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)
245 Summer St., Boston, MA 02210
(Address of principal executive offices) (Zip code)
Marc Bryant, Secretary
245 Summer St.
Boston, Massachusetts 02210
(Name and address of agent for service)
Registrant's telephone number, including area code:
617-563-7000
Date of fiscal year end: | November 30 |
|
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Date of reporting period: | May 31, 2016 |
Item 1.
Reports to Stockholders
Fidelity Advisor® Convertible Securities Fund - Semi-Annual Report May 31, 2016 Class A, Class T, Class B, Class C and Class I are classes of Fidelity® Convertible Securities Fund |
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2016 FMR LLC. All rights reserved.
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, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Fund nor Fidelity Distributors Corporation is a bank.
Investment Summary (Unaudited)
Top Ten Investments as of May 31, 2016
(excluding cash equivalents) | % of fund's net assets | % of fund's net assets 6 months ago |
Wells Fargo & Co. 7.50% | 5.0 | 7.8 |
Allergan PLC 5.50% | 4.0 | 5.4 |
U.S. Treasury Bonds 2.5% 2/15/46 | 3.4 | 0.0 |
Bank of America Corp. Series L 7.25% | 3.0 | 4.1 |
NXP Semiconductors NV 1% 12/1/19 | 2.7 | 0.6 |
Twitter, Inc. 1% 9/15/21 | 2.7 | 1.3 |
InterDigital, Inc. 1.5% 3/1/20 | 2.5 | 0.3 |
Scorpio Tankers, Inc. 2.375% 7/1/19 | 2.5 | 1.2 |
T-Mobile U.S., Inc. Series A 5.50% | 2.4 | 1.2 |
Microchip Technology, Inc. 1.625% 2/15/25 | 2.3 | 1.8 |
30.5 |
Top Five Market Sectors as of May 31, 2016
% of fund's net assets | % of fund's net assets 6 months ago | |
Information Technology | 31.8 | 18.5 |
Health Care | 17.3 | 15.4 |
Financials | 12.8 | 19.9 |
Energy | 8.5 | 8.7 |
Telecommunication Services | 5.8 | 6.5 |
Asset Allocation (% of fund's net assets)
As of May 31, 2016* | ||
Convertible Securities | 80.9% | |
Stocks | 8.9% | |
Nonconvertible Bonds | 5.9% | |
U.S. Government and U.S. Government Agency Obligations | 3.4% | |
Short-Term Investments and Net Other Assets (Liabilities) | 0.9% |
* Foreign investments - 16.1%
As of November 30, 2015* | ||
Convertible Securities | 67.6% | |
Stocks | 29.6% | |
Short-Term Investments and Net Other Assets (Liabilities) | 2.8% |
* Foreign investments - 10.8%
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Investments May 31, 2016 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 50.4% | |||
Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - 44.5% | |||
CONSUMER DISCRETIONARY - 2.3% | |||
Diversified Consumer Services - 0.2% | |||
Carriage Services, Inc. 2.75% 3/15/21 | $3,160 | $3,703 | |
Household Durables - 1.1% | |||
Lennar Corp. 3.25% 11/15/21 | 8,360 | 16,239 | |
M/I Homes, Inc. 3% 3/1/18 | 3,000 | 2,923 | |
19,162 | |||
Media - 1.0% | |||
Liberty Media Corp.: | |||
1.375% 10/15/23 | 9,000 | 8,938 | |
3.5% 1/15/31 | 13,500 | 7,083 | |
16,021 | |||
TOTAL CONSUMER DISCRETIONARY | 38,886 | ||
CONSUMER STAPLES - 1.2% | |||
Tobacco - 1.2% | |||
Vector Group Ltd. 2.5% 1/15/19 (a) | 14,840 | 20,752 | |
ENERGY - 4.4% | |||
Energy Equipment & Services - 0.0% | |||
Vantage Drilling Co. 5.5% 7/15/43 (b)(c) | 20,000 | 20 | |
Oil, Gas & Consumable Fuels - 4.4% | |||
Chesapeake Energy Corp. 2.5% 5/15/37 | 6,545 | 6,054 | |
Clean Energy Fuels Corp. 5.25% 10/1/18 (c) | 10,000 | 6,794 | |
Cobalt International Energy, Inc. 2.625% 12/1/19 | 9,440 | 3,941 | |
Peabody Energy Corp. 4.75% 12/15/41 (b) | 103,850 | 649 | |
Scorpio Tankers, Inc. 2.375% 7/1/19 (c) | 49,620 | 41,495 | |
Whiting Petroleum Corp. 1.25% 4/1/20 (c) | 18,000 | 13,680 | |
72,613 | |||
TOTAL ENERGY | 72,633 | ||
FINANCIALS - 1.4% | |||
Insurance - 0.7% | |||
FNF Group 4.25% 8/15/18 | 6,000 | 11,633 | |
Real Estate Management & Development - 0.7% | |||
Extra Space Storage LP 3.125% 10/1/35 (c) | 10,000 | 11,500 | |
TOTAL FINANCIALS | 23,133 | ||
HEALTH CARE - 7.3% | |||
Biotechnology - 1.5% | |||
AMAG Pharmaceuticals, Inc. 2.5% 2/15/19 | 7,000 | 7,319 | |
BioMarin Pharmaceutical, Inc. 1.5% 10/15/20 | 9,000 | 11,160 | |
Spectrum Pharmaceuticals, Inc. 2.75% 12/15/18 | 6,400 | 6,212 | |
24,691 | |||
Health Care Equipment & Supplies - 0.9% | |||
Hologic, Inc. 2% 3/1/42 (d) | 9,716 | 12,497 | |
Teleflex, Inc. 3.875% 8/1/17 | 1,100 | 2,882 | |
15,379 | |||
Health Care Providers & Services - 1.4% | |||
HealthSouth Corp. 2% 12/1/43 | 19,500 | 23,120 | |
Life Sciences Tools & Services - 0.4% | |||
Fluidigm Corp. 2.75% 2/1/34 | 9,500 | 6,015 | |
Pharmaceuticals - 3.1% | |||
Akorn, Inc. 3.5% 6/1/16 | 5,000 | 17,041 | |
ANI Pharmaceuticals, Inc. 3% 12/1/19 | 1,700 | 1,814 | |
Horizon Pharma Investment Ltd. 2.5% 3/15/22 | 12,000 | 10,965 | |
Orexigen Therapeutics, Inc. 2.75% 12/1/20 | 10,000 | 3,513 | |
Teva Pharmaceutical Finance LLC 0.25% 2/1/26 | 15,000 | 19,369 | |
52,702 | |||
TOTAL HEALTH CARE | 121,907 | ||
INDUSTRIALS - 1.0% | |||
Airlines - 0.5% | |||
JetBlue Airways Corp. Series D 6.75% 10/15/39 | 2,200 | 8,085 | |
Machinery - 0.5% | |||
Trinity Industries, Inc. 3.875% 6/1/36 | 8,000 | 8,525 | |
TOTAL INDUSTRIALS | 16,610 | ||
INFORMATION TECHNOLOGY - 26.7% | |||
Communications Equipment - 3.6% | |||
Brocade Communications Systems, Inc. 1.375% 1/1/20 | 9,710 | 9,388 | |
InterDigital, Inc. 1.5% 3/1/20 | 39,650 | 42,128 | |
Liberty Interactive LLC 0.75% 3/30/43 | 5,310 | 9,044 | |
60,560 | |||
Internet Software & Services - 8.1% | |||
LinkedIn Corp. 0.5% 11/1/19 | 22,100 | 20,650 | |
Twitter, Inc.: | |||
0.25% 9/15/19 | 8,500 | 7,485 | |
1% 9/15/21 | 53,548 | 44,913 | |
VeriSign, Inc. 4.345% 8/15/37 (a) | 8,000 | 19,950 | |
Web.com Group, Inc. 1% 8/15/18 | 5,500 | 5,067 | |
WebMD Health Corp.: | |||
1.5% 12/1/20 | 3,700 | 5,148 | |
2.5% 1/31/18 | 4,300 | 5,044 | |
Yahoo!, Inc. 0% 12/1/18 | 26,820 | 26,971 | |
135,228 | |||
Semiconductors & Semiconductor Equipment - 9.7% | |||
Intel Corp. 3.25% 8/1/39 | 4,750 | 7,505 | |
Microchip Technology, Inc. 1.625% 2/15/25 | 35,000 | 38,916 | |
Micron Technology, Inc.: | |||
1.625% 2/15/33 | 10,250 | 13,504 | |
3% 11/15/43 | 27,850 | 20,261 | |
Novellus Systems, Inc. 2.625% 5/15/41 | 10,500 | 25,587 | |
NXP Semiconductors NV 1% 12/1/19 | 38,570 | 45,537 | |
Xilinx, Inc. 2.625% 6/15/17 | 6,200 | 10,257 | |
161,567 | |||
Software - 4.5% | |||
BroadSoft, Inc. 1% 9/1/22 (c) | 3,000 | 3,831 | |
FireEye, Inc. 1.625% 6/1/35 (c) | 13,500 | 11,095 | |
Nuance Communications, Inc. 1% 12/15/35 (c) | 18,000 | 16,099 | |
Salesforce.com, Inc. 0.25% 4/1/18 | 15,000 | 20,269 | |
TiVo, Inc. 2% 10/1/21 | 21,100 | 20,718 | |
Workday, Inc. 1.5% 7/15/20 | 2,500 | 2,956 | |
74,968 | |||
Technology Hardware, Storage & Peripherals - 0.8% | |||
BlackBerry Ltd. 6% 11/13/20 (Reg. S) | 13,000 | 13,520 | |
TOTAL INFORMATION TECHNOLOGY | 445,843 | ||
UTILITIES - 0.2% | |||
Independent Power and Renewable Electricity Producers - 0.2% | |||
NRG Yield, Inc. 3.5% 2/1/19 (c) | 3,000 | 2,904 | |
TOTAL CONVERTIBLE BONDS | 742,668 | ||
Nonconvertible Bonds - 5.9% | |||
CONSUMER DISCRETIONARY - 1.2% | |||
Media - 1.2% | |||
Altice SA: | |||
7.625% 2/15/25 (c) | 8,500 | 8,394 | |
7.75% 5/15/22 (c) | 9,500 | 9,732 | |
Anna Merger Sub, Inc. 7.75% 10/1/22 (c) | 1,305 | 1,259 | |
19,385 | |||
CONSUMER STAPLES - 0.1% | |||
Food & Staples Retailing - 0.1% | |||
Albertsons Companies LLC/Safeway, Inc./New Albertson's, Inc./Albertson's LLC 6.625% 6/15/24 (c) | 1,775 | 1,817 | |
ENERGY - 0.8% | |||
Oil, Gas & Consumable Fuels - 0.8% | |||
Southwestern Energy Co. 4.1% 3/15/22 | 16,165 | 13,174 | |
FINANCIALS - 1.0% | |||
Thrifts & Mortgage Finance - 1.0% | |||
Prime Securities Services Borrower LLC/Prime Finance, Inc. 9.25% 5/15/23 (c) | 16,730 | 17,441 | |
HEALTH CARE - 0.8% | |||
Pharmaceuticals - 0.8% | |||
Valeant Pharmaceuticals International, Inc. 6.125% 4/15/25 (c) | 15,000 | 12,544 | |
TELECOMMUNICATION SERVICES - 0.6% | |||
Wireless Telecommunication Services - 0.6% | |||
Neptune Finco Corp. 10.125% 1/15/23 (c) | 9,200 | 10,304 | |
UTILITIES - 1.4% | |||
Independent Power and Renewable Electricity Producers - 1.4% | |||
Dynegy, Inc.: | |||
7.375% 11/1/22 | 5,750 | 5,549 | |
7.625% 11/1/24 | 18,570 | 17,827 | |
23,376 | |||
TOTAL NONCONVERTIBLE BONDS | 98,041 | ||
TOTAL CORPORATE BONDS | |||
(Cost $906,877) | 840,709 | ||
U.S. Treasury Obligations - 3.4% | |||
U.S. Treasury Bonds 2.5% 2/15/46 | |||
(Cost $56,713) | 58,500 | 56,743 | |
Shares | Value (000s) | ||
Common Stocks - 8.9% | |||
CONSUMER DISCRETIONARY - 1.0% | |||
Automobiles - 0.5% | |||
General Motors Co. | 270,568 | $8,463 | |
Diversified Consumer Services - 0.0% | |||
Houghton Mifflin Harcourt Co. warrants 6/22/19 (e)(f) | 686 | 4 | |
Household Durables - 0.5% | |||
Newell Brands, Inc. | 160,000 | 7,630 | |
TOTAL CONSUMER DISCRETIONARY | 16,097 | ||
CONSUMER STAPLES - 0.5% | |||
Beverages - 0.3% | |||
Cott Corp. | 300,000 | 4,331 | |
Food Products - 0.2% | |||
B&G Foods, Inc. Class A | 100,000 | 4,299 | |
TOTAL CONSUMER STAPLES | 8,630 | ||
FINANCIALS - 0.3% | |||
Real Estate Investment Trusts - 0.3% | |||
Weyerhaeuser Co. | 159,600 | 5,027 | |
HEALTH CARE - 0.7% | |||
Pharmaceuticals - 0.7% | |||
GlaxoSmithKline PLC sponsored ADR | 255,000 | 10,804 | |
INFORMATION TECHNOLOGY - 5.1% | |||
Communications Equipment - 0.5% | |||
InterDigital, Inc. | 139,025 | 8,105 | |
Internet Software & Services - 1.7% | |||
Twitter, Inc. (e)(g) | 1,525,475 | 23,218 | |
Yahoo!, Inc. (e) | 132,400 | 5,023 | |
28,241 | |||
Semiconductors & Semiconductor Equipment - 0.7% | |||
Qualcomm, Inc. | 227,900 | 12,516 | |
Technology Hardware, Storage & Peripherals - 2.2% | |||
Apple, Inc. | 296,000 | 29,559 | |
EMC Corp. | 265,000 | 7,407 | |
36,966 | |||
TOTAL INFORMATION TECHNOLOGY | 85,828 | ||
TELECOMMUNICATION SERVICES - 1.3% | |||
Diversified Telecommunication Services - 1.3% | |||
AT&T, Inc. | 560,000 | 21,924 | |
TOTAL COMMON STOCKS | |||
(Cost $143,627) | 148,310 | ||
Convertible Preferred Stocks - 36.4% | |||
CONSUMER DISCRETIONARY - 0.1% | |||
Household Durables - 0.1% | |||
William Lyon Homes, Inc. 6.50% (e) | 25,000 | 2,119 | |
CONSUMER STAPLES - 3.6% | |||
Food Products - 3.6% | |||
Bunge Ltd. 4.875% (e) | 192,000 | 18,273 | |
Post Holdings, Inc.: | |||
3.75% | 50,000 | 8,262 | |
Series C 2.50% | 172,500 | 24,991 | |
Tyson Foods, Inc. 4.75% (e) | 128,200 | 9,042 | |
60,568 | |||
ENERGY - 3.3% | |||
Oil, Gas & Consumable Fuels - 3.3% | |||
Anadarko Petroleum Corp. 7.50% (e) | 159,000 | 6,201 | |
Chesapeake Energy Corp. Series A, 5.75% (c)(e) | 41,700 | 10,269 | |
Hess Corp. Series A 8.00% | 155,600 | 11,836 | |
Kinder Morgan, Inc. Series A 9.75% | 267,284 | 12,220 | |
Southwestern Energy Co. Series B 6.25% | 456,500 | 14,722 | |
55,248 | |||
FINANCIALS - 10.1% | |||
Banks - 8.0% | |||
Bank of America Corp. Series L 7.25% | 43,999 | 50,841 | |
Wells Fargo & Co. 7.50% (e) | 67,630 | 83,140 | |
133,981 | |||
Real Estate Investment Trusts - 2.1% | |||
American Tower Corp. 5.50% | 47,300 | 4,995 | |
Crown Castle International Corp. 4.50% (e) | 42,900 | 4,681 | |
Welltower, Inc. Series I, 6.50% (e) | 14,300 | 896 | |
Weyerhaeuser Co. Series A, 6.375% (e) | 486,200 | 24,680 | |
35,252 | |||
TOTAL FINANCIALS | 169,233 | ||
HEALTH CARE - 8.5% | |||
Health Care Equipment & Supplies - 0.3% | |||
Alere, Inc. 3.00% | 13,522 | 4,560 | |
Health Care Providers & Services - 2.7% | |||
AmSurg Corp. Series A-1, 5.25% (e) | 176,500 | 24,941 | |
Anthem, Inc. 5.25% (e) | 461,000 | 20,538 | |
45,479 | |||
Pharmaceuticals - 5.5% | |||
Allergan PLC 5.50% | 78,900 | 66,644 | |
Teva Pharmaceutical Industries Ltd. 7% | 29,100 | 24,760 | |
91,404 | |||
TOTAL HEALTH CARE | 141,443 | ||
INDUSTRIALS - 1.6% | |||
Commercial Services & Supplies - 1.6% | |||
Stericycle, Inc. 2.25% | 330,000 | 26,153 | |
MATERIALS - 1.3% | |||
Metals & Mining - 1.3% | |||
Alcoa, Inc. Series 1, 5.375% (e) | 658,300 | 21,691 | |
TELECOMMUNICATION SERVICES - 3.9% | |||
Diversified Telecommunication Services - 1.5% | |||
Frontier Communications Corp. Series A 11.125% | 247,100 | 24,320 | |
Wireless Telecommunication Services - 2.4% | |||
T-Mobile U.S., Inc. Series A 5.50% | 555,700 | 40,288 | |
TOTAL TELECOMMUNICATION SERVICES | 64,608 | ||
UTILITIES - 4.0% | |||
Electric Utilities - 0.6% | |||
Exelon Corp. 6.50% (e) | 221,500 | 10,459 | |
Independent Power and Renewable Electricity Producers - 1.4% | |||
Dynegy, Inc. 5.375% | 350,000 | 23,664 | |
Multi-Utilities - 2.0% | |||
CenterPoint Energy, Inc. 2.00% ZENS (e) | 500,000 | 32,313 | |
TOTAL UTILITIES | 66,436 | ||
TOTAL CONVERTIBLE PREFERRED STOCKS | |||
(Cost $643,289) | 607,499 | ||
Money Market Funds - 2.1% | |||
Fidelity Cash Central Fund, 0.40% (h) | 26,384,480 | 26,384 | |
Fidelity Securities Lending Cash Central Fund, 0.44% (h)(i) | 7,953,050 | 7,953 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $34,337) | 34,337 | ||
TOTAL INVESTMENT PORTFOLIO - 101.2% | |||
(Cost $1,784,843) | 1,687,598 | ||
NET OTHER ASSETS (LIABILITIES) - (1.2)% | (20,139) | ||
NET ASSETS - 100% | $1,667,459 |
Legend
(a) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end.
(b) Non-income producing - Security is in default.
(c) 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 $179,178,000 or 10.7% of net assets.
(d) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end.
(e) Non-income producing
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $4,000 or 0.0% of net assets.
(g) Security or a portion of the security is on loan at period end.
(h) Affiliated fund that is generally 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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(i) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
Security | Acquisition Date | Acquisition Cost (000s) |
Houghton Mifflin Harcourt Co. warrants 6/22/19 | 6/22/12 | $1 |
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 |
(Amounts in thousands) | |
Fidelity Cash Central Fund | $80 |
Fidelity Securities Lending Cash Central Fund | 11 |
Total | $91 |
Investment Valuation
The following is a summary of the inputs used, as of May 31, 2016, involving the Fund's assets and liabilities carried at fair 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
(Amounts in thousands) | ||||
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $18,216 | $16,093 | $2,123 | $-- |
Consumer Staples | 69,198 | 17,672 | 51,526 | -- |
Energy | 55,248 | 44,979 | 10,269 | -- |
Financials | 174,260 | 174,260 | -- | -- |
Health Care | 152,247 | 122,927 | 29,320 | -- |
Industrials | 26,153 | 26,153 | -- | -- |
Information Technology | 85,828 | 85,828 | -- | -- |
Materials | 21,691 | 21,691 | -- | -- |
Telecommunication Services | 86,532 | 86,532 | -- | -- |
Utilities | 66,436 | 34,123 | 32,313 | -- |
Corporate Bonds | 840,709 | -- | 840,709 | -- |
U.S. Government and Government Agency Obligations | 56,743 | -- | 56,743 | -- |
Money Market Funds | 34,337 | 34,337 | -- | -- |
Total Investments in Securities: | $1,687,598 | $664,595 | $1,023,003 | $-- |
Other Information
The composition of credit quality ratings as a percentage of Total Net Assets is as follows (Unaudited):
U.S. Government and U.S. Government Agency Obligations | 3.4% |
AAA,AA,A | 1.1% |
BBB | 3.5% |
BB | 14.2% |
B | 11.5% |
CCC,CC,C | 2.1% |
D | 0.1% |
Not Rated | 17.9% |
Equities | 45.3% |
Short-Term Investments and Net Other Assets | 0.9% |
100.0% |
We have used ratings from Moody's Investors Service, Inc. Where Moody's® ratings are not available, we have used S&P® ratings. All ratings are as of the date indicated and do not reflect subsequent changes.
