrealized gain (loss) | 1.70 | (14.47) |
Total from investment operations | 1.79 | (14.38) |
Distributions from net investment income | (.11) | - |
Net asset value, end of period | $ 15.86 | $ 14.18 |
Total Return B, C | 12.76% | (50.35)% |
Ratios to Average Net Assets E, H |
|
|
Expenses before reductions | .65% A | .79% A |
Expenses net of fee waivers, if any | .65% A | .79% A |
Expenses net of all reductions | .64% A | .78% A |
Net investment income (loss) | 1.25% A | 1.04% A |
Supplemental Data |
|
|
Net assets, end of period (in millions) | $ 136 | $ 78 |
Portfolio turnover rate F | 218% A | 173% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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, 2009 (Unaudited)
(Amounts in thousands except ratios)
1. Organization.
Fidelity Independence Fund (the Fund) is a fund of Fidelity Financial Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Independence and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. After the commencement of Class K, the Fund began offering conversion privileges between Independence and Class K to eligible shareholders of Independence. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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 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 reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable or deemed less relevant (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Security Valuation - continued
The aggregate value by input level, as of May 31, 2009, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
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
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 substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. There are no unrecognized tax benefits in the accompanying financial statements. A Fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. 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, partnerships, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 603,535 |
|
Unrealized depreciation | (300,413) |
|
Net unrealized appreciation (depreciation) | $ 303,122 |
|
Cost for federal income tax purposes | $ 3,366,945 |
|
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 $3,538,398 and $3,684,906, 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 .27% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of the retail class
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Management Fee - continued
of the Fund, Independence as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .54% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Independence. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the total transfer agent fees paid by each class were as follows:
| Amount | % of |
Independence | $ 4,490 | .29 |
Class K | 34 | .06 |
| $ 4,524 |
|
* Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $113 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily Loan Balance | Weighted Average Interest Rate | Interest Expense |
Borrower | $ 8,138 | .43% | $ 2 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $3.5 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 $10 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 $1,370.
9. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $6,388. The weighted average interest rate was .83%. The interest expense amounted to two hundred and ninety four dollars under the bank borrowing program. At period end, there were no bank borrowings outstanding.
Semiannual Report
10. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Independence's operating expenses. During this period, this reimbursement reduced the class' expenses by $2.
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 $44 for the period.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended | Year ended | |
From net investment income |
|
|
Independence | $ 20,326 | $ 2,158 |
Class K | 619 | - |
Total | $ 20,945 | $ 2,158 |
From net realized gain |
|
|
Independence | $ - | $ 166,844 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars | ||
Six months ended May 31, | Year ended | Six months ended May 31, | Year ended | |
Independence |
|
|
|
|
Shares sold | 11,942 | 106,988 | $ 163,131 | $ 2,759,081 |
Conversion to Class K | (2,043) | (5,354) | (28,312) | (109,247) |
Reinvestment of distributions | 1,443 | 6,242 | 20,026 | 166,964 |
Shares redeemed | (32,746) | (81,243) | (431,409) | (1,816,192) |
Net increase (decrease) | (21,404) | 26,633 | $ (276,564) | $ 1,000,606 |
Class K |
|
|
|
|
Shares sold | 2,431 | 659 | $ 30,869 | $ 10,298 |
Conversion from Independence | 2,044 | 5,350 | 28,312 | 109,247 |
Reinvestment of distributions | 45 | - | 619 | - |
Shares redeemed | (1,400) | (523) | (18,907) | (8,320) |
Net increase (decrease) | 3,120 | 5,486 | $ 40,893 | $ 111,225 |
A Share transactions for Class K are for the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
(Amounts in thousands except ratios)
13. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Semiannual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your workplace benefits (including your workplace savings plan, investments, and additional services) via your telephone or PC. You can access your plan and account information and research your investments 24 hours a day.
By Phone
Fidelity provides a single toll-free number to access plan information, account balances, positions, and quotes*. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Workplace
Investing
1-800-835-5092
By PC
Fidelity's web site on the Internet provides a wide range of information, including plan information, daily financial news, fund performance, interactive planning tools, and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.401k.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Semiannual Report
To Write Fidelity
We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.
(letter_graphic)
For Non-Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(letter_graphic)
For Retirement
Accounts
Buying shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
Selling shares
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035
Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015
General Correspondence
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
FIL Investment Advisors
Fidelity Investments Japan Limited
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Northern Trust Company
Chicago, Illinois
FRE-K-USAN-0709 1.863218.100
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Not applicable.
(b) Not applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the Fidelity Financial Trust's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the Fidelity Financial Trust's (the "Trust") disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the Trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Not applicable. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) |
| Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Financial Trust
By: | /s/ Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
|
|
Date: | July 23, 2009 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
|
|
Date: | July 23, 2009 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
|
|
Date: | July 23, 2009 |