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
United States of America | 83.9% |
Ireland | 4.0% |
Netherlands | 2.7% |
Marshall Islands | 2.5% |
Canada | 1.9% |
Bermuda | 1.7% |
Israel | 1.5% |
Luxembourg | 1.1% |
Others (Individually Less Than 1%) | 0.7% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2016 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $7,809) — See accompanying schedule: Unaffiliated issuers (cost $1,750,506) | $1,653,261 | |
Fidelity Central Funds (cost $34,337) | 34,337 | |
Total Investments (cost $1,784,843) | $1,687,598 | |
Cash | 1,909 | |
Foreign currency held at value (cost $188) | 188 | |
Receivable for investments sold | 31,657 | |
Receivable for fund shares sold | 186 | |
Dividends receivable | 5,705 | |
Interest receivable | 5,955 | |
Distributions receivable from Fidelity Central Funds | 35 | |
Prepaid expenses | 1 | |
Other receivables | 7 | |
Total assets | 1,733,241 | |
Liabilities | ||
Payable for investments purchased | $55,197 | |
Payable for fund shares redeemed | 1,946 | |
Accrued management fee | 332 | |
Distribution and service plan fees payable | 35 | |
Other affiliated payables | 279 | |
Other payables and accrued expenses | 40 | |
Collateral on securities loaned, at value | 7,953 | |
Total liabilities | 65,782 | |
Net Assets | $1,667,459 | |
Net Assets consist of: | ||
Paid in capital | $1,705,693 | |
Undistributed net investment income | 13,234 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 45,777 | |
Net unrealized appreciation (depreciation) on investments | (97,245) | |
Net Assets | $1,667,459 | |
Calculation of Maximum Offering Price | ||
Class A: | ||
Net Asset Value and redemption price per share ($35,847.12 ÷ 1,382.094 shares) | $25.94 | |
Maximum offering price per share (100/94.25 of $25.94) | $27.52 | |
Class T: | ||
Net Asset Value and redemption price per share ($6,973.35 ÷ 268.769 shares) | $25.95 | |
Maximum offering price per share (100/96.50 of $25.95) | $26.89 | |
Class B: | ||
Net Asset Value and offering price per share ($251.33 ÷ 9.687 shares)(a) | $25.95 | |
Class C: | ||
Net Asset Value and offering price per share ($28,724.74 ÷ 1,114.686 shares)(a) | $25.77 | |
Convertible Securities: | ||
Net Asset Value, offering price and redemption price per share ($1,532,474.67 ÷ 58,861.079 shares) | $26.04 | |
Class I: | ||
Net Asset Value, offering price and redemption price per share ($63,187.76 ÷ 2,430.581 shares) | $26.00 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | |
Investment Income | ||
Dividends | $19,858 | |
Interest | 8,657 | |
Income from Fidelity Central Funds | 91 | |
Total income | 28,606 | |
Expenses | ||
Management fee | ||
Basic fee | $3,887 | |
Performance adjustment | (1,760) | |
Transfer agent fees | 1,448 | |
Distribution and service plan fees | 230 | |
Accounting and security lending fees | 267 | |
Custodian fees and expenses | 9 | |
Independent trustees' fees and expenses | 4 | |
Registration fees | 87 | |
Audit | 48 | |
Legal | 1 | |
Miscellaneous | 30 | |
Total expenses before reductions | 4,251 | |
Expense reductions | (7) | 4,244 |
Net investment income (loss) | 24,362 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 99,305 | |
Foreign currency transactions | (2) | |
Total net realized gain (loss) | 99,303 | |
Change in net unrealized appreciation (depreciation) on investment securities | (215,746) | |
Net gain (loss) | (116,443) | |
Net increase (decrease) in net assets resulting from operations | $(92,081) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | Year ended November 30, 2015 |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $24,362 | $56,146 |
Net realized gain (loss) | 99,303 | 145,093 |
Change in net unrealized appreciation (depreciation) | (215,746) | (356,501) |
Net increase (decrease) in net assets resulting from operations | (92,081) | (155,262) |
Distributions to shareholders from net investment income | (28,204) | (53,288) |
Distributions to shareholders from net realized gain | (135,548) | (87,333) |
Total distributions | (163,752) | (140,621) |
Share transactions - net increase (decrease) | (131,995) | (327,711) |
Total increase (decrease) in net assets | (387,828) | (623,594) |
Net Assets | ||
Beginning of period | 2,055,287 | 2,678,881 |
End of period (including undistributed net investment income of $13,234 and undistributed net investment income of $17,076, respectively) | $1,667,459 | $2,055,287 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund Class A
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.56 | $33.42 | $30.79 | $25.08 | $22.85 | $24.22 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .33 | .66 | .51 | .57 | .68 | .72 |
Net realized and unrealized gain (loss) | (1.57) | (2.81) | 2.81B | 5.88 | 2.22 | (1.34) |
Total from investment operations | (1.24) | (2.15) | 3.32 | 6.45 | 2.90 | (.62) |
Distributions from net investment income | (.38) | (.61) | (.48) | (.74) | (.67) | (.75) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.38) | (1.71) | (.69) | (.74) | (.67) | (.75) |
Net asset value, end of period | $25.94 | $29.56 | $33.42 | $30.79 | $25.08 | $22.85 |
Total ReturnC,D,E | (4.19)% | (6.60)% | 10.95%B | 26.12% | 12.87% | (2.79)% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | .74%H | .84% | .86% | .99% | 1.04% | .88% |
Expenses net of fee waivers, if any | .74%H | .84% | .85% | .99% | 1.04% | .88% |
Expenses net of all reductions | .74%H | .84% | .85% | .99% | 1.04% | .88% |
Net investment income (loss) | 2.56%H | 2.09% | 1.60% | 1.99% | 2.79% | 2.84% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $36 | $56 | $150 | $113 | $26 | $33 |
Portfolio turnover rateI | 111%H | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 10.58%.
C Total returns for periods of less than one year are not annualized.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the sales charges.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund Class T
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.56 | $33.44 | $30.80 | $25.09 | $22.87 | $24.23 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .29 | .57 | .42 | .48 | .60 | .65 |
Net realized and unrealized gain (loss) | (1.56) | (2.82) | 2.82B | 5.89 | 2.22 | (1.34) |
Total from investment operations | (1.27) | (2.25) | 3.24 | 6.37 | 2.82 | (.69) |
Distributions from net investment income | (.34) | (.53) | (.39) | (.66) | (.60) | (.67) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.34) | (1.63) | (.60) | (.66) | (.60) | (.67) |
Net asset value, end of period | $25.95 | $29.56 | $33.44 | $30.80 | $25.09 | $22.87 |
Total ReturnC,D,E | (4.32)% | (6.91)% | 10.67%B | 25.73% | 12.48% | (3.07)% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | 1.05%H | 1.12% | 1.14% | 1.30% | 1.36% | 1.18% |
Expenses net of fee waivers, if any | 1.05%H | 1.12% | 1.14% | 1.30% | 1.36% | 1.18% |
Expenses net of all reductions | 1.05%H | 1.12% | 1.14% | 1.30% | 1.36% | 1.17% |
Net investment income (loss) | 2.26%H | 1.81% | 1.32% | 1.68% | 2.47% | 2.55% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $7 | $9 | $14 | $11 | $4 | $5 |
Portfolio turnover rateI | 111%H | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 10.30%.
C Total returns for periods of less than one year are not annualized.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the sales charges.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund Class B
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.53 | $33.37 | $30.74 | $25.04 | $22.82 | $24.17 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .22 | .41 | .25 | .32 | .47 | .51 |
Net realized and unrealized gain (loss) | (1.57) | (2.81) | 2.81B | 5.89 | 2.22 | (1.34) |
Total from investment operations | (1.35) | (2.40) | 3.06 | 6.21 | 2.69 | (.83) |
Distributions from net investment income | (.24) | (.34) | (.22) | (.51) | (.47) | (.52) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.23)C | (1.44) | (.43) | (.51) | (.47) | (.52) |
Net asset value, end of period | $25.95 | $29.53 | $33.37 | $30.74 | $25.04 | $22.82 |
Total ReturnD,E,F | (4.59)% | (7.38)% | 10.05%B | 25.05% | 11.91% | (3.59)% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | 1.60%I | 1.64% | 1.69% | 1.83% | 1.88% | 1.73% |
Expenses net of fee waivers, if any | 1.60%I | 1.64% | 1.69% | 1.83% | 1.88% | 1.73% |
Expenses net of all reductions | 1.60%I | 1.63% | 1.69% | 1.83% | 1.88% | 1.73% |
Net investment income (loss) | 1.70%I | 1.30% | .77% | 1.15% | 1.95% | 2.00% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $– | $1 | $1 | $1 | $1 | $1 |
Portfolio turnover rateJ | 111%I | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 9.68%.
C Total distributions of $2.23 per share is comprised of distributions from net investment income of $.237 and distributions from net realized gain of $1.997 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the contingent deferred sales charge.
G Fees and expenses of any 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.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. 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 Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund Class C
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.37 | $33.23 | $30.63 | $24.97 | $22.75 | $24.14 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .23 | .42 | .27 | .34 | .49 | .51 |
Net realized and unrealized gain (loss) | (1.56) | (2.80) | 2.80B | 5.87 | 2.22 | (1.33) |
Total from investment operations | (1.33) | (2.38) | 3.07 | 6.21 | 2.71 | (.82) |
Distributions from net investment income | (.28) | (.38) | (.26) | (.55) | (.49) | (.57) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.27)C | (1.48) | (.47) | (.55) | (.49) | (.57) |
Net asset value, end of period | $25.77 | $29.37 | $33.23 | $30.63 | $24.97 | $22.75 |
Total ReturnD,E,F | (4.55)% | (7.35)% | 10.13%B | 25.12% | 12.01% | (3.57)% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | 1.50%I | 1.60% | 1.62% | 1.78% | 1.82% | 1.67% |
Expenses net of fee waivers, if any | 1.50%I | 1.60% | 1.62% | 1.77% | 1.82% | 1.67% |
Expenses net of all reductions | 1.50%I | 1.59% | 1.62% | 1.77% | 1.82% | 1.67% |
Net investment income (loss) | 1.80%I | 1.33% | .84% | 1.20% | 2.01% | 2.06% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $29 | $39 | $48 | $28 | $12 | $13 |
Portfolio turnover rateJ | 111%I | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 9.76%.
C Total distributions of $2.27 per share is comprised of distributions from net investment income of $.276 and distributions from net realized gain of $1.997 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the contingent deferred sales charge.
G Fees and expenses of any 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.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. 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 Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.66 | $33.56 | $30.90 | $25.16 | $22.92 | $24.29 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .36 | .75 | .60 | .64 | .75 | .79 |
Net realized and unrealized gain (loss) | (1.56) | (2.83) | 2.83B | 5.91 | 2.23 | (1.35) |
Total from investment operations | (1.20) | (2.08) | 3.43 | 6.55 | 2.98 | (.56) |
Distributions from net investment income | (.43) | (.72) | (.56) | (.81) | (.74) | (.81) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.42)C | (1.82) | (.77) | (.81) | (.74) | (.81) |
Net asset value, end of period | $26.04 | $29.66 | $33.56 | $30.90 | $25.16 | $22.92 |
Total ReturnD,E | (4.03)% | (6.38)% | 11.28%B | 26.44% | 13.20% | (2.54)% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | .46%H | .56% | .58% | .73% | .76% | .61% |
Expenses net of fee waivers, if any | .46%H | .56% | .58% | .72% | .76% | .61% |
Expenses net of all reductions | .46%H | .56% | .58% | .72% | .76% | .61% |
Net investment income (loss) | 2.84%H | 2.37% | 1.88% | 2.26% | 3.07% | 3.12% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $1,532 | $1,823 | $2,307 | $2,109 | $1,733 | $1,904 |
Portfolio turnover rateI | 111%H | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 10.91%.
C Total distributions of $2.42 per share is comprised of distributions from net investment income of $.425 and distributions from net realized gain of $1.997 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund Class I
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.62 | $33.51 | $30.86 | $25.13 | $22.90 | $24.27 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .36 | .74 | .59 | .64 | .74 | .77 |
Net realized and unrealized gain (loss) | (1.56) | (2.82) | 2.83B | 5.89 | 2.22 | (1.33) |
Total from investment operations | (1.20) | (2.08) | 3.42 | 6.53 | 2.96 | (.56) |
Distributions from net investment income | (.42) | (.71) | (.56) | (.80) | (.73) | (.81) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.42) | (1.81) | (.77) | (.80) | (.73) | (.81) |
Net asset value, end of period | $26.00 | $29.62 | $33.51 | $30.86 | $25.13 | $22.90 |
Total ReturnC,D | (4.06)% | (6.39)% | 11.25%B | 26.42% | 13.11% | (2.55)% |
Ratios to Average Net AssetsE,F | ||||||
Expenses before reductions | .48%G | .58% | .61% | .76% | .80% | .65% |
Expenses net of fee waivers, if any | .48%G | .58% | .61% | .76% | .80% | .65% |
Expenses net of all reductions | .48%G | .58% | .61% | .76% | .80% | .65% |
Net investment income (loss) | 2.82%G | 2.35% | 1.85% | 2.22% | 3.03% | 3.07% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $63 | $128 | $159 | $92 | $14 | $23 |
Portfolio turnover rateH | 111%G | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 10.88%.
C Total returns for periods of less than one year are not annualized.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Annualized
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended May 31, 2016
(Amounts in thousands except percentages)
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 C, Convertible Securities and Class I shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a maximum holding period of seven years from the initial date of purchase.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective after the close of business on June 24, 2016, regardless of the length of times shares have been held.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. Corporate bonds and U.S. government and government agency obligations are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances. The Fund invests a significant portion of its assets in below investment grade securities. The value of these securities can be more volatile due to changes in the credit quality of the issuer and is sensitive to changes in economic, market and regulatory conditions.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of May 31, 2016 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily 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 may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. 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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP.
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. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to market discount, contingent interest, equity-debt classifications, deferred trustees compensation, certain conversion ratio adjustments and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $133,457 |
Gross unrealized depreciation | (228,279) |
Net unrealized appreciation (depreciation) on securities | $(94,822) |
Tax cost | $1,782,420 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $906,756 and $1,188,205, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. 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 Convertible Securities as compared to its benchmark index, the BofA Merrill Lynch℠ All US Convertibles Index, over the same 36 month performance period. For the reporting period, the total annualized management fee rate, including the performance adjustment, was .25% of the Fund's average net assets. The performance adjustment included in the management fee rate may be higher or lower than the maximum performance adjustment rate due to the difference between the average net assets for the reporting and performance periods.
Distribution and Service Plan Fees. 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 the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
Class A | -% | .25% | $52 | $– |
Class T | .25% | .25% | 19 | – |
Class B | .75% | .25% | 2 | 2 |
Class C | .75% | .25% | 157 | 13 |
$230 | $ 15 |
Sales Load. FDC may receive 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. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 by FDC | |
Class A | $13 |
Class T | –(a) |
Class B(b) | –(a) |
Class C(b) | 2 |
$15 |
(a) In the amount of less than five hundred dollars.
(b) 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 the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
Amount | % of Class-Level Average Net Assets(a) | |
Class A | $40 | .19 |
Class T | 9 | .25 |
Class B | 1 | .30 |
Class C | 32 | .20 |
Convertible Securities | 1,294 | .16 |
Class I | 72 | .19 |
$1,448 |
(a) Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $20 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 or other affiliated entities of 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 Loan Balance | Weighted Average Interest Rate | Interest Expense |
Borrower | $7,528 | .56% | $–(a) |
(a) In the amount of less than five hundred dollars.
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 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 $2 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. 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 rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $11. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
During the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $7.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended May 31, 2016 | Year ended November 30, 2015 | |
From net investment income | ||
Class A | $660 | $1,806 |
Class T | 101 | 205 |
Class B | 4 | 10 |
Class C | 349 | 553 |
Convertible Securities | 25,750 | 47,205 |
Class I | 1,340 | 3,509 |
Total | $28,204 | $53,288 |
From net realized gain | ||
Class A | $3,668 | $4,752 |
Class T | 611 | 461 |
Class B | 42 | 44 |
Class C | 2,620 | 1,591 |
Convertible Securities | 121,510 | 75,279 |
Class I | 7,097 | 5,206 |
Total | $135,548 | $87,333 |
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
Shares | Shares | Dollars | Dollars | |
Six months ended May 31, 2016 | Year ended November 30, 2015 | Six months ended May 31, 2016 | Year ended November 30, 2015 | |
Class A | ||||
Shares sold | 143 | 1,290 | $3,683 | $41,387 |
Reinvestment of distributions | 156 | 200 | 4,061 | 6,239 |
Shares redeemed | (802) | (4,097) | (20,487) | (130,595) |
Net increase (decrease) | (503) | (2,607) | $(12,743) | $(82,969) |
Class T | ||||
Shares sold | 15 | 60 | $378 | $1,939 |
Reinvestment of distributions | 26 | 21 | 679 | 649 |
Shares redeemed | (86) | (186) | (2,194) | (5,784) |
Net increase (decrease) | (45) | (105) | $(1,137) | $(3,196) |
Class B | ||||
Shares sold | –(a) | –(a) | $4 | $8 |
Reinvestment of distributions | 2 | 2 | 44 | 51 |
Shares redeemed | (13) | (21) | (334) | (668) |
Net increase (decrease) | (11) | (19) | $(286) | $(609) |
Class C | ||||
Shares sold | 37 | 294 | $931 | $9,362 |
Reinvestment of distributions | 98 | 60 | 2,556 | 1,859 |
Shares redeemed | (348) | (457) | (8,803) | (13,980) |
Net increase (decrease) | (213) | (103) | $(5,316) | $(2,759) |
Convertible Securities | ||||
Shares sold | 1,388 | 5,334 | $35,580 | $170,055 |
Reinvestment of distributions | 5,005 | 3,473 | 130,956 | 108,158 |
Shares redeemed | (8,977) | (16,104) | (229,518) | (506,266) |
Net increase (decrease) | (2,584) | (7,297) | $(62,982) | $(228,053) |
Class I | ||||
Shares sold | 431 | 4,462 | $10,982 | $141,039 |
Reinvestment of distributions | 245 | 218 | 6,414 | 6,798 |
Shares redeemed | (2,563) | (5,097) | (66,927) | (157,962) |
Net increase (decrease) | (1,887) | (417) | $(49,531) | $(10,125) |
(a) In the amount of less than five hundred shares.
11. 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.
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2015 to May 31, 2016).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratio-A | Beginning Account Value December 1, 2015 | Ending Account Value May 31, 2016 | Expenses Paid During Period-B December 1, 2015 to May 31, 2016 | |
Class A | .74% | |||
Actual | $1,000.00 | $958.10 | $3.62 | |
Hypothetical-C | $1,000.00 | $1,021.30 | $3.74 | |
Class T | 1.05% | |||
Actual | $1,000.00 | $956.80 | $5.14 | |
Hypothetical-C | $1,000.00 | $1,019.75 | $5.30 | |
Class B | 1.60% | |||
Actual | $1,000.00 | $954.10 | $7.82 | |
Hypothetical-C | $1,000.00 | $1,017.00 | $8.07 | |
Class C | 1.50% | |||
Actual | $1,000.00 | $954.50 | $7.33 | |
Hypothetical-C | $1,000.00 | $1,017.50 | $7.57 | |
Convertible Securities | .46% | |||
Actual | $1,000.00 | $959.70 | $2.25 | |
Hypothetical-C | $1,000.00 | $1,022.70 | $2.33 | |
Class I | .48% | |||
Actual | $1,000.00 | $959.40 | $2.35 | |
Hypothetical-C | $1,000.00 | $1,022.60 | $2.43 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).
C 5% return per year before expenses
ACVS-SANN-0716
1.884070.107
Fidelity® Convertible Securities Fund Semi-Annual Report May 31, 2016 |
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2016 FMR LLC. All rights reserved.
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, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Fund nor Fidelity Distributors Corporation is a bank.
Investment Summary (Unaudited)
Top Ten Investments as of May 31, 2016
(excluding cash equivalents) | % of fund's net assets | % of fund's net assets 6 months ago |
Wells Fargo & Co. 7.50% | 5.0 | 7.8 |
Allergan PLC 5.50% | 4.0 | 5.4 |
U.S. Treasury Bonds 2.5% 2/15/46 | 3.4 | 0.0 |
Bank of America Corp. Series L 7.25% | 3.0 | 4.1 |
NXP Semiconductors NV 1% 12/1/19 | 2.7 | 0.6 |
Twitter, Inc. 1% 9/15/21 | 2.7 | 1.3 |
InterDigital, Inc. 1.5% 3/1/20 | 2.5 | 0.3 |
Scorpio Tankers, Inc. 2.375% 7/1/19 | 2.5 | 1.2 |
T-Mobile U.S., Inc. Series A 5.50% | 2.4 | 1.2 |
Microchip Technology, Inc. 1.625% 2/15/25 | 2.3 | 1.8 |
30.5 |
Top Five Market Sectors as of May 31, 2016
% of fund's net assets | % of fund's net assets 6 months ago | |
Information Technology | 31.8 | 18.5 |
Health Care | 17.3 | 15.4 |
Financials | 12.8 | 19.9 |
Energy | 8.5 | 8.7 |
Telecommunication Services | 5.8 | 6.5 |
Asset Allocation (% of fund's net assets)
As of May 31, 2016* | ||
Convertible Securities | 80.9% | |
Stocks | 8.9% | |
Nonconvertible Bonds | 5.9% | |
U.S. Government and U.S. Government Agency Obligations | 3.4% | |
Short-Term Investments and Net Other Assets (Liabilities) | 0.9% |
* Foreign investments - 16.1%
As of November 30, 2015* | ||
Convertible Securities | 67.6% | |
Stocks | 29.6% | |
Short-Term Investments and Net Other Assets (Liabilities) | 2.8% |
* Foreign investments - 10.8%
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Investments May 31, 2016 (Unaudited)
Showing Percentage of Net Assets
Corporate Bonds - 50.4% | |||
Principal Amount (000s) | Value (000s) | ||
Convertible Bonds - 44.5% | |||
CONSUMER DISCRETIONARY - 2.3% | |||
Diversified Consumer Services - 0.2% | |||
Carriage Services, Inc. 2.75% 3/15/21 | $3,160 | $3,703 | |
Household Durables - 1.1% | |||
Lennar Corp. 3.25% 11/15/21 | 8,360 | 16,239 | |
M/I Homes, Inc. 3% 3/1/18 | 3,000 | 2,923 | |
19,162 | |||
Media - 1.0% | |||
Liberty Media Corp.: | |||
1.375% 10/15/23 | 9,000 | 8,938 | |
3.5% 1/15/31 | 13,500 | 7,083 | |
16,021 | |||
TOTAL CONSUMER DISCRETIONARY | 38,886 | ||
CONSUMER STAPLES - 1.2% | |||
Tobacco - 1.2% | |||
Vector Group Ltd. 2.5% 1/15/19 (a) | 14,840 | 20,752 | |
ENERGY - 4.4% | |||
Energy Equipment & Services - 0.0% | |||
Vantage Drilling Co. 5.5% 7/15/43 (b)(c) | 20,000 | 20 | |
Oil, Gas & Consumable Fuels - 4.4% | |||
Chesapeake Energy Corp. 2.5% 5/15/37 | 6,545 | 6,054 | |
Clean Energy Fuels Corp. 5.25% 10/1/18 (c) | 10,000 | 6,794 | |
Cobalt International Energy, Inc. 2.625% 12/1/19 | 9,440 | 3,941 | |
Peabody Energy Corp. 4.75% 12/15/41 (b) | 103,850 | 649 | |
Scorpio Tankers, Inc. 2.375% 7/1/19 (c) | 49,620 | 41,495 | |
Whiting Petroleum Corp. 1.25% 4/1/20 (c) | 18,000 | 13,680 | |
72,613 | |||
TOTAL ENERGY | 72,633 | ||
FINANCIALS - 1.4% | |||
Insurance - 0.7% | |||
FNF Group 4.25% 8/15/18 | 6,000 | 11,633 | |
Real Estate Management & Development - 0.7% | |||
Extra Space Storage LP 3.125% 10/1/35 (c) | 10,000 | 11,500 | |
TOTAL FINANCIALS | 23,133 | ||
HEALTH CARE - 7.3% | |||
Biotechnology - 1.5% | |||
AMAG Pharmaceuticals, Inc. 2.5% 2/15/19 | 7,000 | 7,319 | |
BioMarin Pharmaceutical, Inc. 1.5% 10/15/20 | 9,000 | 11,160 | |
Spectrum Pharmaceuticals, Inc. 2.75% 12/15/18 | 6,400 | 6,212 | |
24,691 | |||
Health Care Equipment & Supplies - 0.9% | |||
Hologic, Inc. 2% 3/1/42 (d) | 9,716 | 12,497 | |
Teleflex, Inc. 3.875% 8/1/17 | 1,100 | 2,882 | |
15,379 | |||
Health Care Providers & Services - 1.4% | |||
HealthSouth Corp. 2% 12/1/43 | 19,500 | 23,120 | |
Life Sciences Tools & Services - 0.4% | |||
Fluidigm Corp. 2.75% 2/1/34 | 9,500 | 6,015 | |
Pharmaceuticals - 3.1% | |||
Akorn, Inc. 3.5% 6/1/16 | 5,000 | 17,041 | |
ANI Pharmaceuticals, Inc. 3% 12/1/19 | 1,700 | 1,814 | |
Horizon Pharma Investment Ltd. 2.5% 3/15/22 | 12,000 | 10,965 | |
Orexigen Therapeutics, Inc. 2.75% 12/1/20 | 10,000 | 3,513 | |
Teva Pharmaceutical Finance LLC 0.25% 2/1/26 | 15,000 | 19,369 | |
52,702 | |||
TOTAL HEALTH CARE | 121,907 | ||
INDUSTRIALS - 1.0% | |||
Airlines - 0.5% | |||
JetBlue Airways Corp. Series D 6.75% 10/15/39 | 2,200 | 8,085 | |
Machinery - 0.5% | |||
Trinity Industries, Inc. 3.875% 6/1/36 | 8,000 | 8,525 | |
TOTAL INDUSTRIALS | 16,610 | ||
INFORMATION TECHNOLOGY - 26.7% | |||
Communications Equipment - 3.6% | |||
Brocade Communications Systems, Inc. 1.375% 1/1/20 | 9,710 | 9,388 | |
InterDigital, Inc. 1.5% 3/1/20 | 39,650 | 42,128 | |
Liberty Interactive LLC 0.75% 3/30/43 | 5,310 | 9,044 | |
60,560 | |||
Internet Software & Services - 8.1% | |||
LinkedIn Corp. 0.5% 11/1/19 | 22,100 | 20,650 | |
Twitter, Inc.: | |||
0.25% 9/15/19 | 8,500 | 7,485 | |
1% 9/15/21 | 53,548 | 44,913 | |
VeriSign, Inc. 4.345% 8/15/37 (a) | 8,000 | 19,950 | |
Web.com Group, Inc. 1% 8/15/18 | 5,500 | 5,067 | |
WebMD Health Corp.: | |||
1.5% 12/1/20 | 3,700 | 5,148 | |
2.5% 1/31/18 | 4,300 | 5,044 | |
Yahoo!, Inc. 0% 12/1/18 | 26,820 | 26,971 | |
135,228 | |||
Semiconductors & Semiconductor Equipment - 9.7% | |||
Intel Corp. 3.25% 8/1/39 | 4,750 | 7,505 | |
Microchip Technology, Inc. 1.625% 2/15/25 | 35,000 | 38,916 | |
Micron Technology, Inc.: | |||
1.625% 2/15/33 | 10,250 | 13,504 | |
3% 11/15/43 | 27,850 | 20,261 | |
Novellus Systems, Inc. 2.625% 5/15/41 | 10,500 | 25,587 | |
NXP Semiconductors NV 1% 12/1/19 | 38,570 | 45,537 | |
Xilinx, Inc. 2.625% 6/15/17 | 6,200 | 10,257 | |
161,567 | |||
Software - 4.5% | |||
BroadSoft, Inc. 1% 9/1/22 (c) | 3,000 | 3,831 | |
FireEye, Inc. 1.625% 6/1/35 (c) | 13,500 | 11,095 | |
Nuance Communications, Inc. 1% 12/15/35 (c) | 18,000 | 16,099 | |
Salesforce.com, Inc. 0.25% 4/1/18 | 15,000 | 20,269 | |
TiVo, Inc. 2% 10/1/21 | 21,100 | 20,718 | |
Workday, Inc. 1.5% 7/15/20 | 2,500 | 2,956 | |
74,968 | |||
Technology Hardware, Storage & Peripherals - 0.8% | |||
BlackBerry Ltd. 6% 11/13/20 (Reg. S) | 13,000 | 13,520 | |
TOTAL INFORMATION TECHNOLOGY | 445,843 | ||
UTILITIES - 0.2% | |||
Independent Power and Renewable Electricity Producers - 0.2% | |||
NRG Yield, Inc. 3.5% 2/1/19 (c) | 3,000 | 2,904 | |
TOTAL CONVERTIBLE BONDS | 742,668 | ||
Nonconvertible Bonds - 5.9% | |||
CONSUMER DISCRETIONARY - 1.2% | |||
Media - 1.2% | |||
Altice SA: | |||
7.625% 2/15/25 (c) | 8,500 | 8,394 | |
7.75% 5/15/22 (c) | 9,500 | 9,732 | |
Anna Merger Sub, Inc. 7.75% 10/1/22 (c) | 1,305 | 1,259 | |
19,385 | |||
CONSUMER STAPLES - 0.1% | |||
Food & Staples Retailing - 0.1% | |||
Albertsons Companies LLC/Safeway, Inc./New Albertson's, Inc./Albertson's LLC 6.625% 6/15/24 (c) | 1,775 | 1,817 | |
ENERGY - 0.8% | |||
Oil, Gas & Consumable Fuels - 0.8% | |||
Southwestern Energy Co. 4.1% 3/15/22 | 16,165 | 13,174 | |
FINANCIALS - 1.0% | |||
Thrifts & Mortgage Finance - 1.0% | |||
Prime Securities Services Borrower LLC/Prime Finance, Inc. 9.25% 5/15/23 (c) | 16,730 | 17,441 | |
HEALTH CARE - 0.8% | |||
Pharmaceuticals - 0.8% | |||
Valeant Pharmaceuticals International, Inc. 6.125% 4/15/25 (c) | 15,000 | 12,544 | |
TELECOMMUNICATION SERVICES - 0.6% | |||
Wireless Telecommunication Services - 0.6% | |||
Neptune Finco Corp. 10.125% 1/15/23 (c) | 9,200 | 10,304 | |
UTILITIES - 1.4% | |||
Independent Power and Renewable Electricity Producers - 1.4% | |||
Dynegy, Inc.: | |||
7.375% 11/1/22 | 5,750 | 5,549 | |
7.625% 11/1/24 | 18,570 | 17,827 | |
23,376 | |||
TOTAL NONCONVERTIBLE BONDS | 98,041 | ||
TOTAL CORPORATE BONDS | |||
(Cost $906,877) | 840,709 | ||
U.S. Treasury Obligations - 3.4% | |||
U.S. Treasury Bonds 2.5% 2/15/46 | |||
(Cost $56,713) | 58,500 | 56,743 | |
Shares | Value (000s) | ||
Common Stocks - 8.9% | |||
CONSUMER DISCRETIONARY - 1.0% | |||
Automobiles - 0.5% | |||
General Motors Co. | 270,568 | $8,463 | |
Diversified Consumer Services - 0.0% | |||
Houghton Mifflin Harcourt Co. warrants 6/22/19 (e)(f) | 686 | 4 | |
Household Durables - 0.5% | |||
Newell Brands, Inc. | 160,000 | 7,630 | |
TOTAL CONSUMER DISCRETIONARY | 16,097 | ||
CONSUMER STAPLES - 0.5% | |||
Beverages - 0.3% | |||
Cott Corp. | 300,000 | 4,331 | |
Food Products - 0.2% | |||
B&G Foods, Inc. Class A | 100,000 | 4,299 | |
TOTAL CONSUMER STAPLES | 8,630 | ||
FINANCIALS - 0.3% | |||
Real Estate Investment Trusts - 0.3% | |||
Weyerhaeuser Co. | 159,600 | 5,027 | |
HEALTH CARE - 0.7% | |||
Pharmaceuticals - 0.7% | |||
GlaxoSmithKline PLC sponsored ADR | 255,000 | 10,804 | |
INFORMATION TECHNOLOGY - 5.1% | |||
Communications Equipment - 0.5% | |||
InterDigital, Inc. | 139,025 | 8,105 | |
Internet Software & Services - 1.7% | |||
Twitter, Inc. (e)(g) | 1,525,475 | 23,218 | |
Yahoo!, Inc. (e) | 132,400 | 5,023 | |
28,241 | |||
Semiconductors & Semiconductor Equipment - 0.7% | |||
Qualcomm, Inc. | 227,900 | 12,516 | |
Technology Hardware, Storage & Peripherals - 2.2% | |||
Apple, Inc. | 296,000 | 29,559 | |
EMC Corp. | 265,000 | 7,407 | |
36,966 | |||
TOTAL INFORMATION TECHNOLOGY | 85,828 | ||
TELECOMMUNICATION SERVICES - 1.3% | |||
Diversified Telecommunication Services - 1.3% | |||
AT&T, Inc. | 560,000 | 21,924 | |
TOTAL COMMON STOCKS | |||
(Cost $143,627) | 148,310 | ||
Convertible Preferred Stocks - 36.4% | |||
CONSUMER DISCRETIONARY - 0.1% | |||
Household Durables - 0.1% | |||
William Lyon Homes, Inc. 6.50% (e) | 25,000 | 2,119 | |
CONSUMER STAPLES - 3.6% | |||
Food Products - 3.6% | |||
Bunge Ltd. 4.875% (e) | 192,000 | 18,273 | |
Post Holdings, Inc.: | |||
3.75% | 50,000 | 8,262 | |
Series C 2.50% | 172,500 | 24,991 | |
Tyson Foods, Inc. 4.75% (e) | 128,200 | 9,042 | |
60,568 | |||
ENERGY - 3.3% | |||
Oil, Gas & Consumable Fuels - 3.3% | |||
Anadarko Petroleum Corp. 7.50% (e) | 159,000 | 6,201 | |
Chesapeake Energy Corp. Series A, 5.75% (c)(e) | 41,700 | 10,269 | |
Hess Corp. Series A 8.00% | 155,600 | 11,836 | |
Kinder Morgan, Inc. Series A 9.75% | 267,284 | 12,220 | |
Southwestern Energy Co. Series B 6.25% | 456,500 | 14,722 | |
55,248 | |||
FINANCIALS - 10.1% | |||
Banks - 8.0% | |||
Bank of America Corp. Series L 7.25% | 43,999 | 50,841 | |
Wells Fargo & Co. 7.50% (e) | 67,630 | 83,140 | |
133,981 | |||
Real Estate Investment Trusts - 2.1% | |||
American Tower Corp. 5.50% | 47,300 | 4,995 | |
Crown Castle International Corp. 4.50% (e) | 42,900 | 4,681 | |
Welltower, Inc. Series I, 6.50% (e) | 14,300 | 896 | |
Weyerhaeuser Co. Series A, 6.375% (e) | 486,200 | 24,680 | |
35,252 | |||
TOTAL FINANCIALS | 169,233 | ||
HEALTH CARE - 8.5% | |||
Health Care Equipment & Supplies - 0.3% | |||
Alere, Inc. 3.00% | 13,522 | 4,560 | |
Health Care Providers & Services - 2.7% | |||
AmSurg Corp. Series A-1, 5.25% (e) | 176,500 | 24,941 | |
Anthem, Inc. 5.25% (e) | 461,000 | 20,538 | |
45,479 | |||
Pharmaceuticals - 5.5% | |||
Allergan PLC 5.50% | 78,900 | 66,644 | |
Teva Pharmaceutical Industries Ltd. 7% | 29,100 | 24,760 | |
91,404 | |||
TOTAL HEALTH CARE | 141,443 | ||
INDUSTRIALS - 1.6% | |||
Commercial Services & Supplies - 1.6% | |||
Stericycle, Inc. 2.25% | 330,000 | 26,153 | |
MATERIALS - 1.3% | |||
Metals & Mining - 1.3% | |||
Alcoa, Inc. Series 1, 5.375% (e) | 658,300 | 21,691 | |
TELECOMMUNICATION SERVICES - 3.9% | |||
Diversified Telecommunication Services - 1.5% | |||
Frontier Communications Corp. Series A 11.125% | 247,100 | 24,320 | |
Wireless Telecommunication Services - 2.4% | |||
T-Mobile U.S., Inc. Series A 5.50% | 555,700 | 40,288 | |
TOTAL TELECOMMUNICATION SERVICES | 64,608 | ||
UTILITIES - 4.0% | |||
Electric Utilities - 0.6% | |||
Exelon Corp. 6.50% (e) | 221,500 | 10,459 | |
Independent Power and Renewable Electricity Producers - 1.4% | |||
Dynegy, Inc. 5.375% | 350,000 | 23,664 | |
Multi-Utilities - 2.0% | |||
CenterPoint Energy, Inc. 2.00% ZENS (e) | 500,000 | 32,313 | |
TOTAL UTILITIES | 66,436 | ||
TOTAL CONVERTIBLE PREFERRED STOCKS | |||
(Cost $643,289) | 607,499 | ||
Money Market Funds - 2.1% | |||
Fidelity Cash Central Fund, 0.40% (h) | 26,384,480 | 26,384 | |
Fidelity Securities Lending Cash Central Fund, 0.44% (h)(i) | 7,953,050 | 7,953 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $34,337) | 34,337 | ||
TOTAL INVESTMENT PORTFOLIO - 101.2% | |||
(Cost $1,784,843) | 1,687,598 | ||
NET OTHER ASSETS (LIABILITIES) - (1.2)% | (20,139) | ||
NET ASSETS - 100% | $1,667,459 |
Legend
(a) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end.
(b) Non-income producing - Security is in default.
(c) 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 $179,178,000 or 10.7% of net assets.
(d) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end.
(e) Non-income producing
(f) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $4,000 or 0.0% of net assets.
(g) Security or a portion of the security is on loan at period end.
(h) Affiliated fund that is generally 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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(i) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
Security | Acquisition Date | Acquisition Cost (000s) |
Houghton Mifflin Harcourt Co. warrants 6/22/19 | 6/22/12 | $1 |
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 |
(Amounts in thousands) | |
Fidelity Cash Central Fund | $80 |
Fidelity Securities Lending Cash Central Fund | 11 |
Total | $91 |
Investment Valuation
The following is a summary of the inputs used, as of May 31, 2016, involving the Fund's assets and liabilities carried at fair 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
(Amounts in thousands) | ||||
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $18,216 | $16,093 | $2,123 | $-- |
Consumer Staples | 69,198 | 17,672 | 51,526 | -- |
Energy | 55,248 | 44,979 | 10,269 | -- |
Financials | 174,260 | 174,260 | -- | -- |
Health Care | 152,247 | 122,927 | 29,320 | -- |
Industrials | 26,153 | 26,153 | -- | -- |
Information Technology | 85,828 | 85,828 | -- | -- |
Materials | 21,691 | 21,691 | -- | -- |
Telecommunication Services | 86,532 | 86,532 | -- | -- |
Utilities | 66,436 | 34,123 | 32,313 | -- |
Corporate Bonds | 840,709 | -- | 840,709 | -- |
U.S. Government and Government Agency Obligations | 56,743 | -- | 56,743 | -- |
Money Market Funds | 34,337 | 34,337 | -- | -- |
Total Investments in Securities: | $1,687,598 | $664,595 | $1,023,003 | $-- |
Other Information
The composition of credit quality ratings as a percentage of Total Net Assets is as follows (Unaudited):
U.S. Government and U.S. Government Agency Obligations | 3.4% |
AAA,AA,A | 1.1% |
BBB | 3.5% |
BB | 14.2% |
B | 11.5% |
CCC,CC,C | 2.1% |
D | 0.1% |
Not Rated | 17.9% |
Equities | 45.3% |
Short-Term Investments and Net Other Assets | 0.9% |
100.0% |
We have used ratings from Moody's Investors Service, Inc. Where Moody's® ratings are not available, we have used S&P® ratings. All ratings are as of the date indicated and do not reflect subsequent changes.
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
United States of America | 83.9% |
Ireland | 4.0% |
Netherlands | 2.7% |
Marshall Islands | 2.5% |
Canada | 1.9% |
Bermuda | 1.7% |
Israel | 1.5% |
Luxembourg | 1.1% |
Others (Individually Less Than 1%) | 0.7% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2016 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $7,809) — See accompanying schedule: Unaffiliated issuers (cost $1,750,506) | $1,653,261 | |
Fidelity Central Funds (cost $34,337) | 34,337 | |
Total Investments (cost $1,784,843) | $1,687,598 | |
Cash | 1,909 | |
Foreign currency held at value (cost $188) | 188 | |
Receivable for investments sold | 31,657 | |
Receivable for fund shares sold | 186 | |
Dividends receivable | 5,705 | |
Interest receivable | 5,955 | |
Distributions receivable from Fidelity Central Funds | 35 | |
Prepaid expenses | 1 | |
Other receivables | 7 | |
Total assets | 1,733,241 | |
Liabilities | ||
Payable for investments purchased | $55,197 | |
Payable for fund shares redeemed | 1,946 | |
Accrued management fee | 332 | |
Distribution and service plan fees payable | 35 | |
Other affiliated payables | 279 | |
Other payables and accrued expenses | 40 | |
Collateral on securities loaned, at value | 7,953 | |
Total liabilities | 65,782 | |
Net Assets | $1,667,459 | |
Net Assets consist of: | ||
Paid in capital | $1,705,693 | |
Undistributed net investment income | 13,234 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 45,777 | |
Net unrealized appreciation (depreciation) on investments | (97,245) | |
Net Assets | $1,667,459 | |
Calculation of Maximum Offering Price | ||
Class A: | ||
Net Asset Value and redemption price per share ($35,847.12 ÷ 1,382.094 shares) | $25.94 | |
Maximum offering price per share (100/94.25 of $25.94) | $27.52 | |
Class T: | ||
Net Asset Value and redemption price per share ($6,973.35 ÷ 268.769 shares) | $25.95 | |
Maximum offering price per share (100/96.50 of $25.95) | $26.89 | |
Class B: | ||
Net Asset Value and offering price per share ($251.33 ÷ 9.687 shares)(a) | $25.95 | |
Class C: | ||
Net Asset Value and offering price per share ($28,724.74 ÷ 1,114.686 shares)(a) | $25.77 | |
Convertible Securities: | ||
Net Asset Value, offering price and redemption price per share ($1,532,474.67 ÷ 58,861.079 shares) | $26.04 | |
Class I: | ||
Net Asset Value, offering price and redemption price per share ($63,187.76 ÷ 2,430.581 shares) | $26.00 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | |
Investment Income | ||
Dividends | $19,858 | |
Interest | 8,657 | |
Income from Fidelity Central Funds | 91 | |
Total income | 28,606 | |
Expenses | ||
Management fee | ||
Basic fee | $3,887 | |
Performance adjustment | (1,760) | |
Transfer agent fees | 1,448 | |
Distribution and service plan fees | 230 | |
Accounting and security lending fees | 267 | |
Custodian fees and expenses | 9 | |
Independent trustees' fees and expenses | 4 | |
Registration fees | 87 | |
Audit | 48 | |
Legal | 1 | |
Miscellaneous | 30 | |
Total expenses before reductions | 4,251 | |
Expense reductions | (7) | 4,244 |
Net investment income (loss) | 24,362 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 99,305 | |
Foreign currency transactions | (2) | |
Total net realized gain (loss) | 99,303 | |
Change in net unrealized appreciation (depreciation) on investment securities | (215,746) | |
Net gain (loss) | (116,443) | |
Net increase (decrease) in net assets resulting from operations | $(92,081) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | Year ended November 30, 2015 |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $24,362 | $56,146 |
Net realized gain (loss) | 99,303 | 145,093 |
Change in net unrealized appreciation (depreciation) | (215,746) | (356,501) |
Net increase (decrease) in net assets resulting from operations | (92,081) | (155,262) |
Distributions to shareholders from net investment income | (28,204) | (53,288) |
Distributions to shareholders from net realized gain | (135,548) | (87,333) |
Total distributions | (163,752) | (140,621) |
Share transactions - net increase (decrease) | (131,995) | (327,711) |
Total increase (decrease) in net assets | (387,828) | (623,594) |
Net Assets | ||
Beginning of period | 2,055,287 | 2,678,881 |
End of period (including undistributed net investment income of $13,234 and undistributed net investment income of $17,076, respectively) | $1,667,459 | $2,055,287 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund Class A
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.56 | $33.42 | $30.79 | $25.08 | $22.85 | $24.22 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .33 | .66 | .51 | .57 | .68 | .72 |
Net realized and unrealized gain (loss) | (1.57) | (2.81) | 2.81B | 5.88 | 2.22 | (1.34) |
Total from investment operations | (1.24) | (2.15) | 3.32 | 6.45 | 2.90 | (.62) |
Distributions from net investment income | (.38) | (.61) | (.48) | (.74) | (.67) | (.75) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.38) | (1.71) | (.69) | (.74) | (.67) | (.75) |
Net asset value, end of period | $25.94 | $29.56 | $33.42 | $30.79 | $25.08 | $22.85 |
Total ReturnC,D,E | (4.19)% | (6.60)% | 10.95%B | 26.12% | 12.87% | (2.79)% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | .74%H | .84% | .86% | .99% | 1.04% | .88% |
Expenses net of fee waivers, if any | .74%H | .84% | .85% | .99% | 1.04% | .88% |
Expenses net of all reductions | .74%H | .84% | .85% | .99% | 1.04% | .88% |
Net investment income (loss) | 2.56%H | 2.09% | 1.60% | 1.99% | 2.79% | 2.84% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $36 | $56 | $150 | $113 | $26 | $33 |
Portfolio turnover rateI | 111%H | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 10.58%.
C Total returns for periods of less than one year are not annualized.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the sales charges.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund Class T
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.56 | $33.44 | $30.80 | $25.09 | $22.87 | $24.23 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .29 | .57 | .42 | .48 | .60 | .65 |
Net realized and unrealized gain (loss) | (1.56) | (2.82) | 2.82B | 5.89 | 2.22 | (1.34) |
Total from investment operations | (1.27) | (2.25) | 3.24 | 6.37 | 2.82 | (.69) |
Distributions from net investment income | (.34) | (.53) | (.39) | (.66) | (.60) | (.67) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.34) | (1.63) | (.60) | (.66) | (.60) | (.67) |
Net asset value, end of period | $25.95 | $29.56 | $33.44 | $30.80 | $25.09 | $22.87 |
Total ReturnC,D,E | (4.32)% | (6.91)% | 10.67%B | 25.73% | 12.48% | (3.07)% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | 1.05%H | 1.12% | 1.14% | 1.30% | 1.36% | 1.18% |
Expenses net of fee waivers, if any | 1.05%H | 1.12% | 1.14% | 1.30% | 1.36% | 1.18% |
Expenses net of all reductions | 1.05%H | 1.12% | 1.14% | 1.30% | 1.36% | 1.17% |
Net investment income (loss) | 2.26%H | 1.81% | 1.32% | 1.68% | 2.47% | 2.55% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $7 | $9 | $14 | $11 | $4 | $5 |
Portfolio turnover rateI | 111%H | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 10.30%.
C Total returns for periods of less than one year are not annualized.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the sales charges.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund Class B
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.53 | $33.37 | $30.74 | $25.04 | $22.82 | $24.17 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .22 | .41 | .25 | .32 | .47 | .51 |
Net realized and unrealized gain (loss) | (1.57) | (2.81) | 2.81B | 5.89 | 2.22 | (1.34) |
Total from investment operations | (1.35) | (2.40) | 3.06 | 6.21 | 2.69 | (.83) |
Distributions from net investment income | (.24) | (.34) | (.22) | (.51) | (.47) | (.52) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.23)C | (1.44) | (.43) | (.51) | (.47) | (.52) |
Net asset value, end of period | $25.95 | $29.53 | $33.37 | $30.74 | $25.04 | $22.82 |
Total ReturnD,E,F | (4.59)% | (7.38)% | 10.05%B | 25.05% | 11.91% | (3.59)% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | 1.60%I | 1.64% | 1.69% | 1.83% | 1.88% | 1.73% |
Expenses net of fee waivers, if any | 1.60%I | 1.64% | 1.69% | 1.83% | 1.88% | 1.73% |
Expenses net of all reductions | 1.60%I | 1.63% | 1.69% | 1.83% | 1.88% | 1.73% |
Net investment income (loss) | 1.70%I | 1.30% | .77% | 1.15% | 1.95% | 2.00% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $– | $1 | $1 | $1 | $1 | $1 |
Portfolio turnover rateJ | 111%I | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 9.68%.
C Total distributions of $2.23 per share is comprised of distributions from net investment income of $.237 and distributions from net realized gain of $1.997 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the contingent deferred sales charge.
G Fees and expenses of any 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.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. 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 Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund Class C
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.37 | $33.23 | $30.63 | $24.97 | $22.75 | $24.14 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .23 | .42 | .27 | .34 | .49 | .51 |
Net realized and unrealized gain (loss) | (1.56) | (2.80) | 2.80B | 5.87 | 2.22 | (1.33) |
Total from investment operations | (1.33) | (2.38) | 3.07 | 6.21 | 2.71 | (.82) |
Distributions from net investment income | (.28) | (.38) | (.26) | (.55) | (.49) | (.57) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.27)C | (1.48) | (.47) | (.55) | (.49) | (.57) |
Net asset value, end of period | $25.77 | $29.37 | $33.23 | $30.63 | $24.97 | $22.75 |
Total ReturnD,E,F | (4.55)% | (7.35)% | 10.13%B | 25.12% | 12.01% | (3.57)% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | 1.50%I | 1.60% | 1.62% | 1.78% | 1.82% | 1.67% |
Expenses net of fee waivers, if any | 1.50%I | 1.60% | 1.62% | 1.77% | 1.82% | 1.67% |
Expenses net of all reductions | 1.50%I | 1.59% | 1.62% | 1.77% | 1.82% | 1.67% |
Net investment income (loss) | 1.80%I | 1.33% | .84% | 1.20% | 2.01% | 2.06% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $29 | $39 | $48 | $28 | $12 | $13 |
Portfolio turnover rateJ | 111%I | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 9.76%.
C Total distributions of $2.27 per share is comprised of distributions from net investment income of $.276 and distributions from net realized gain of $1.997 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the contingent deferred sales charge.
G Fees and expenses of any 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.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. 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 Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.66 | $33.56 | $30.90 | $25.16 | $22.92 | $24.29 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .36 | .75 | .60 | .64 | .75 | .79 |
Net realized and unrealized gain (loss) | (1.56) | (2.83) | 2.83B | 5.91 | 2.23 | (1.35) |
Total from investment operations | (1.20) | (2.08) | 3.43 | 6.55 | 2.98 | (.56) |
Distributions from net investment income | (.43) | (.72) | (.56) | (.81) | (.74) | (.81) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.42)C | (1.82) | (.77) | (.81) | (.74) | (.81) |
Net asset value, end of period | $26.04 | $29.66 | $33.56 | $30.90 | $25.16 | $22.92 |
Total ReturnD,E | (4.03)% | (6.38)% | 11.28%B | 26.44% | 13.20% | (2.54)% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | .46%H | .56% | .58% | .73% | .76% | .61% |
Expenses net of fee waivers, if any | .46%H | .56% | .58% | .72% | .76% | .61% |
Expenses net of all reductions | .46%H | .56% | .58% | .72% | .76% | .61% |
Net investment income (loss) | 2.84%H | 2.37% | 1.88% | 2.26% | 3.07% | 3.12% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $1,532 | $1,823 | $2,307 | $2,109 | $1,733 | $1,904 |
Portfolio turnover rateI | 111%H | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 10.91%.
C Total distributions of $2.42 per share is comprised of distributions from net investment income of $.425 and distributions from net realized gain of $1.997 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Convertible Securities Fund Class I
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $29.62 | $33.51 | $30.86 | $25.13 | $22.90 | $24.27 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .36 | .74 | .59 | .64 | .74 | .77 |
Net realized and unrealized gain (loss) | (1.56) | (2.82) | 2.83B | 5.89 | 2.22 | (1.33) |
Total from investment operations | (1.20) | (2.08) | 3.42 | 6.53 | 2.96 | (.56) |
Distributions from net investment income | (.42) | (.71) | (.56) | (.80) | (.73) | (.81) |
Distributions from net realized gain | (2.00) | (1.10) | (.21) | – | – | – |
Total distributions | (2.42) | (1.81) | (.77) | (.80) | (.73) | (.81) |
Net asset value, end of period | $26.00 | $29.62 | $33.51 | $30.86 | $25.13 | $22.90 |
Total ReturnC,D | (4.06)% | (6.39)% | 11.25%B | 26.42% | 13.11% | (2.55)% |
Ratios to Average Net AssetsE,F | ||||||
Expenses before reductions | .48%G | .58% | .61% | .76% | .80% | .65% |
Expenses net of fee waivers, if any | .48%G | .58% | .61% | .76% | .80% | .65% |
Expenses net of all reductions | .48%G | .58% | .61% | .76% | .80% | .65% |
Net investment income (loss) | 2.82%G | 2.35% | 1.85% | 2.22% | 3.03% | 3.07% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $63 | $128 | $159 | $92 | $14 | $23 |
Portfolio turnover rateH | 111%G | 19% | 23% | 22% | 20% | 24% |
A Calculated based on average shares outstanding during the period.
B Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.12 per share. Excluding these litigation proceeds, the total return would have been 10.88%.
C Total returns for periods of less than one year are not annualized.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Annualized
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended May 31, 2016
(Amounts in thousands except percentages)
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 C, Convertible Securities and Class I shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Class B shares are closed to new accounts and additional purchases, except for exchanges and reinvestments. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a maximum holding period of seven years from the initial date of purchase.
During the period, the Board of Trustees approved the conversion of all existing Class B shares into Class A shares, effective after the close of business on June 24, 2016, regardless of the length of times shares have been held.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. Corporate bonds and U.S. government and government agency obligations are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances. The Fund invests a significant portion of its assets in below investment grade securities. The value of these securities can be more volatile due to changes in the credit quality of the issuer and is sensitive to changes in economic, market and regulatory conditions.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of May 31, 2016 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily 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 may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. 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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP.
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. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to market discount, contingent interest, equity-debt classifications, deferred trustees compensation, certain conversion ratio adjustments and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $133,457 |
Gross unrealized depreciation | (228,279) |
Net unrealized appreciation (depreciation) on securities | $(94,822) |
Tax cost | $1,782,420 |
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.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and U.S. government securities, aggregated $906,756 and $1,188,205, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. 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 Convertible Securities as compared to its benchmark index, the BofA Merrill Lynch℠ All US Convertibles Index, over the same 36 month performance period. For the reporting period, the total annualized management fee rate, including the performance adjustment, was .25% of the Fund's average net assets. The performance adjustment included in the management fee rate may be higher or lower than the maximum performance adjustment rate due to the difference between the average net assets for the reporting and performance periods.
Distribution and Service Plan Fees. 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 the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
Class A | -% | .25% | $52 | $– |
Class T | .25% | .25% | 19 | – |
Class B | .75% | .25% | 2 | 2 |
Class C | .75% | .25% | 157 | 13 |
$230 | $ 15 |
Sales Load. FDC may receive 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. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% 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 by FDC | |
Class A | $13 |
Class T | –(a) |
Class B(b) | –(a) |
Class C(b) | 2 |
$15 |
(a) In the amount of less than five hundred dollars
(b) 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 the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
Amount | % of Class-Level Average Net Assets(a) | |
Class A | $40 | .19 |
Class T | 9 | .25 |
Class B | 1 | .30 |
Class C | 32 | .20 |
Convertible Securities | 1,294 | .16 |
Class I | 72 | .19 |
$1,448 |
(a) Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $20 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 or other affiliated entities of 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 Loan Balance | Weighted Average Interest Rate | Interest Expense |
Borrower | $7,528 | .56% | $–(a) |
(a) In the amount of less than five hundred dollars.
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 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 $2 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. 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 rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $11. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
During the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $7.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended May 31, 2016 | Year ended November 30, 2015 | |
From net investment income | ||
Class A | $660 | $1,806 |
Class T | 101 | 205 |
Class B | 4 | 10 |
Class C | 349 | 553 |
Convertible Securities | 25,750 | 47,205 |
Class I | 1,340 | 3,509 |
Total | $28,204 | $53,288 |
From net realized gain | ||
Class A | $3,668 | $4,752 |
Class T | 611 | 461 |
Class B | 42 | 44 |
Class C | 2,620 | 1,591 |
Convertible Securities | 121,510 | 75,279 |
Class I | 7,097 | 5,206 |
Total | $135,548 | $87,333 |
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
Shares | Shares | Dollars | Dollars | |
Six months ended May 31, 2016 | Year ended November 30, 2015 | Six months ended May 31, 2016 | Year ended November 30, 2015 | |
Class A | ||||
Shares sold | 143 | 1,290 | $3,683 | $41,387 |
Reinvestment of distributions | 156 | 200 | 4,061 | 6,239 |
Shares redeemed | (802) | (4,097) | (20,487) | (130,595) |
Net increase (decrease) | (503) | (2,607) | $(12,743) | $(82,969) |
Class T | ||||
Shares sold | 15 | 60 | $378 | $1,939 |
Reinvestment of distributions | 26 | 21 | 679 | 649 |
Shares redeemed | (86) | (186) | (2,194) | (5,784) |
Net increase (decrease) | (45) | (105) | $(1,137) | $(3,196) |
Class B | ||||
Shares sold | –(a) | –(a) | $4 | $8 |
Reinvestment of distributions | 2 | 2 | 44 | 51 |
Shares redeemed | (13) | (21) | (334) | (668) |
Net increase (decrease) | (11) | (19) | $(286) | $(609) |
Class C | ||||
Shares sold | 37 | 294 | $931 | $9,362 |
Reinvestment of distributions | 98 | 60 | 2,556 | 1,859 |
Shares redeemed | (348) | (457) | (8,803) | (13,980) |
Net increase (decrease) | (213) | (103) | $(5,316) | $(2,759) |
Convertible Securities | ||||
Shares sold | 1,388 | 5,334 | $35,580 | $170,055 |
Reinvestment of distributions | 5,005 | 3,473 | 130,956 | 108,158 |
Shares redeemed | (8,977) | (16,104) | (229,518) | (506,266) |
Net increase (decrease) | (2,584) | (7,297) | $(62,982) | $(228,053) |
Class I | ||||
Shares sold | 431 | 4,462 | $10,982 | $141,039 |
Reinvestment of distributions | 245 | 218 | 6,414 | 6,798 |
Shares redeemed | (2,563) | (5,097) | (66,927) | (157,962) |
Net increase (decrease) | (1,887) | (417) | $(49,531) | $(10,125) |
(a) In the amount of less than five hundred shares.
11. 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.
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2015 to May 31, 2016).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratio-A | Beginning Account Value December 1, 2015 | Ending Account Value May 31, 2016 | Expenses Paid During Period-B December 1, 2015 to May 31, 2016 | |
Class A | .74% | |||
Actual | $1,000.00 | $958.10 | $3.62 | |
Hypothetical-C | $1,000.00 | $1,021.30 | $3.74 | |
Class T | 1.05% | |||
Actual | $1,000.00 | $956.80 | $5.14 | |
Hypothetical-C | $1,000.00 | $1,019.75 | $5.30 | |
Class B | 1.60% | |||
Actual | $1,000.00 | $954.10 | $7.82 | |
Hypothetical-C | $1,000.00 | $1,017.00 | $8.07 | |
Class C | 1.50% | |||
Actual | $1,000.00 | $954.50 | $7.33 | |
Hypothetical-C | $1,000.00 | $1,017.50 | $7.57 | |
Convertible Securities | .46% | |||
Actual | $1,000.00 | $959.70 | $2.25 | |
Hypothetical-C | $1,000.00 | $1,022.70 | $2.33 | |
Class I | .48% | |||
Actual | $1,000.00 | $959.40 | $2.35 | |
Hypothetical-C | $1,000.00 | $1,022.60 | $2.43 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).
C 5% return per year before expenses
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Fidelity® Equity Dividend Income Fund Semi-Annual Report May 31, 2016 |
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-835-5092 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2016 FMR LLC. All rights reserved.
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, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Fund nor Fidelity Distributors Corporation is a bank.
Investment Summary (Unaudited)
Top Ten Stocks as of May 31, 2016
% of fund's net assets | % of fund's net assets 6 months ago | |
Chevron Corp. | 4.2 | 3.6 |
JPMorgan Chase & Co. | 4.1 | 4.1 |
Johnson & Johnson | 3.7 | 3.7 |
Wells Fargo & Co. | 3.4 | 3.5 |
General Electric Co. | 3.0 | 4.0 |
AT&T, Inc. | 2.8 | 2.0 |
Cisco Systems, Inc. | 2.7 | 1.9 |
Pfizer, Inc. | 2.5 | 2.4 |
Medtronic PLC | 2.5 | 2.3 |
Procter & Gamble Co. | 2.2 | 2.3 |
31.1 |
Top Five Market Sectors as of May 31, 2016
% of fund's net assets | % of fund's net assets 6 months ago | |
Financials | 26.8 | 31.0 |
Energy | 14.7 | 10.7 |
Health Care | 13.7 | 13.7 |
Consumer Staples | 10.9 | 10.7 |
Industrials | 9.8 | 7.5 |
Asset Allocation (% of fund's net assets)
As of May 31, 2016* | ||
Stocks | 98.0% | |
Short-Term Investments and Net Other Assets (Liabilities) | 2.0% |
* Foreign investments - 16.8%
As of November 30, 2015* | ||
Stocks | 98.7% | |
Other Investments | 0.1% | |
Short-Term Investments and Net Other Assets (Liabilities) | 1.2% |
* Foreign investments - 14.1%
Investments May 31, 2016 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 98.0% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 3.1% | |||
Automobiles - 0.9% | |||
General Motors Co. | 1,553,500 | $48,593 | |
Hotels, Restaurants & Leisure - 0.8% | |||
Cedar Fair LP (depositary unit) | 181,500 | 10,895 | |
Sonic Corp. | 169,100 | 5,037 | |
Wyndham Worldwide Corp. | 387,800 | 26,134 | |
42,066 | |||
Specialty Retail - 1.0% | |||
Home Depot, Inc. | 377,600 | 49,889 | |
Textiles, Apparel & Luxury Goods - 0.4% | |||
Coach, Inc. | 192,493 | 7,588 | |
VF Corp. | 236,400 | 14,732 | |
22,320 | |||
TOTAL CONSUMER DISCRETIONARY | 162,868 | ||
CONSUMER STAPLES - 10.9% | |||
Beverages - 2.1% | |||
Anheuser-Busch InBev SA NV ADR | 280,300 | 35,379 | |
Britvic PLC | 1,388,200 | 13,582 | |
Constellation Brands, Inc. Class A (sub. vtg.) | 165,300 | 25,316 | |
Molson Coors Brewing Co. Class B | 345,300 | 34,247 | |
108,524 | |||
Food & Staples Retailing - 4.4% | |||
CVS Health Corp. | 915,800 | 88,329 | |
Wal-Mart Stores, Inc. | 1,393,300 | 98,618 | |
Walgreens Boots Alliance, Inc. | 531,800 | 41,161 | |
228,108 | |||
Food Products - 0.6% | |||
ConAgra Foods, Inc. | 727,800 | 33,260 | |
Household Products - 2.7% | |||
Procter & Gamble Co. | 1,364,505 | 110,579 | |
Reckitt Benckiser Group PLC | 276,800 | 27,558 | |
138,137 | |||
Tobacco - 1.1% | |||
Imperial Tobacco Group PLC | 462,569 | 25,197 | |
Japan Tobacco, Inc. | 736,700 | 29,052 | |
54,249 | |||
TOTAL CONSUMER STAPLES | 562,278 | ||
ENERGY - 14.7% | |||
Energy Equipment & Services - 1.7% | |||
Frank's International NV | 854,500 | 13,681 | |
Schlumberger Ltd. | 970,500 | 74,049 | |
87,730 | |||
Oil, Gas & Consumable Fuels - 13.0% | |||
Cenovus Energy, Inc. | 3,483,200 | 52,513 | |
Chevron Corp. | 2,163,570 | 218,517 | |
ConocoPhillips Co. | 1,077,300 | 47,175 | |
Enterprise Products Partners LP | 1,148,800 | 31,891 | |
EQT Midstream Partners LP | 135,600 | 10,220 | |
Exxon Mobil Corp. | 1,029,656 | 91,660 | |
Kinder Morgan, Inc. | 2,232,000 | 40,355 | |
Suncor Energy, Inc. (a) | 2,058,000 | 56,843 | |
Western Gas Partners LP | 392,217 | 19,544 | |
Williams Partners LP | 3,208,594 | 102,418 | |
671,136 | |||
TOTAL ENERGY | 758,866 | ||
FINANCIALS - 26.8% | |||
Banks - 14.1% | |||
Bank of America Corp. | 2,380,000 | 35,200 | |
Community Trust Bancorp, Inc. | 87,273 | 3,149 | |
JPMorgan Chase & Co. | 3,286,122 | 214,485 | |
M&T Bank Corp. | 289,100 | 34,547 | |
Regions Financial Corp. | 7,710,200 | 75,791 | |
SunTrust Banks, Inc. | 1,815,000 | 79,533 | |
U.S. Bancorp | 2,559,400 | 109,594 | |
Wells Fargo & Co. | 3,504,408 | 177,744 | |
730,043 | |||
Capital Markets - 3.6% | |||
Ares Capital Corp. (a) | 1,250,400 | 18,556 | |
BlackRock, Inc. Class A | 196,000 | 71,315 | |
The Blackstone Group LP | 2,639,000 | 69,115 | |
TPG Specialty Lending, Inc. | 1,530,200 | 25,095 | |
184,081 | |||
Consumer Finance - 1.2% | |||
Capital One Financial Corp. | 882,000 | 64,598 | |
Insurance - 4.4% | |||
Chubb Ltd. | 652,279 | 82,585 | |
First American Financial Corp. | 801,800 | 30,661 | |
MetLife, Inc. | 1,170,529 | 53,318 | |
Principal Financial Group, Inc. | 1,384,500 | 61,693 | |
228,257 | |||
Real Estate Investment Trusts - 3.5% | |||
Crown Castle International Corp. | 292,700 | 26,580 | |
Liberty Property Trust (SBI) | 536,300 | 20,015 | |
MGM Growth Properties LLC | 81,400 | 1,872 | |
Mid-America Apartment Communities, Inc. | 306,000 | 31,515 | |
Parkway Properties, Inc. | 1,214,600 | 21,195 | |
Potlatch Corp. | 146,000 | 4,990 | |
Simon Property Group, Inc. | 173,700 | 34,330 | |
Urban Edge Properties | 607,900 | 16,322 | |
WP Carey, Inc. | 361,200 | 23,157 | |
179,976 | |||
TOTAL FINANCIALS | 1,386,955 | ||
HEALTH CARE - 13.7% | |||
Biotechnology - 0.6% | |||
Amgen, Inc. | 190,700 | 30,121 | |
Health Care Equipment & Supplies - 2.5% | |||
Medtronic PLC | 1,570,564 | 126,399 | |
Pharmaceuticals - 10.6% | |||
Bristol-Myers Squibb Co. | 538,200 | 38,589 | |
Eli Lilly & Co. | 223,000 | 16,732 | |
GlaxoSmithKline PLC | 3,660,100 | 76,492 | |
Johnson & Johnson | 1,694,366 | 190,938 | |
Pfizer, Inc. | 3,798,600 | 131,811 | |
Sanofi SA sponsored ADR | 1,119,900 | 46,140 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 952,900 | 49,427 | |
550,129 | |||
TOTAL HEALTH CARE | 706,649 | ||
INDUSTRIALS - 9.8% | |||
Aerospace & Defense - 1.8% | |||
Honeywell International, Inc. | 137,600 | 15,663 | |
Northrop Grumman Corp. | 111,500 | 23,713 | |
United Technologies Corp. | 526,030 | 52,908 | |
92,284 | |||
Air Freight & Logistics - 1.8% | |||
C.H. Robinson Worldwide, Inc. | 671,200 | 50,327 | |
United Parcel Service, Inc. Class B | 444,500 | 45,824 | |
96,151 | |||
Commercial Services & Supplies - 0.3% | |||
KAR Auction Services, Inc. | 329,600 | 13,527 | |
Electrical Equipment - 1.7% | |||
Eaton Corp. PLC | 1,401,700 | 86,387 | |
Industrial Conglomerates - 3.7% | |||
3M Co. | 223,200 | 37,569 | |
General Electric Co. | 5,057,097 | 152,876 | |
190,445 | |||
Machinery - 0.5% | |||
Caterpillar, Inc. | 233,500 | 16,931 | |
Deere & Co. | 121,000 | 9,957 | |
26,888 | |||
TOTAL INDUSTRIALS | 505,682 | ||
INFORMATION TECHNOLOGY - 9.8% | |||
Communications Equipment - 2.7% | |||
Cisco Systems, Inc. | 4,734,600 | 137,540 | |
IT Services - 1.9% | |||
Accenture PLC Class A | 290,100 | 34,513 | |
Paychex, Inc. | 930,000 | 50,425 | |
Sabre Corp. | 369,000 | 10,395 | |
95,333 | |||
Semiconductors & Semiconductor Equipment - 1.4% | |||
Maxim Integrated Products, Inc. | 1,206,000 | 45,780 | |
Qualcomm, Inc. | 525,251 | 28,847 | |
74,627 | |||
Software - 1.5% | |||
Microsoft Corp. | 873,926 | 46,318 | |
Oracle Corp. | 810,200 | 32,570 | |
78,888 | |||
Technology Hardware, Storage & Peripherals - 2.3% | |||
Apple, Inc. | 245,100 | 24,476 | |
EMC Corp. | 2,650,955 | 74,094 | |
HP, Inc. | 1,445,800 | 19,345 | |
117,915 | |||
TOTAL INFORMATION TECHNOLOGY | 504,303 | ||
MATERIALS - 1.3% | |||
Chemicals - 1.3% | |||
CF Industries Holdings, Inc. | 519,300 | 14,364 | |
E.I. du Pont de Nemours & Co. | 457,400 | 29,919 | |
LyondellBasell Industries NV Class A | 305,200 | 24,831 | |
69,114 | |||
Containers & Packaging - 0.0% | |||
WestRock Co. | 2,331 | 92 | |
TOTAL MATERIALS | 69,206 | ||
TELECOMMUNICATION SERVICES - 3.4% | |||
Diversified Telecommunication Services - 3.4% | |||
AT&T, Inc. | 3,765,800 | 147,431 | |
Verizon Communications, Inc. | 609,200 | 31,008 | |
178,439 | |||
UTILITIES - 4.5% | |||
Electric Utilities - 4.5% | |||
American Electric Power Co., Inc. | 727,077 | 47,064 | |
Exelon Corp. | 744,900 | 25,528 | |
IDACORP, Inc. | 565,300 | 41,386 | |
PPL Corp. | 1,527,400 | 58,866 | |
Xcel Energy, Inc. | 1,510,700 | 62,498 | |
235,342 | |||
TOTAL COMMON STOCKS | |||
(Cost $4,398,585) | 5,070,588 | ||
Money Market Funds - 1.6% | |||
Fidelity Cash Central Fund, 0.40% (b) | 74,884,647 | 74,885 | |
Fidelity Securities Lending Cash Central Fund, 0.44% (b)(c) | 6,997,527 | 6,998 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $81,883) | 81,883 | ||
TOTAL INVESTMENT PORTFOLIO - 99.6% | |||
(Cost $4,480,468) | 5,152,471 | ||
NET OTHER ASSETS (LIABILITIES) - 0.4% | 18,687 | ||
NET ASSETS - 100% | $5,171,158 |
Legend
(a) Security or a portion of the security is on loan at period end.
(b) Affiliated fund that is generally 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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(c) Investment made with cash collateral received from securities on loan.
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 |
(Amounts in thousands) | |
Fidelity Cash Central Fund | $162 |
Fidelity Securities Lending Cash Central Fund | 58 |
Total | $220 |
Investment Valuation
The following is a summary of the inputs used, as of May 31, 2016, involving the Fund's assets and liabilities carried at fair 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
(Amounts in thousands) | ||||
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $162,868 | $162,868 | $-- | $-- |
Consumer Staples | 562,278 | 505,668 | 56,610 | -- |
Energy | 758,866 | 758,866 | -- | -- |
Financials | 1,386,955 | 1,386,955 | -- | -- |
Health Care | 706,649 | 630,157 | 76,492 | -- |
Industrials | 505,682 | 505,682 | -- | -- |
Information Technology | 504,303 | 504,303 | -- | -- |
Materials | 69,206 | 69,206 | -- | -- |
Telecommunication Services | 178,439 | 178,439 | -- | -- |
Utilities | 235,342 | 235,342 | -- | -- |
Money Market Funds | 81,883 | 81,883 | -- | -- |
Total Investments in Securities: | $5,152,471 | $5,019,369 | $133,102 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
United States of America | 83.2% |
Ireland | 4.9% |
United Kingdom | 2.8% |
Canada | 2.1% |
Switzerland | 1.6% |
Curacao | 1.4% |
Israel | 1.0% |
Others (Individually Less Than 1%) | 3.0% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2016 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $6,781) — See accompanying schedule: Unaffiliated issuers (cost $4,398,585) | $5,070,588 | |
Fidelity Central Funds (cost $81,883) | 81,883 | |
Total Investments (cost $4,480,468) | $5,152,471 | |
Receivable for investments sold | 67,149 | |
Receivable for fund shares sold | 5,268 | |
Dividends receivable | 17,539 | |
Distributions receivable from Fidelity Central Funds | 36 | |
Prepaid expenses | 2 | |
Other receivables | 428 | |
Total assets | 5,242,893 | |
Liabilities | ||
Payable for investments purchased | $58,824 | |
Payable for fund shares redeemed | 2,879 | |
Accrued management fee | 1,901 | |
Other affiliated payables | 723 | |
Other payables and accrued expenses | 410 | |
Collateral on securities loaned, at value | 6,998 | |
Total liabilities | 71,735 | |
Net Assets | $5,171,158 | |
Net Assets consist of: | ||
Paid in capital | $4,451,885 | |
Undistributed net investment income | 17,716 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 29,629 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 671,928 | |
Net Assets | $5,171,158 | |
Equity Dividend Income: | ||
Net Asset Value, offering price and redemption price per share ($4,892,381 ÷ 189,628 shares) | $25.80 | |
Class K: | ||
Net Asset Value, offering price and redemption price per share ($278,777 ÷ 10,805 shares) | $25.80 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | |
Investment Income | ||
Dividends | $72,201 | |
Income from Fidelity Central Funds | 220 | |
Total income | 72,421 | |
Expenses | ||
Management fee | $11,013 | |
Transfer agent fees | 3,675 | |
Accounting and security lending fees | 539 | |
Custodian fees and expenses | 36 | |
Independent trustees' fees and expenses | 11 | |
Registration fees | 41 | |
Audit | 40 | |
Legal | 5 | |
Miscellaneous | 21 | |
Total expenses before reductions | 15,381 | |
Expense reductions | (152) | 15,229 |
Net investment income (loss) | 57,192 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 20,327 | |
Foreign currency transactions | (116) | |
Total net realized gain (loss) | 20,211 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 116,227 | |
Assets and liabilities in foreign currencies | 51 | |
Total change in net unrealized appreciation (depreciation) | 116,278 | |
Net gain (loss) | 136,489 | |
Net increase (decrease) in net assets resulting from operations | $193,681 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | Year ended November 30, 2015 |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $57,192 | $130,113 |
Net realized gain (loss) | 20,211 | 165,910 |
Change in net unrealized appreciation (depreciation) | 116,278 | (353,491) |
Net increase (decrease) in net assets resulting from operations | 193,681 | (57,468) |
Distributions to shareholders from net investment income | (63,046) | (118,993) |
Distributions to shareholders from net realized gain | (161,630) | (17,510) |
Total distributions | (224,676) | (136,503) |
Share transactions - net increase (decrease) | 105,528 | (356,764) |
Total increase (decrease) in net assets | 74,533 | (550,735) |
Net Assets | ||
Beginning of period | 5,096,625 | 5,647,360 |
End of period (including undistributed net investment income of $17,716 and undistributed net investment income of $23,570, respectively) | $5,171,158 | $5,096,625 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Equity Dividend Income Fund
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $26.01 | $26.99 | $24.15 | $19.54 | $17.03 | $16.81 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .28 | .64 | .70B | .49 | .46 | .33 |
Net realized and unrealized gain (loss) | .66 | (.95)C | 2.77 | 4.59 | 2.48 | .21 |
Total from investment operations | .94 | (.31) | 3.47 | 5.08 | 2.94 | .54 |
Distributions from net investment income | (.32) | (.58) | (.63) | (.47) | (.43) | (.32) |
Distributions from net realized gain | (.83) | (.08) | – | – | – | – |
Total distributions | (1.15) | (.67)D | (.63) | (.47) | (.43) | (.32) |
Net asset value, end of period | $25.80 | $26.01 | $26.99 | $24.15 | $19.54 | $17.03 |
Total ReturnE,F | 3.94% | (1.13)%C | 14.60% | 26.35% | 17.42% | 3.17% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | .63%I | .63% | .63% | .65% | .67% | .68% |
Expenses net of fee waivers, if any | .63%I | .63% | .63% | .65% | .67% | .68% |
Expenses net of all reductions | .63%I | .62% | .63% | .63% | .66% | .67% |
Net investment income (loss) | 2.32%I | 2.42% | 2.78%B | 2.24% | 2.45% | 1.83% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $4,892 | $4,819 | $5,253 | $4,993 | $4,538 | $4,198 |
Portfolio turnover rateJ | 56%I | 49% | 52% | 86% | 78% | 82% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.12 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 2.31%.
C Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.02 per share. Excluding these litigation proceeds, the total return would have been (1.22)%.
D Total distributions of $.67 per share is comprised of distributions from net investment income of $.582 and distributions from net realized gain of $.084 per share.
E Total returns for periods of less than one year are not annualized.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any 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.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. 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 Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Equity Dividend Income Fund Class K
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $26.01 | $26.99 | $24.15 | $19.53 | $17.03 | $16.82 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .30 | .67 | .73B | .51 | .48 | .35 |
Net realized and unrealized gain (loss) | .65 | (.96)C | 2.76 | 4.61 | 2.48 | .21 |
Total from investment operations | .95 | (.29) | 3.49 | 5.12 | 2.96 | .56 |
Distributions from net investment income | (.33) | (.61) | (.65) | (.50) | (.46) | (.35) |
Distributions from net realized gain | (.83) | (.08) | – | – | – | – |
Total distributions | (1.16) | (.69) | (.65) | (.50) | (.46) | (.35) |
Net asset value, end of period | $25.80 | $26.01 | $26.99 | $24.15 | $19.53 | $17.03 |
Total ReturnD,E | 3.99% | (1.03)%C | 14.72% | 26.57% | 17.53% | 3.26% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | .52%H | .52% | .52% | .53% | .54% | .54% |
Expenses net of fee waivers, if any | .52%H | .52% | .52% | .53% | .54% | .54% |
Expenses net of all reductions | .52%H | .52% | .52% | .51% | .53% | .53% |
Net investment income (loss) | 2.43%H | 2.52% | 2.89%B | 2.35% | 2.58% | 1.96% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $279 | $277 | $394 | $442 | $564 | $344 |
Portfolio turnover rateI | 56%H | 49% | 52% | 86% | 78% | 82% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.12 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 2.42%.
C Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.02 per share. Excluding these litigation proceeds, the total return would have been (1.12)%.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended May 31, 2016
(Amounts in thousands except percentages)
1. Organization.
Fidelity Equity Dividend Income Fund (the Fund) is a fund of Fidelity Financial Trust (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Equity Dividend Income 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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of May 31, 2016 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily 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 may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP.
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. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $803,746 |
Gross unrealized depreciation | (160,643) |
Net unrealized appreciation (depreciation) on securities | $643,103 |
Tax cost | $4,509,368 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,297,699 and $1,373,896, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annualized management fee rate was .45% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, 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 Equity Dividend Income, except for Class K. 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, transfer agent fees for each class were as follows:
Amount | % of Class-Level Average Net Assets(a) | |
Equity Dividend Income | $3,613 | .16 |
Class K | 62 | .05 |
$3,675 |
(a) Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $40 for the period.
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Other. During the period, the investment adviser reimbursed the Fund for certain losses in the amount of $8.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 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 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. 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 rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $58. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $134 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $18.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended May 31, 2016 | Year ended November 30, 2015 | |
From net investment income | ||
Equity Dividend Income | $59,512 | $110,847 |
Class K | 3,534 | 8,146 |
Total | $63,046 | $118,993 |
From net realized gain | ||
Equity Dividend Income | $152,875 | $16,312 |
Class K | 8,755 | 1,198 |
Total | $161,630 | $17,510 |
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
Shares | Shares | Dollars | Dollars | |
Six months ended May 31, 2016 | Year ended November 30, 2015 | Six months ended May 31, 2016 | Year ended November 30, 2015 | |
Equity Dividend Income | ||||
Shares sold | 6,761 | 7,055 | $163,773 | $185,628 |
Reinvestment of distributions | 8,319 | 4,623 | 200,512 | 119,972 |
Shares redeemed | (10,716) | (21,086) | (262,162) | (557,494) |
Net increase (decrease) | 4,364 | (9,408) | $102,123 | $(251,894) |
Class K | ||||
Shares sold | 1,458 | 3,255 | $35,526 | $84,337 |
Reinvestment of distributions | 510 | 359 | 12,289 | 9,344 |
Shares redeemed | (1,820) | (7,560) | (44,410) | (198,551) |
Net increase (decrease) | 148 | (3,946) | $3,405 | $(104,870) |
11. 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.
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, 2015 to May 31, 2016).
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.
Annualized Expense Ratio-A | Beginning Account Value December 1, 2015 | Ending Account Value May 31, 2016 | Expenses Paid During Period-B December 1, 2015 to May 31, 2016 | |
Equity Dividend Income | .63% | |||
Actual | $1,000.00 | $1,039.40 | $3.21 | |
Hypothetical-C | $1,000.00 | $1,021.85 | $3.18 | |
Class K | .52% | |||
Actual | $1,000.00 | $1,039.90 | $2.65 | |
Hypothetical-C | $1,000.00 | $1,022.40 | $2.63 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).
C 5% return per year before expenses
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Fidelity® Equity Dividend Income Fund Semi-Annual Report May 31, 2016 |
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2016 FMR LLC. All rights reserved.
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, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Fund nor Fidelity Distributors Corporation is a bank.
Investment Summary (Unaudited)
Top Ten Stocks as of May 31, 2016
% of fund's net assets | % of fund's net assets 6 months ago | |
Chevron Corp. | 4.2 | 3.6 |
JPMorgan Chase & Co. | 4.1 | 4.1 |
Johnson & Johnson | 3.7 | 3.7 |
Wells Fargo & Co. | 3.4 | 3.5 |
General Electric Co. | 3.0 | 4.0 |
AT&T, Inc. | 2.8 | 2.0 |
Cisco Systems, Inc. | 2.7 | 1.9 |
Pfizer, Inc. | 2.5 | 2.4 |
Medtronic PLC | 2.5 | 2.3 |
Procter & Gamble Co. | 2.2 | 2.3 |
31.1 |
Top Five Market Sectors as of May 31, 2016
% of fund's net assets | % of fund's net assets 6 months ago | |
Financials | 26.8 | 31.0 |
Energy | 14.7 | 10.7 |
Health Care | 13.7 | 13.7 |
Consumer Staples | 10.9 | 10.7 |
Industrials | 9.8 | 7.5 |
Asset Allocation (% of fund's net assets)
As of May 31, 2016* | ||
Stocks | 98.0% | |
Short-Term Investments and Net Other Assets (Liabilities) | 2.0% |
* Foreign investments - 16.8%
As of November 30, 2015* | ||
Stocks | 98.7% | |
Other Investments | 0.1% | |
Short-Term Investments and Net Other Assets (Liabilities) | 1.2% |
* Foreign investments - 14.1%
Investments May 31, 2016 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 98.0% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 3.1% | |||
Automobiles - 0.9% | |||
General Motors Co. | 1,553,500 | $48,593 | |
Hotels, Restaurants & Leisure - 0.8% | |||
Cedar Fair LP (depositary unit) | 181,500 | 10,895 | |
Sonic Corp. | 169,100 | 5,037 | |
Wyndham Worldwide Corp. | 387,800 | 26,134 | |
42,066 | |||
Specialty Retail - 1.0% | |||
Home Depot, Inc. | 377,600 | 49,889 | |
Textiles, Apparel & Luxury Goods - 0.4% | |||
Coach, Inc. | 192,493 | 7,588 | |
VF Corp. | 236,400 | 14,732 | |
22,320 | |||
TOTAL CONSUMER DISCRETIONARY | 162,868 | ||
CONSUMER STAPLES - 10.9% | |||
Beverages - 2.1% | |||
Anheuser-Busch InBev SA NV ADR | 280,300 | 35,379 | |
Britvic PLC | 1,388,200 | 13,582 | |
Constellation Brands, Inc. Class A (sub. vtg.) | 165,300 | 25,316 | |
Molson Coors Brewing Co. Class B | 345,300 | 34,247 | |
108,524 | |||
Food & Staples Retailing - 4.4% | |||
CVS Health Corp. | 915,800 | 88,329 | |
Wal-Mart Stores, Inc. | 1,393,300 | 98,618 | |
Walgreens Boots Alliance, Inc. | 531,800 | 41,161 | |
228,108 | |||
Food Products - 0.6% | |||
ConAgra Foods, Inc. | 727,800 | 33,260 | |
Household Products - 2.7% | |||
Procter & Gamble Co. | 1,364,505 | 110,579 | |
Reckitt Benckiser Group PLC | 276,800 | 27,558 | |
138,137 | |||
Tobacco - 1.1% | |||
Imperial Tobacco Group PLC | 462,569 | 25,197 | |
Japan Tobacco, Inc. | 736,700 | 29,052 | |
54,249 | |||
TOTAL CONSUMER STAPLES | 562,278 | ||
ENERGY - 14.7% | |||
Energy Equipment & Services - 1.7% | |||
Frank's International NV | 854,500 | 13,681 | |
Schlumberger Ltd. | 970,500 | 74,049 | |
87,730 | |||
Oil, Gas & Consumable Fuels - 13.0% | |||
Cenovus Energy, Inc. | 3,483,200 | 52,513 | |
Chevron Corp. | 2,163,570 | 218,517 | |
ConocoPhillips Co. | 1,077,300 | 47,175 | |
Enterprise Products Partners LP | 1,148,800 | 31,891 | |
EQT Midstream Partners LP | 135,600 | 10,220 | |
Exxon Mobil Corp. | 1,029,656 | 91,660 | |
Kinder Morgan, Inc. | 2,232,000 | 40,355 | |
Suncor Energy, Inc. (a) | 2,058,000 | 56,843 | |
Western Gas Partners LP | 392,217 | 19,544 | |
Williams Partners LP | 3,208,594 | 102,418 | |
671,136 | |||
TOTAL ENERGY | 758,866 | ||
FINANCIALS - 26.8% | |||
Banks - 14.1% | |||
Bank of America Corp. | 2,380,000 | 35,200 | |
Community Trust Bancorp, Inc. | 87,273 | 3,149 | |
JPMorgan Chase & Co. | 3,286,122 | 214,485 | |
M&T Bank Corp. | 289,100 | 34,547 | |
Regions Financial Corp. | 7,710,200 | 75,791 | |
SunTrust Banks, Inc. | 1,815,000 | 79,533 | |
U.S. Bancorp | 2,559,400 | 109,594 | |
Wells Fargo & Co. | 3,504,408 | 177,744 | |
730,043 | |||
Capital Markets - 3.6% | |||
Ares Capital Corp. (a) | 1,250,400 | 18,556 | |
BlackRock, Inc. Class A | 196,000 | 71,315 | |
The Blackstone Group LP | 2,639,000 | 69,115 | |
TPG Specialty Lending, Inc. | 1,530,200 | 25,095 | |
184,081 | |||
Consumer Finance - 1.2% | |||
Capital One Financial Corp. | 882,000 | 64,598 | |
Insurance - 4.4% | |||
Chubb Ltd. | 652,279 | 82,585 | |
First American Financial Corp. | 801,800 | 30,661 | |
MetLife, Inc. | 1,170,529 | 53,318 | |
Principal Financial Group, Inc. | 1,384,500 | 61,693 | |
228,257 | |||
Real Estate Investment Trusts - 3.5% | |||
Crown Castle International Corp. | 292,700 | 26,580 | |
Liberty Property Trust (SBI) | 536,300 | 20,015 | |
MGM Growth Properties LLC | 81,400 | 1,872 | |
Mid-America Apartment Communities, Inc. | 306,000 | 31,515 | |
Parkway Properties, Inc. | 1,214,600 | 21,195 | |
Potlatch Corp. | 146,000 | 4,990 | |
Simon Property Group, Inc. | 173,700 | 34,330 | |
Urban Edge Properties | 607,900 | 16,322 | |
WP Carey, Inc. | 361,200 | 23,157 | |
179,976 | |||
TOTAL FINANCIALS | 1,386,955 | ||
HEALTH CARE - 13.7% | |||
Biotechnology - 0.6% | |||
Amgen, Inc. | 190,700 | 30,121 | |
Health Care Equipment & Supplies - 2.5% | |||
Medtronic PLC | 1,570,564 | 126,399 | |
Pharmaceuticals - 10.6% | |||
Bristol-Myers Squibb Co. | 538,200 | 38,589 | |
Eli Lilly & Co. | 223,000 | 16,732 | |
GlaxoSmithKline PLC | 3,660,100 | 76,492 | |
Johnson & Johnson | 1,694,366 | 190,938 | |
Pfizer, Inc. | 3,798,600 | 131,811 | |
Sanofi SA sponsored ADR | 1,119,900 | 46,140 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 952,900 | 49,427 | |
550,129 | |||
TOTAL HEALTH CARE | 706,649 | ||
INDUSTRIALS - 9.8% | |||
Aerospace & Defense - 1.8% | |||
Honeywell International, Inc. | 137,600 | 15,663 | |
Northrop Grumman Corp. | 111,500 | 23,713 | |
United Technologies Corp. | 526,030 | 52,908 | |
92,284 | |||
Air Freight & Logistics - 1.8% | |||
C.H. Robinson Worldwide, Inc. | 671,200 | 50,327 | |
United Parcel Service, Inc. Class B | 444,500 | 45,824 | |
96,151 | |||
Commercial Services & Supplies - 0.3% | |||
KAR Auction Services, Inc. | 329,600 | 13,527 | |
Electrical Equipment - 1.7% | |||
Eaton Corp. PLC | 1,401,700 | 86,387 | |
Industrial Conglomerates - 3.7% | |||
3M Co. | 223,200 | 37,569 | |
General Electric Co. | 5,057,097 | 152,876 | |
190,445 | |||
Machinery - 0.5% | |||
Caterpillar, Inc. | 233,500 | 16,931 | |
Deere & Co. | 121,000 | 9,957 | |
26,888 | |||
TOTAL INDUSTRIALS | 505,682 | ||
INFORMATION TECHNOLOGY - 9.8% | |||
Communications Equipment - 2.7% | |||
Cisco Systems, Inc. | 4,734,600 | 137,540 | |
IT Services - 1.9% | |||
Accenture PLC Class A | 290,100 | 34,513 | |
Paychex, Inc. | 930,000 | 50,425 | |
Sabre Corp. | 369,000 | 10,395 | |
95,333 | |||
Semiconductors & Semiconductor Equipment - 1.4% | |||
Maxim Integrated Products, Inc. | 1,206,000 | 45,780 | |
Qualcomm, Inc. | 525,251 | 28,847 | |
74,627 | |||
Software - 1.5% | |||
Microsoft Corp. | 873,926 | 46,318 | |
Oracle Corp. | 810,200 | 32,570 | |
78,888 | |||
Technology Hardware, Storage & Peripherals - 2.3% | |||
Apple, Inc. | 245,100 | 24,476 | |
EMC Corp. | 2,650,955 | 74,094 | |
HP, Inc. | 1,445,800 | 19,345 | |
117,915 | |||
TOTAL INFORMATION TECHNOLOGY | 504,303 | ||
MATERIALS - 1.3% | |||
Chemicals - 1.3% | |||
CF Industries Holdings, Inc. | 519,300 | 14,364 | |
E.I. du Pont de Nemours & Co. | 457,400 | 29,919 | |
LyondellBasell Industries NV Class A | 305,200 | 24,831 | |
69,114 | |||
Containers & Packaging - 0.0% | |||
WestRock Co. | 2,331 | 92 | |
TOTAL MATERIALS | 69,206 | ||
TELECOMMUNICATION SERVICES - 3.4% | |||
Diversified Telecommunication Services - 3.4% | |||
AT&T, Inc. | 3,765,800 | 147,431 | |
Verizon Communications, Inc. | 609,200 | 31,008 | |
178,439 | |||
UTILITIES - 4.5% | |||
Electric Utilities - 4.5% | |||
American Electric Power Co., Inc. | 727,077 | 47,064 | |
Exelon Corp. | 744,900 | 25,528 | |
IDACORP, Inc. | 565,300 | 41,386 | |
PPL Corp. | 1,527,400 | 58,866 | |
Xcel Energy, Inc. | 1,510,700 | 62,498 | |
235,342 | |||
TOTAL COMMON STOCKS | |||
(Cost $4,398,585) | 5,070,588 | ||
Money Market Funds - 1.6% | |||
Fidelity Cash Central Fund, 0.40% (b) | 74,884,647 | 74,885 | |
Fidelity Securities Lending Cash Central Fund, 0.44% (b)(c) | 6,997,527 | 6,998 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $81,883) | 81,883 | ||
TOTAL INVESTMENT PORTFOLIO - 99.6% | |||
(Cost $4,480,468) | 5,152,471 | ||
NET OTHER ASSETS (LIABILITIES) - 0.4% | 18,687 | ||
NET ASSETS - 100% | $5,171,158 |
Legend
(a) Security or a portion of the security is on loan at period end.
(b) Affiliated fund that is generally 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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(c) Investment made with cash collateral received from securities on loan.
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 |
(Amounts in thousands) | |
Fidelity Cash Central Fund | $162 |
Fidelity Securities Lending Cash Central Fund | 58 |
Total | $220 |
Investment Valuation
The following is a summary of the inputs used, as of May 31, 2016, involving the Fund's assets and liabilities carried at fair 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
(Amounts in thousands) | ||||
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $162,868 | $162,868 | $-- | $-- |
Consumer Staples | 562,278 | 505,668 | 56,610 | -- |
Energy | 758,866 | 758,866 | -- | -- |
Financials | 1,386,955 | 1,386,955 | -- | -- |
Health Care | 706,649 | 630,157 | 76,492 | -- |
Industrials | 505,682 | 505,682 | -- | -- |
Information Technology | 504,303 | 504,303 | -- | -- |
Materials | 69,206 | 69,206 | -- | -- |
Telecommunication Services | 178,439 | 178,439 | -- | -- |
Utilities | 235,342 | 235,342 | -- | -- |
Money Market Funds | 81,883 | 81,883 | -- | -- |
Total Investments in Securities: | $5,152,471 | $5,019,369 | $133,102 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
United States of America | 83.2% |
Ireland | 4.9% |
United Kingdom | 2.8% |
Canada | 2.1% |
Switzerland | 1.6% |
Curacao | 1.4% |
Israel | 1.0% |
Others (Individually Less Than 1%) | 3.0% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2016 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $6,781) — See accompanying schedule: Unaffiliated issuers (cost $4,398,585) | $5,070,588 | |
Fidelity Central Funds (cost $81,883) | 81,883 | |
Total Investments (cost $4,480,468) | $5,152,471 | |
Receivable for investments sold | 67,149 | |
Receivable for fund shares sold | 5,268 | |
Dividends receivable | 17,539 | |
Distributions receivable from Fidelity Central Funds | 36 | |
Prepaid expenses | 2 | |
Other receivables | 428 | |
Total assets | 5,242,893 | |
Liabilities | ||
Payable for investments purchased | $58,824 | |
Payable for fund shares redeemed | 2,879 | |
Accrued management fee | 1,901 | |
Other affiliated payables | 723 | |
Other payables and accrued expenses | 410 | |
Collateral on securities loaned, at value | 6,998 | |
Total liabilities | 71,735 | |
Net Assets | $5,171,158 | |
Net Assets consist of: | ||
Paid in capital | $4,451,885 | |
Undistributed net investment income | 17,716 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 29,629 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 671,928 | |
Net Assets | $5,171,158 | |
Equity Dividend Income: | ||
Net Asset Value, offering price and redemption price per share ($4,892,381 ÷ 189,628 shares) | $25.80 | |
Class K: | ||
Net Asset Value, offering price and redemption price per share ($278,777 ÷ 10,805 shares) | $25.80 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | |
Investment Income | ||
Dividends | $72,201 | |
Income from Fidelity Central Funds | 220 | |
Total income | 72,421 | |
Expenses | ||
Management fee | $11,013 | |
Transfer agent fees | 3,675 | |
Accounting and security lending fees | 539 | |
Custodian fees and expenses | 36 | |
Independent trustees' fees and expenses | 11 | |
Registration fees | 41 | |
Audit | 40 | |
Legal | 5 | |
Miscellaneous | 21 | |
Total expenses before reductions | 15,381 | |
Expense reductions | (152) | 15,229 |
Net investment income (loss) | 57,192 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 20,327 | |
Foreign currency transactions | (116) | |
Total net realized gain (loss) | 20,211 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 116,227 | |
Assets and liabilities in foreign currencies | 51 | |
Total change in net unrealized appreciation (depreciation) | 116,278 | |
Net gain (loss) | 136,489 | |
Net increase (decrease) in net assets resulting from operations | $193,681 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | Year ended November 30, 2015 |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $57,192 | $130,113 |
Net realized gain (loss) | 20,211 | 165,910 |
Change in net unrealized appreciation (depreciation) | 116,278 | (353,491) |
Net increase (decrease) in net assets resulting from operations | 193,681 | (57,468) |
Distributions to shareholders from net investment income | (63,046) | (118,993) |
Distributions to shareholders from net realized gain | (161,630) | (17,510) |
Total distributions | (224,676) | (136,503) |
Share transactions - net increase (decrease) | 105,528 | (356,764) |
Total increase (decrease) in net assets | 74,533 | (550,735) |
Net Assets | ||
Beginning of period | 5,096,625 | 5,647,360 |
End of period (including undistributed net investment income of $17,716 and undistributed net investment income of $23,570, respectively) | $5,171,158 | $5,096,625 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Equity Dividend Income Fund
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $26.01 | $26.99 | $24.15 | $19.54 | $17.03 | $16.81 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .28 | .64 | .70B | .49 | .46 | .33 |
Net realized and unrealized gain (loss) | .66 | (.95)C | 2.77 | 4.59 | 2.48 | .21 |
Total from investment operations | .94 | (.31) | 3.47 | 5.08 | 2.94 | .54 |
Distributions from net investment income | (.32) | (.58) | (.63) | (.47) | (.43) | (.32) |
Distributions from net realized gain | (.83) | (.08) | – | – | – | – |
Total distributions | (1.15) | (.67)D | (.63) | (.47) | (.43) | (.32) |
Net asset value, end of period | $25.80 | $26.01 | $26.99 | $24.15 | $19.54 | $17.03 |
Total ReturnE,F | 3.94% | (1.13)%C | 14.60% | 26.35% | 17.42% | 3.17% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | .63%I | .63% | .63% | .65% | .67% | .68% |
Expenses net of fee waivers, if any | .63%I | .63% | .63% | .65% | .67% | .68% |
Expenses net of all reductions | .63%I | .62% | .63% | .63% | .66% | .67% |
Net investment income (loss) | 2.32%I | 2.42% | 2.78%B | 2.24% | 2.45% | 1.83% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $4,892 | $4,819 | $5,253 | $4,993 | $4,538 | $4,198 |
Portfolio turnover rateJ | 56%I | 49% | 52% | 86% | 78% | 82% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.12 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 2.31%.
C Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.02 per share. Excluding these litigation proceeds, the total return would have been (1.22)%.
D Total distributions of $.67 per share is comprised of distributions from net investment income of $.582 and distributions from net realized gain of $.084 per share.
E Total returns for periods of less than one year are not annualized.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any 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.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. 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 Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Equity Dividend Income Fund Class K
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $26.01 | $26.99 | $24.15 | $19.53 | $17.03 | $16.82 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .30 | .67 | .73B | .51 | .48 | .35 |
Net realized and unrealized gain (loss) | .65 | (.96)C | 2.76 | 4.61 | 2.48 | .21 |
Total from investment operations | .95 | (.29) | 3.49 | 5.12 | 2.96 | .56 |
Distributions from net investment income | (.33) | (.61) | (.65) | (.50) | (.46) | (.35) |
Distributions from net realized gain | (.83) | (.08) | – | – | – | – |
Total distributions | (1.16) | (.69) | (.65) | (.50) | (.46) | (.35) |
Net asset value, end of period | $25.80 | $26.01 | $26.99 | $24.15 | $19.53 | $17.03 |
Total ReturnD,E | 3.99% | (1.03)%C | 14.72% | 26.57% | 17.53% | 3.26% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | .52%H | .52% | .52% | .53% | .54% | .54% |
Expenses net of fee waivers, if any | .52%H | .52% | .52% | .53% | .54% | .54% |
Expenses net of all reductions | .52%H | .52% | .52% | .51% | .53% | .53% |
Net investment income (loss) | 2.43%H | 2.52% | 2.89%B | 2.35% | 2.58% | 1.96% |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $279 | $277 | $394 | $442 | $564 | $344 |
Portfolio turnover rateI | 56%H | 49% | 52% | 86% | 78% | 82% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.12 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 2.42%.
C Net realized and unrealized gain (loss) per share reflects proceeds from litigation which amounted to $.02 per share. Excluding these litigation proceeds, the total return would have been (1.12)%.
D Total returns for periods of less than one year are not annualized.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended May 31, 2016
(Amounts in thousands except percentages)
1. Organization.
Fidelity Equity Dividend Income Fund (the Fund) is a fund of Fidelity Financial Trust (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Equity Dividend Income 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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of May 31, 2016 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily 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 may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP.
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. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $803,746 |
Gross unrealized depreciation | (160,643) |
Net unrealized appreciation (depreciation) on securities | $643,103 |
Tax cost | $4,509,368 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,297,699 and $1,373,896, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annualized management fee rate was .45% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, 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 Equity Dividend Income, except for Class K. 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, transfer agent fees for each class were as follows:
Amount | % of Class-Level Average Net Assets(a) | |
Equity Dividend Income | $3,613 | .16 |
Class K | 62 | .05 |
$3,675 |
(a) Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $40 for the period.
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Other. During the period, the investment adviser reimbursed the Fund for certain losses in the amount of $8.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 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 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. 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 rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $58. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $134 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $18.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended May 31, 2016 | Year ended November 30, 2015 | |
From net investment income | ||
Equity Dividend Income | $59,512 | $110,847 |
Class K | 3,534 | 8,146 |
Total | $63,046 | $118,993 |
From net realized gain | ||
Equity Dividend Income | $152,875 | $16,312 |
Class K | 8,755 | 1,198 |
Total | $161,630 | $17,510 |
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
Shares | Shares | Dollars | Dollars | |
Six months ended May 31, 2016 | Year ended November 30, 2015 | Six months ended May 31, 2016 | Year ended November 30, 2015 | |
Equity Dividend Income | ||||
Shares sold | 6,761 | 7,055 | $163,773 | $185,628 |
Reinvestment of distributions | 8,319 | 4,623 | 200,512 | 119,972 |
Shares redeemed | (10,716) | (21,086) | (262,162) | (557,494) |
Net increase (decrease) | 4,364 | (9,408) | $102,123 | $(251,894) |
Class K | ||||
Shares sold | 1,458 | 3,255 | $35,526 | $84,337 |
Reinvestment of distributions | 510 | 359 | 12,289 | 9,344 |
Shares redeemed | (1,820) | (7,560) | (44,410) | (198,551) |
Net increase (decrease) | 148 | (3,946) | $3,405 | $(104,870) |
11. 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.
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, 2015 to May 31, 2016).
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.
Annualized Expense Ratio-A | Beginning Account Value December 1, 2015 | Ending Account Value May 31, 2016 | Expenses Paid During Period-B December 1, 2015 to May 31, 2016 | |
Equity Dividend Income | .63% | |||
Actual | $1,000.00 | $1,039.40 | $3.21 | |
Hypothetical-C | $1,000.00 | $1,021.85 | $3.18 | |
Class K | .52% | |||
Actual | $1,000.00 | $1,039.90 | $2.65 | |
Hypothetical-C | $1,000.00 | $1,022.40 | $2.63 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).
C 5% return per year before expenses
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Fidelity® Independence Fund Semi-Annual Report May 31, 2016 |
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-835-5092 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2016 FMR LLC. All rights reserved.
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, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Fund nor Fidelity Distributors Corporation is a bank.
Investment Summary (Unaudited)
Top Ten Stocks as of May 31, 2016
% of fund's net assets | % of fund's net assets 6 months ago | |
Apple, Inc. | 3.4 | 4.3 |
Celgene Corp. | 3.1 | 2.9 |
Gilead Sciences, Inc. | 3.0 | 3.0 |
Facebook, Inc. Class A | 2.6 | 2.3 |
Medivation, Inc. | 2.6 | 2.0 |
Southwest Airlines Co. | 2.5 | 2.4 |
Alphabet, Inc. Class A | 2.5 | 3.2 |
Visa, Inc. Class A | 2.4 | 2.3 |
NXP Semiconductors NV | 2.4 | 2.2 |
Alexion Pharmaceuticals, Inc. | 2.3 | 2.4 |
26.8 |
Top Five Market Sectors as of May 31, 2016
% of fund's net assets | % of fund's net assets 6 months ago | |
Health Care | 24.6 | 28.2 |
Information Technology | 20.3 | 24.2 |
Consumer Discretionary | 14.5 | 22.1 |
Industrials | 13.2 | 11.9 |
Financials | 9.2 | 6.7 |
Asset Allocation (% of fund's net assets)
As of May 31, 2016* | ||
Stocks | 99.2% | |
Short-Term Investments and Net Other Assets (Liabilities) | 0.8% |
* Foreign investments - 15.9%
As of November 30, 2015* | ||
Stocks | 99.9% | |
Short-Term Investments and Net Other Assets (Liabilities) | 0.1% |
* Foreign investments - 19.2%
Investments May 31, 2016 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.2% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 14.5% | |||
Automobiles - 0.9% | |||
General Motors Co. | 1,087,700 | $34,023 | |
Hotels, Restaurants & Leisure - 0.4% | |||
Chipotle Mexican Grill, Inc. (a) | 37,100 | 16,397 | |
Household Durables - 2.1% | |||
D.R. Horton, Inc. | 2,643,300 | 80,779 | |
Internet & Catalog Retail - 2.9% | |||
Amazon.com, Inc. (a) | 24,100 | 17,419 | |
JD.com, Inc. sponsored ADR (a) | 400,000 | 9,844 | |
Priceline Group, Inc. (a) | 54,300 | 68,653 | |
Vipshop Holdings Ltd. ADR (a) | 1,200,000 | 14,004 | |
109,920 | |||
Leisure Products - 0.1% | |||
Vista Outdoor, Inc. (a) | 100,000 | 5,018 | |
Media - 0.6% | |||
ITV PLC | 5,909,100 | 18,335 | |
Liberty Global PLC Class C (a) | 105,800 | 3,823 | |
22,158 | |||
Multiline Retail - 0.4% | |||
Dollar Tree, Inc. (a) | 150,000 | 13,581 | |
Specialty Retail - 4.0% | |||
Home Depot, Inc. | 481,300 | 63,589 | |
John David Group PLC | 200,000 | 3,806 | |
Lowe's Companies, Inc. | 613,400 | 49,152 | |
TJX Companies, Inc. | 489,000 | 37,223 | |
153,770 | |||
Textiles, Apparel & Luxury Goods - 3.1% | |||
Michael Kors Holdings Ltd. (a) | 1,845,547 | 78,842 | |
Pandora A/S | 280,000 | 41,614 | |
120,456 | |||
TOTAL CONSUMER DISCRETIONARY | 556,102 | ||
CONSUMER STAPLES - 7.5% | |||
Beverages - 4.8% | |||
Constellation Brands, Inc. Class A (sub. vtg.) | 300,000 | 45,945 | |
Dr. Pepper Snapple Group, Inc. | 255,000 | 23,307 | |
Molson Coors Brewing Co. Class B | 300,000 | 29,754 | |
Monster Beverage Corp. | 568,900 | 85,335 | |
184,341 | |||
Food Products - 0.7% | |||
Mead Johnson Nutrition Co. Class A | 275,000 | 22,627 | |
WH Group Ltd. | 2,500,000 | 1,924 | |
24,551 | |||
Tobacco - 2.0% | |||
Altria Group, Inc. | 400,000 | 25,456 | |
Imperial Tobacco Group PLC | 393,940 | 21,459 | |
Philip Morris International, Inc. | 300,000 | 29,604 | |
76,519 | |||
TOTAL CONSUMER STAPLES | 285,411 | ||
ENERGY - 7.5% | |||
Oil, Gas & Consumable Fuels - 7.5% | |||
Chevron Corp. | 650,000 | 65,650 | |
Cimarex Energy Co. | 100,000 | 11,628 | |
Continental Resources, Inc. (a)(b) | 1,204,100 | 50,644 | |
Devon Energy Corp. | 1,175,000 | 42,406 | |
Exxon Mobil Corp. | 500,000 | 44,510 | |
SM Energy Co. (b) | 600,000 | 18,912 | |
Targa Resources Corp. | 280,000 | 11,992 | |
Williams Partners LP | 1,300,000 | 41,496 | |
287,238 | |||
FINANCIALS - 9.2% | |||
Banks - 3.7% | |||
Bank of America Corp. | 4,029,000 | 59,589 | |
Citigroup, Inc. | 1,200,000 | 55,884 | |
SunTrust Banks, Inc. | 600,000 | 26,292 | |
141,765 | |||
Capital Markets - 1.5% | |||
Goldman Sachs Group, Inc. | 90,000 | 14,353 | |
The Blackstone Group LP | 1,704,600 | 44,643 | |
58,996 | |||
Consumer Finance - 1.2% | |||
OneMain Holdings, Inc. (a)(b) | 1,509,000 | 47,171 | |
Diversified Financial Services - 1.7% | |||
Broadcom Ltd. | 60,800 | 9,385 | |
McGraw Hill Financial, Inc. | 280,900 | 31,407 | |
MSCI, Inc. Class A | 300,000 | 23,937 | |
64,729 | |||
Insurance - 0.5% | |||
Marsh & McLennan Companies, Inc. | 300,000 | 19,821 | |
Real Estate Investment Trusts - 0.6% | |||
American Tower Corp. | 200,000 | 21,156 | |
TOTAL FINANCIALS | 353,638 | ||
HEALTH CARE - 24.6% | |||
Biotechnology - 16.7% | |||
AbbVie, Inc. | 250,000 | 15,733 | |
Acorda Therapeutics, Inc. (a) | 649,800 | 18,487 | |
Actelion Ltd. | 156,854 | 25,737 | |
Alexion Pharmaceuticals, Inc. (a) | 577,100 | 87,084 | |
Alnylam Pharmaceuticals, Inc. (a) | 97,661 | 7,004 | |
Amicus Therapeutics, Inc. (a)(b) | 861,800 | 6,102 | |
BioMarin Pharmaceutical, Inc. (a) | 515,000 | 46,170 | |
Celgene Corp. (a) | 1,139,900 | 120,282 | |
Genmab A/S (a) | 195,000 | 35,239 | |
Gilead Sciences, Inc. | 1,308,100 | 113,883 | |
Intercept Pharmaceuticals, Inc. (a)(b) | 201,600 | 29,909 | |
Medivation, Inc. (a) | 1,645,200 | 99,469 | |
Medy-Tox, Inc. | 20,000 | 7,375 | |
Novavax, Inc. (a) | 2,500,000 | 15,225 | |
TESARO, Inc. (a)(b) | 200,000 | 9,260 | |
vTv Therapeutics, Inc. Class A (a)(b) | 325,000 | 1,937 | |
638,896 | |||
Health Care Equipment & Supplies - 0.3% | |||
Nevro Corp. (a)(b) | 150,000 | 10,458 | |
Novocure Ltd. (a)(b) | 200,000 | 2,226 | |
12,684 | |||
Health Care Providers & Services - 0.4% | |||
AmSurg Corp. (a) | 200,000 | 14,958 | |
Pharmaceuticals - 7.2% | |||
Bristol-Myers Squibb Co. | 753,000 | 53,990 | |
Collegium Pharmaceutical, Inc. (b) | 300,000 | 5,016 | |
GlaxoSmithKline PLC | 400,000 | 8,360 | |
Innocoll Holdings PLC (a) | 823,381 | 7,904 | |
Jazz Pharmaceuticals PLC (a) | 282,500 | 42,816 | |
Johnson & Johnson | 400,000 | 45,076 | |
Ocular Therapeutix, Inc. (a)(b) | 1,099,853 | 13,198 | |
Pacira Pharmaceuticals, Inc. (a)(b) | 334,000 | 15,534 | |
Relypsa, Inc. (a)(b) | 691,600 | 13,210 | |
Shire PLC | 60,100 | 3,713 | |
Supernus Pharmaceuticals, Inc. (a) | 400,000 | 7,804 | |
Valeant Pharmaceuticals International, Inc. (Canada) (a) | 2,068,260 | 58,842 | |
275,463 | |||
TOTAL HEALTH CARE | 942,001 | ||
INDUSTRIALS - 13.2% | |||
Aerospace & Defense - 4.2% | |||
General Dynamics Corp. | 200,000 | 28,374 | |
Huntington Ingalls Industries, Inc. | 230,000 | 35,284 | |
Lockheed Martin Corp. | 150,000 | 35,435 | |
Northrop Grumman Corp. | 230,000 | 48,914 | |
TransDigm Group, Inc. (a) | 50,000 | 13,177 | |
161,184 | |||
Airlines - 7.9% | |||
American Airlines Group, Inc. | 2,409,900 | 76,900 | |
Delta Air Lines, Inc. | 1,605,975 | 69,796 | |
Norwegian Air Shuttle A/S (a)(b) | 300,000 | 12,265 | |
Southwest Airlines Co. | 2,268,200 | 96,353 | |
United Continental Holdings, Inc. (a) | 1,006,300 | 45,374 | |
300,688 | |||
Industrial Conglomerates - 0.6% | |||
Danaher Corp. | 250,000 | 24,590 | |
Machinery - 0.2% | |||
Xylem, Inc. | 150,000 | 6,699 | |
Professional Services - 0.3% | |||
Robert Half International, Inc. | 244,700 | 10,177 | |
TOTAL INDUSTRIALS | 503,338 | ||
INFORMATION TECHNOLOGY - 20.3% | |||
Internet Software & Services - 7.5% | |||
Akamai Technologies, Inc. (a) | 200,000 | 10,916 | |
Alibaba Group Holding Ltd. sponsored ADR (a) | 196,500 | 16,113 | |
Alphabet, Inc. Class A | 127,100 | 95,179 | |
Facebook, Inc. Class A (a) | 847,540 | 100,696 | |
Tencent Holdings Ltd. | 2,815,500 | 62,740 | |
285,644 | |||
IT Services - 5.3% | |||
FleetCor Technologies, Inc. (a) | 150,000 | 22,334 | |
Global Payments, Inc. | 410,000 | 31,853 | |
MasterCard, Inc. Class A | 611,800 | 58,672 | |
Visa, Inc. Class A | 1,156,900 | 91,326 | |
204,185 | |||
Semiconductors & Semiconductor Equipment - 2.5% | |||
NXP Semiconductors NV (a) | 964,600 | 91,145 | |
Skyworks Solutions, Inc. | 75,000 | 5,007 | |
96,152 | |||
Software - 1.5% | |||
Adobe Systems, Inc. (a) | 567,400 | 56,439 | |
Technology Hardware, Storage & Peripherals - 3.5% | |||
Apple, Inc. | 1,315,800 | 131,395 | |
Nimble Storage, Inc. (a) | 366,574 | 3,274 | |
134,669 | |||
TOTAL INFORMATION TECHNOLOGY | 777,089 | ||
MATERIALS - 0.8% | |||
Chemicals - 0.8% | |||
LyondellBasell Industries NV Class A | 390,000 | 31,730 | |
TELECOMMUNICATION SERVICES - 1.1% | |||
Diversified Telecommunication Services - 1.1% | |||
AT&T, Inc. | 1,050,000 | 41,108 | |
UTILITIES - 0.5% | |||
Independent Power and Renewable Electricity Producers - 0.5% | |||
Dynegy, Inc. (a) | 1,027,112 | 19,351 | |
TOTAL COMMON STOCKS | |||
(Cost $2,955,756) | 3,797,006 | ||
Money Market Funds - 2.9% | |||
Fidelity Cash Central Fund, 0.40% (c) | 35,132,780 | 35,133 | |
Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 74,882,525 | 74,883 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $110,016) | 110,016 | ||
TOTAL INVESTMENT PORTFOLIO - 102.1% | |||
(Cost $3,065,772) | 3,907,022 | ||
NET OTHER ASSETS (LIABILITIES) - (2.1)% | (81,464) | ||
NET ASSETS - 100% | $3,825,558 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally 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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
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 |
(Amounts in thousands) | |
Fidelity Cash Central Fund | $24 |
Fidelity Securities Lending Cash Central Fund | 506 |
Total | $530 |
Investment Valuation
The following is a summary of the inputs used, as of May 31, 2016, involving the Fund's assets and liabilities carried at fair 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
(Amounts in thousands) | ||||
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $556,102 | $537,767 | $18,335 | $-- |
Consumer Staples | 285,411 | 285,411 | -- | -- |
Energy | 287,238 | 287,238 | -- | -- |
Financials | 353,638 | 353,638 | -- | -- |
Health Care | 942,001 | 929,928 | 12,073 | -- |
Industrials | 503,338 | 503,338 | -- | -- |
Information Technology | 777,089 | 714,349 | 62,740 | -- |
Materials | 31,730 | 31,730 | -- | -- |
Telecommunication Services | 41,108 | 41,108 | -- | -- |
Utilities | 19,351 | 19,351 | -- | -- |
Money Market Funds | 110,016 | 110,016 | -- | -- |
Total Investments in Securities: | $3,907,022 | $3,813,874 | $93,148 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
United States of America | 84.1% |
Netherlands | 3.2% |
Cayman Islands | 2.9% |
British Virgin Islands | 2.0% |
Denmark | 2.0% |
Canada | 1.5% |
United Kingdom | 1.4% |
Ireland | 1.3% |
Others (Individually Less Than 1%) | 1.6% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2016 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $75,158) — See accompanying schedule: Unaffiliated issuers (cost $2,955,756) | $3,797,006 | |
Fidelity Central Funds (cost $110,016) | 110,016 | |
Total Investments (cost $3,065,772) | $3,907,022 | |
Receivable for investments sold | 17,153 | |
Receivable for fund shares sold | 429 | |
Dividends receivable | 3,465 | |
Distributions receivable from Fidelity Central Funds | 113 | |
Prepaid expenses | 2 | |
Other receivables | 102 | |
Total assets | 3,928,286 | |
Liabilities | ||
Payable for investments purchased | $21,921 | |
Payable for fund shares redeemed | 4,187 | |
Accrued management fee | 1,063 | |
Other affiliated payables | 509 | |
Other payables and accrued expenses | 165 | |
Collateral on securities loaned, at value | 74,883 | |
Total liabilities | 102,728 | |
Net Assets | $3,825,558 | |
Net Assets consist of: | ||
Paid in capital | $2,952,409 | |
Undistributed net investment income | 5,485 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 26,415 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 841,249 | |
Net Assets | $3,825,558 | |
Independence: | ||
Net Asset Value, offering price and redemption price per share ($3,426,537 ÷ 100,121 shares) | $34.22 | |
Class K: | ||
Net Asset Value, offering price and redemption price per share ($399,021 ÷ 11,653 shares) | $34.24 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | |
Investment Income | ||
Dividends | $18,586 | |
Income from Fidelity Central Funds | 530 | |
Total income | 19,116 | |
Expenses | ||
Management fee | ||
Basic fee | $10,636 | |
Performance adjustment | (2,378) | |
Transfer agent fees | 2,516 | |
Accounting and security lending fees | 529 | |
Custodian fees and expenses | 98 | |
Independent trustees' fees and expenses | 8 | |
Registration fees | 39 | |
Audit | 38 | |
Legal | 4 | |
Interest | 1 | |
Miscellaneous | 18 | |
Total expenses before reductions | 11,509 | |
Expense reductions | (60) | 11,449 |
Net investment income (loss) | 7,667 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 65,569 | |
Foreign currency transactions | (46) | |
Total net realized gain (loss) | 65,523 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (357,137) | |
Assets and liabilities in foreign currencies | 4 | |
Total change in net unrealized appreciation (depreciation) | (357,133) | |
Net gain (loss) | (291,610) | |
Net increase (decrease) in net assets resulting from operations | $(283,943) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | Year ended November 30, 2015 |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $7,667 | $6,046 |
Net realized gain (loss) | 65,523 | 255,055 |
Change in net unrealized appreciation (depreciation) | (357,133) | (231,404) |
Net increase (decrease) in net assets resulting from operations | (283,943) | 29,697 |
Distributions to shareholders from net investment income | (3,443) | (5,737) |
Distributions to shareholders from net realized gain | (272,611) | (233,191) |
Total distributions | (276,054) | (238,928) |
Share transactions - net increase (decrease) | (17,379) | (306,547) |
Total increase (decrease) in net assets | (577,376) | (515,778) |
Net Assets | ||
Beginning of period | 4,402,934 | 4,918,712 |
End of period (including undistributed net investment income of $5,485 and undistributed net investment income of $1,261, respectively) | $3,825,558 | $4,402,934 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Independence Fund
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $39.08 | $40.89 | $35.10 | $25.44 | $22.35 | $23.29 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .06 | .05 | .10 | .19 | .04 | .05B |
Net realized and unrealized gain (loss) | (2.46) | .13 | 5.80 | 9.52 | 3.11 | (.99) |
Total from investment operations | (2.40) | .18 | 5.90 | 9.71 | 3.15 | (.94) |
Distributions from net investment income | (.03) | (.04) | (.11) | (.05) | (.06) | – |
Distributions from net realized gain | (2.43) | (1.95) | – | – | – | – |
Total distributions | (2.46) | (1.99) | (.11) | (.05) | (.06) | – |
Net asset value, end of period | $34.22 | $39.08 | $40.89 | $35.10 | $25.44 | $22.35 |
Total ReturnC,D | (6.33)% | .63% | 16.87% | 38.24% | 14.14% | (4.04)% |
Ratios to Average Net AssetsE,F | ||||||
Expenses before reductions | .60%G | .86% | .73% | .62% | .78% | .70% |
Expenses net of fee waivers, if any | .60%G | .86% | .73% | .62% | .78% | .70% |
Expenses net of all reductions | .60%G | .86% | .73% | .60% | .77% | .70% |
Net investment income (loss) | .39%G | .12% | .27% | .64% | .17% | .21%B |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $3,427 | $3,910 | $4,251 | $3,772 | $3,055 | $3,272 |
Portfolio turnover rateH | 66%G | 48% | 53% | 59% | 82% | 93% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.03 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .08%.
C Total returns for periods of less than one year are not annualized.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Annualized
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Independence Fund Class K
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $39.12 | $40.93 | $35.14 | $25.48 | $22.39 | $23.31 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .08 | .08 | .14 | .22 | .07 | .08B |
Net realized and unrealized gain (loss) | (2.47) | .14 | 5.79 | 9.52 | 3.12 | (1.00) |
Total from investment operations | (2.39) | .22 | 5.93 | 9.74 | 3.19 | (.92) |
Distributions from net investment income | (.06) | (.08) | (.14) | (.08) | (.10) | – |
Distributions from net realized gain | (2.43) | (1.95) | – | – | – | – |
Total distributions | (2.49) | (2.03) | (.14) | (.08) | (.10) | – |
Net asset value, end of period | $34.24 | $39.12 | $40.93 | $35.14 | $25.48 | $22.39 |
Total ReturnC,D | (6.29)% | .73% | 16.95% | 38.35% | 14.33% | (3.95)% |
Ratios to Average Net AssetsE,F | ||||||
Expenses before reductions | .51%G | .78% | .64% | .51% | .66% | .57% |
Expenses net of fee waivers, if any | .51%G | .78% | .64% | .51% | .66% | .57% |
Expenses net of all reductions | .51%G | .77% | .64% | .50% | .65% | .57% |
Net investment income (loss) | .48%G | .20% | .36% | .74% | .29% | .34%B |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $399 | $493 | $668 | $488 | $387 | $287 |
Portfolio turnover rateH | 66%G | 48% | 53% | 59% | 82% | 93% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.03 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .21%.
C Total returns for periods of less than one year are not annualized.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Annualized
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended May 31, 2016
(Amounts in thousands except percentages)
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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of May 31, 2016 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily 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 may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP.
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. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $986,701 |
Gross unrealized depreciation | (177,598) |
Net unrealized appreciation (depreciation) on securities | $809,103 |
Tax cost | $3,097,919 |
The Fund elected to defer to its next fiscal year approximately $8,462 of capital losses recognized during the period November 1, 2015 to November 30, 2015.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,303,572 and $1,613,660, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. 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 Independence as compared to its benchmark index, the S&P 500 Index, over the same 36 month performance period. For the reporting period, the total annualized management fee rate, including the performance adjustment, was .43% of the Fund's average net assets. The performance adjustment included in the management fee rate may be higher or lower than the maximum performance adjustment rate due to the difference between the average net assets for the reporting and performance periods.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, 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, transfer agent fees for each class were as follows:
Amount | % of Class-Level Average Net Assets(a) | |
Independence | $2,417 | .14 |
Class K | 99 | .05 |
$2,516 |
(a) Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $31 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 or other affiliated entities of 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 Loan Balance | Weighted Average Interest Rate | Interest Expense |
Borrower | $5,719 | .57% | $1 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 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 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. 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. The value of securities loaned to FCM at period end was $111. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $506, including $4 from securities loaned to FCM.
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. 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 loan balance during the period for which loans were outstanding amounted to $980. The weighted average interest rate was .86%. The interest expense amounted to less than five hundred dollars under the bank borrowing program. At period end, there were no bank borrowings outstanding.
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $45 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $15.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended May 31, 2016 | Year ended November 30, 2015 | |
From net investment income | ||
Independence | $2,690 | $4,437 |
Class K | 753 | 1,300 |
Total | $3,443 | $5,737 |
From net realized gain | ||
Independence | $242,122 | $201,818 |
Class K | 30,489 | 31,373 |
Total | $272,611 | $233,191 |
11. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
Shares | Shares | Dollars | Dollars | |
Six months ended May 31, 2016 | Year ended November 30, 2015 | Six months ended May 31, 2016 | Year ended November 30, 2015 | |
Independence | ||||
Shares sold | 1,178 | 4,292 | $39,346 | $171,172 |
Reinvestment of distributions | 6,799 | 5,341 | 239,478 | 202,092 |
Shares redeemed | (7,911) | (13,538) | (266,280) | (534,016) |
Net increase (decrease) | 66 | (3,905) | $12,544 | $(160,752) |
Class K | ||||
Shares sold | 652 | 2,770 | $21,969 | $109,526 |
Reinvestment of distributions | 887 | 863 | 31,242 | 32,673 |
Shares redeemed | (2,479) | (7,348) | (83,134) | (287,994) |
Net increase (decrease) | (940) | (3,715) | $(29,923) | $(145,795) |
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.
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, 2015 to May 31, 2016).
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.
Annualized Expense Ratio-A | Beginning Account Value December 1, 2015 | Ending Account Value May 31, 2016 | Expenses Paid During Period-B December 1, 2015 to May 31, 2016 | |
Independence | .60% | |||
Actual | $1,000.00 | $936.70 | $2.91 | |
Hypothetical-C | $1,000.00 | $1,022.00 | $3.03 | |
Class K | .51% | |||
Actual | $1,000.00 | $937.10 | $2.47 | |
Hypothetical-C | $1,000.00 | $1,022.45 | $2.58 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).
C 5% return per year before expenses
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FRE-K-SANN-0716
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Fidelity® Independence Fund Semi-Annual Report May 31, 2016 |
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2016 FMR LLC. All rights reserved.
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, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Fund nor Fidelity Distributors Corporation is a bank.
Investment Summary (Unaudited)
Top Ten Stocks as of May 31, 2016
% of fund's net assets | % of fund's net assets 6 months ago | |
Apple, Inc. | 3.4 | 4.3 |
Celgene Corp. | 3.1 | 2.9 |
Gilead Sciences, Inc. | 3.0 | 3.0 |
Facebook, Inc. Class A | 2.6 | 2.3 |
Medivation, Inc. | 2.6 | 2.0 |
Southwest Airlines Co. | 2.5 | 2.4 |
Alphabet, Inc. Class A | 2.5 | 3.2 |
Visa, Inc. Class A | 2.4 | 2.3 |
NXP Semiconductors NV | 2.4 | 2.2 |
Alexion Pharmaceuticals, Inc. | 2.3 | 2.4 |
26.8 |
Top Five Market Sectors as of May 31, 2016
% of fund's net assets | % of fund's net assets 6 months ago | |
Health Care | 24.6 | 28.2 |
Information Technology | 20.3 | 24.2 |
Consumer Discretionary | 14.5 | 22.1 |
Industrials | 13.2 | 11.9 |
Financials | 9.2 | 6.7 |
Asset Allocation (% of fund's net assets)
As of May 31, 2016* | ||
Stocks | 99.2% | |
Short-Term Investments and Net Other Assets (Liabilities) | 0.8% |
* Foreign investments - 15.9%
As of November 30, 2015* | ||
Stocks | 99.9% | |
Short-Term Investments and Net Other Assets (Liabilities) | 0.1% |
* Foreign investments - 19.2%
Investments May 31, 2016 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.2% | |||
Shares | Value (000s) | ||
CONSUMER DISCRETIONARY - 14.5% | |||
Automobiles - 0.9% | |||
General Motors Co. | 1,087,700 | $34,023 | |
Hotels, Restaurants & Leisure - 0.4% | |||
Chipotle Mexican Grill, Inc. (a) | 37,100 | 16,397 | |
Household Durables - 2.1% | |||
D.R. Horton, Inc. | 2,643,300 | 80,779 | |
Internet & Catalog Retail - 2.9% | |||
Amazon.com, Inc. (a) | 24,100 | 17,419 | |
JD.com, Inc. sponsored ADR (a) | 400,000 | 9,844 | |
Priceline Group, Inc. (a) | 54,300 | 68,653 | |
Vipshop Holdings Ltd. ADR (a) | 1,200,000 | 14,004 | |
109,920 | |||
Leisure Products - 0.1% | |||
Vista Outdoor, Inc. (a) | 100,000 | 5,018 | |
Media - 0.6% | |||
ITV PLC | 5,909,100 | 18,335 | |
Liberty Global PLC Class C (a) | 105,800 | 3,823 | |
22,158 | |||
Multiline Retail - 0.4% | |||
Dollar Tree, Inc. (a) | 150,000 | 13,581 | |
Specialty Retail - 4.0% | |||
Home Depot, Inc. | 481,300 | 63,589 | |
John David Group PLC | 200,000 | 3,806 | |
Lowe's Companies, Inc. | 613,400 | 49,152 | |
TJX Companies, Inc. | 489,000 | 37,223 | |
153,770 | |||
Textiles, Apparel & Luxury Goods - 3.1% | |||
Michael Kors Holdings Ltd. (a) | 1,845,547 | 78,842 | |
Pandora A/S | 280,000 | 41,614 | |
120,456 | |||
TOTAL CONSUMER DISCRETIONARY | 556,102 | ||
CONSUMER STAPLES - 7.5% | |||
Beverages - 4.8% | |||
Constellation Brands, Inc. Class A (sub. vtg.) | 300,000 | 45,945 | |
Dr. Pepper Snapple Group, Inc. | 255,000 | 23,307 | |
Molson Coors Brewing Co. Class B | 300,000 | 29,754 | |
Monster Beverage Corp. | 568,900 | 85,335 | |
184,341 | |||
Food Products - 0.7% | |||
Mead Johnson Nutrition Co. Class A | 275,000 | 22,627 | |
WH Group Ltd. | 2,500,000 | 1,924 | |
24,551 | |||
Tobacco - 2.0% | |||
Altria Group, Inc. | 400,000 | 25,456 | |
Imperial Tobacco Group PLC | 393,940 | 21,459 | |
Philip Morris International, Inc. | 300,000 | 29,604 | |
76,519 | |||
TOTAL CONSUMER STAPLES | 285,411 | ||
ENERGY - 7.5% | |||
Oil, Gas & Consumable Fuels - 7.5% | |||
Chevron Corp. | 650,000 | 65,650 | |
Cimarex Energy Co. | 100,000 | 11,628 | |
Continental Resources, Inc. (a)(b) | 1,204,100 | 50,644 | |
Devon Energy Corp. | 1,175,000 | 42,406 | |
Exxon Mobil Corp. | 500,000 | 44,510 | |
SM Energy Co. (b) | 600,000 | 18,912 | |
Targa Resources Corp. | 280,000 | 11,992 | |
Williams Partners LP | 1,300,000 | 41,496 | |
287,238 | |||
FINANCIALS - 9.2% | |||
Banks - 3.7% | |||
Bank of America Corp. | 4,029,000 | 59,589 | |
Citigroup, Inc. | 1,200,000 | 55,884 | |
SunTrust Banks, Inc. | 600,000 | 26,292 | |
141,765 | |||
Capital Markets - 1.5% | |||
Goldman Sachs Group, Inc. | 90,000 | 14,353 | |
The Blackstone Group LP | 1,704,600 | 44,643 | |
58,996 | |||
Consumer Finance - 1.2% | |||
OneMain Holdings, Inc. (a)(b) | 1,509,000 | 47,171 | |
Diversified Financial Services - 1.7% | |||
Broadcom Ltd. | 60,800 | 9,385 | |
McGraw Hill Financial, Inc. | 280,900 | 31,407 | |
MSCI, Inc. Class A | 300,000 | 23,937 | |
64,729 | |||
Insurance - 0.5% | |||
Marsh & McLennan Companies, Inc. | 300,000 | 19,821 | |
Real Estate Investment Trusts - 0.6% | |||
American Tower Corp. | 200,000 | 21,156 | |
TOTAL FINANCIALS | 353,638 | ||
HEALTH CARE - 24.6% | |||
Biotechnology - 16.7% | |||
AbbVie, Inc. | 250,000 | 15,733 | |
Acorda Therapeutics, Inc. (a) | 649,800 | 18,487 | |
Actelion Ltd. | 156,854 | 25,737 | |
Alexion Pharmaceuticals, Inc. (a) | 577,100 | 87,084 | |
Alnylam Pharmaceuticals, Inc. (a) | 97,661 | 7,004 | |
Amicus Therapeutics, Inc. (a)(b) | 861,800 | 6,102 | |
BioMarin Pharmaceutical, Inc. (a) | 515,000 | 46,170 | |
Celgene Corp. (a) | 1,139,900 | 120,282 | |
Genmab A/S (a) | 195,000 | 35,239 | |
Gilead Sciences, Inc. | 1,308,100 | 113,883 | |
Intercept Pharmaceuticals, Inc. (a)(b) | 201,600 | 29,909 | |
Medivation, Inc. (a) | 1,645,200 | 99,469 | |
Medy-Tox, Inc. | 20,000 | 7,375 | |
Novavax, Inc. (a) | 2,500,000 | 15,225 | |
TESARO, Inc. (a)(b) | 200,000 | 9,260 | |
vTv Therapeutics, Inc. Class A (a)(b) | 325,000 | 1,937 | |
638,896 | |||
Health Care Equipment & Supplies - 0.3% | |||
Nevro Corp. (a)(b) | 150,000 | 10,458 | |
Novocure Ltd. (a)(b) | 200,000 | 2,226 | |
12,684 | |||
Health Care Providers & Services - 0.4% | |||
AmSurg Corp. (a) | 200,000 | 14,958 | |
Pharmaceuticals - 7.2% | |||
Bristol-Myers Squibb Co. | 753,000 | 53,990 | |
Collegium Pharmaceutical, Inc. (b) | 300,000 | 5,016 | |
GlaxoSmithKline PLC | 400,000 | 8,360 | |
Innocoll Holdings PLC (a) | 823,381 | 7,904 | |
Jazz Pharmaceuticals PLC (a) | 282,500 | 42,816 | |
Johnson & Johnson | 400,000 | 45,076 | |
Ocular Therapeutix, Inc. (a)(b) | 1,099,853 | 13,198 | |
Pacira Pharmaceuticals, Inc. (a)(b) | 334,000 | 15,534 | |
Relypsa, Inc. (a)(b) | 691,600 | 13,210 | |
Shire PLC | 60,100 | 3,713 | |
Supernus Pharmaceuticals, Inc. (a) | 400,000 | 7,804 | |
Valeant Pharmaceuticals International, Inc. (Canada) (a) | 2,068,260 | 58,842 | |
275,463 | |||
TOTAL HEALTH CARE | 942,001 | ||
INDUSTRIALS - 13.2% | |||
Aerospace & Defense - 4.2% | |||
General Dynamics Corp. | 200,000 | 28,374 | |
Huntington Ingalls Industries, Inc. | 230,000 | 35,284 | |
Lockheed Martin Corp. | 150,000 | 35,435 | |
Northrop Grumman Corp. | 230,000 | 48,914 | |
TransDigm Group, Inc. (a) | 50,000 | 13,177 | |
161,184 | |||
Airlines - 7.9% | |||
American Airlines Group, Inc. | 2,409,900 | 76,900 | |
Delta Air Lines, Inc. | 1,605,975 | 69,796 | |
Norwegian Air Shuttle A/S (a)(b) | 300,000 | 12,265 | |
Southwest Airlines Co. | 2,268,200 | 96,353 | |
United Continental Holdings, Inc. (a) | 1,006,300 | 45,374 | |
300,688 | |||
Industrial Conglomerates - 0.6% | |||
Danaher Corp. | 250,000 | 24,590 | |
Machinery - 0.2% | |||
Xylem, Inc. | 150,000 | 6,699 | |
Professional Services - 0.3% | |||
Robert Half International, Inc. | 244,700 | 10,177 | |
TOTAL INDUSTRIALS | 503,338 | ||
INFORMATION TECHNOLOGY - 20.3% | |||
Internet Software & Services - 7.5% | |||
Akamai Technologies, Inc. (a) | 200,000 | 10,916 | |
Alibaba Group Holding Ltd. sponsored ADR (a) | 196,500 | 16,113 | |
Alphabet, Inc. Class A | 127,100 | 95,179 | |
Facebook, Inc. Class A (a) | 847,540 | 100,696 | |
Tencent Holdings Ltd. | 2,815,500 | 62,740 | |
285,644 | |||
IT Services - 5.3% | |||
FleetCor Technologies, Inc. (a) | 150,000 | 22,334 | |
Global Payments, Inc. | 410,000 | 31,853 | |
MasterCard, Inc. Class A | 611,800 | 58,672 | |
Visa, Inc. Class A | 1,156,900 | 91,326 | |
204,185 | |||
Semiconductors & Semiconductor Equipment - 2.5% | |||
NXP Semiconductors NV (a) | 964,600 | 91,145 | |
Skyworks Solutions, Inc. | 75,000 | 5,007 | |
96,152 | |||
Software - 1.5% | |||
Adobe Systems, Inc. (a) | 567,400 | 56,439 | |
Technology Hardware, Storage & Peripherals - 3.5% | |||
Apple, Inc. | 1,315,800 | 131,395 | |
Nimble Storage, Inc. (a) | 366,574 | 3,274 | |
134,669 | |||
TOTAL INFORMATION TECHNOLOGY | 777,089 | ||
MATERIALS - 0.8% | |||
Chemicals - 0.8% | |||
LyondellBasell Industries NV Class A | 390,000 | 31,730 | |
TELECOMMUNICATION SERVICES - 1.1% | |||
Diversified Telecommunication Services - 1.1% | |||
AT&T, Inc. | 1,050,000 | 41,108 | |
UTILITIES - 0.5% | |||
Independent Power and Renewable Electricity Producers - 0.5% | |||
Dynegy, Inc. (a) | 1,027,112 | 19,351 | |
TOTAL COMMON STOCKS | |||
(Cost $2,955,756) | 3,797,006 | ||
Money Market Funds - 2.9% | |||
Fidelity Cash Central Fund, 0.40% (c) | 35,132,780 | 35,133 | |
Fidelity Securities Lending Cash Central Fund, 0.44% (c)(d) | 74,882,525 | 74,883 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $110,016) | 110,016 | ||
TOTAL INVESTMENT PORTFOLIO - 102.1% | |||
(Cost $3,065,772) | 3,907,022 | ||
NET OTHER ASSETS (LIABILITIES) - (2.1)% | (81,464) | ||
NET ASSETS - 100% | $3,825,558 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally 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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
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 |
(Amounts in thousands) | |
Fidelity Cash Central Fund | $24 |
Fidelity Securities Lending Cash Central Fund | 506 |
Total | $530 |
Investment Valuation
The following is a summary of the inputs used, as of May 31, 2016, involving the Fund's assets and liabilities carried at fair 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 below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
(Amounts in thousands) | ||||
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $556,102 | $537,767 | $18,335 | $-- |
Consumer Staples | 285,411 | 285,411 | -- | -- |
Energy | 287,238 | 287,238 | -- | -- |
Financials | 353,638 | 353,638 | -- | -- |
Health Care | 942,001 | 929,928 | 12,073 | -- |
Industrials | 503,338 | 503,338 | -- | -- |
Information Technology | 777,089 | 714,349 | 62,740 | -- |
Materials | 31,730 | 31,730 | -- | -- |
Telecommunication Services | 41,108 | 41,108 | -- | -- |
Utilities | 19,351 | 19,351 | -- | -- |
Money Market Funds | 110,016 | 110,016 | -- | -- |
Total Investments in Securities: | $3,907,022 | $3,813,874 | $93,148 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
United States of America | 84.1% |
Netherlands | 3.2% |
Cayman Islands | 2.9% |
British Virgin Islands | 2.0% |
Denmark | 2.0% |
Canada | 1.5% |
United Kingdom | 1.4% |
Ireland | 1.3% |
Others (Individually Less Than 1%) | 1.6% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | May 31, 2016 (Unaudited) | |
Assets | ||
Investment in securities, at value (including securities loaned of $75,158) — See accompanying schedule: Unaffiliated issuers (cost $2,955,756) | $3,797,006 | |
Fidelity Central Funds (cost $110,016) | 110,016 | |
Total Investments (cost $3,065,772) | $3,907,022 | |
Receivable for investments sold | 17,153 | |
Receivable for fund shares sold | 429 | |
Dividends receivable | 3,465 | |
Distributions receivable from Fidelity Central Funds | 113 | |
Prepaid expenses | 2 | |
Other receivables | 102 | |
Total assets | 3,928,286 | |
Liabilities | ||
Payable for investments purchased | $21,921 | |
Payable for fund shares redeemed | 4,187 | |
Accrued management fee | 1,063 | |
Other affiliated payables | 509 | |
Other payables and accrued expenses | 165 | |
Collateral on securities loaned, at value | 74,883 | |
Total liabilities | 102,728 | |
Net Assets | $3,825,558 | |
Net Assets consist of: | ||
Paid in capital | $2,952,409 | |
Undistributed net investment income | 5,485 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 26,415 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 841,249 | |
Net Assets | $3,825,558 | |
Independence: | ||
Net Asset Value, offering price and redemption price per share ($3,426,537 ÷ 100,121 shares) | $34.22 | |
Class K: | ||
Net Asset Value, offering price and redemption price per share ($399,021 ÷ 11,653 shares) | $34.24 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | |
Investment Income | ||
Dividends | $18,586 | |
Income from Fidelity Central Funds | 530 | |
Total income | 19,116 | |
Expenses | ||
Management fee | ||
Basic fee | $10,636 | |
Performance adjustment | (2,378) | |
Transfer agent fees | 2,516 | |
Accounting and security lending fees | 529 | |
Custodian fees and expenses | 98 | |
Independent trustees' fees and expenses | 8 | |
Registration fees | 39 | |
Audit | 38 | |
Legal | 4 | |
Interest | 1 | |
Miscellaneous | 18 | |
Total expenses before reductions | 11,509 | |
Expense reductions | (60) | 11,449 |
Net investment income (loss) | 7,667 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 65,569 | |
Foreign currency transactions | (46) | |
Total net realized gain (loss) | 65,523 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | (357,137) | |
Assets and liabilities in foreign currencies | 4 | |
Total change in net unrealized appreciation (depreciation) | (357,133) | |
Net gain (loss) | (291,610) | |
Net increase (decrease) in net assets resulting from operations | $(283,943) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Amounts in thousands | Six months ended May 31, 2016 (Unaudited) | Year ended November 30, 2015 |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $7,667 | $6,046 |
Net realized gain (loss) | 65,523 | 255,055 |
Change in net unrealized appreciation (depreciation) | (357,133) | (231,404) |
Net increase (decrease) in net assets resulting from operations | (283,943) | 29,697 |
Distributions to shareholders from net investment income | (3,443) | (5,737) |
Distributions to shareholders from net realized gain | (272,611) | (233,191) |
Total distributions | (276,054) | (238,928) |
Share transactions - net increase (decrease) | (17,379) | (306,547) |
Total increase (decrease) in net assets | (577,376) | (515,778) |
Net Assets | ||
Beginning of period | 4,402,934 | 4,918,712 |
End of period (including undistributed net investment income of $5,485 and undistributed net investment income of $1,261, respectively) | $3,825,558 | $4,402,934 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Independence Fund
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $39.08 | $40.89 | $35.10 | $25.44 | $22.35 | $23.29 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .06 | .05 | .10 | .19 | .04 | .05B |
Net realized and unrealized gain (loss) | (2.46) | .13 | 5.80 | 9.52 | 3.11 | (.99) |
Total from investment operations | (2.40) | .18 | 5.90 | 9.71 | 3.15 | (.94) |
Distributions from net investment income | (.03) | (.04) | (.11) | (.05) | (.06) | – |
Distributions from net realized gain | (2.43) | (1.95) | – | – | – | – |
Total distributions | (2.46) | (1.99) | (.11) | (.05) | (.06) | – |
Net asset value, end of period | $34.22 | $39.08 | $40.89 | $35.10 | $25.44 | $22.35 |
Total ReturnC,D | (6.33)% | .63% | 16.87% | 38.24% | 14.14% | (4.04)% |
Ratios to Average Net AssetsE,F | ||||||
Expenses before reductions | .60%G | .86% | .73% | .62% | .78% | .70% |
Expenses net of fee waivers, if any | .60%G | .86% | .73% | .62% | .78% | .70% |
Expenses net of all reductions | .60%G | .86% | .73% | .60% | .77% | .70% |
Net investment income (loss) | .39%G | .12% | .27% | .64% | .17% | .21%B |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $3,427 | $3,910 | $4,251 | $3,772 | $3,055 | $3,272 |
Portfolio turnover rateH | 66%G | 48% | 53% | 59% | 82% | 93% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.03 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .08%.
C Total returns for periods of less than one year are not annualized.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Annualized
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Fidelity Independence Fund Class K
Six months ended (Unaudited) May 31, | Years ended November 30, | |||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $39.12 | $40.93 | $35.14 | $25.48 | $22.39 | $23.31 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .08 | .08 | .14 | .22 | .07 | .08B |
Net realized and unrealized gain (loss) | (2.47) | .14 | 5.79 | 9.52 | 3.12 | (1.00) |
Total from investment operations | (2.39) | .22 | 5.93 | 9.74 | 3.19 | (.92) |
Distributions from net investment income | (.06) | (.08) | (.14) | (.08) | (.10) | – |
Distributions from net realized gain | (2.43) | (1.95) | – | – | – | – |
Total distributions | (2.49) | (2.03) | (.14) | (.08) | (.10) | – |
Net asset value, end of period | $34.24 | $39.12 | $40.93 | $35.14 | $25.48 | $22.39 |
Total ReturnC,D | (6.29)% | .73% | 16.95% | 38.35% | 14.33% | (3.95)% |
Ratios to Average Net AssetsE,F | ||||||
Expenses before reductions | .51%G | .78% | .64% | .51% | .66% | .57% |
Expenses net of fee waivers, if any | .51%G | .78% | .64% | .51% | .66% | .57% |
Expenses net of all reductions | .51%G | .77% | .64% | .50% | .65% | .57% |
Net investment income (loss) | .48%G | .20% | .36% | .74% | .29% | .34%B |
Supplemental Data | ||||||
Net assets, end of period (in millions) | $399 | $493 | $668 | $488 | $387 | $287 |
Portfolio turnover rateH | 66%G | 48% | 53% | 59% | 82% | 93% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.03 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .21%.
C Total returns for periods of less than one year are not annualized.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any 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 Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Annualized
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended May 31, 2016
(Amounts in thousands except percentages)
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.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser 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 the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee). In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of May 31, 2016 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. 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. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily 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 may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP.
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. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $986,701 |
Gross unrealized depreciation | (177,598) |
Net unrealized appreciation (depreciation) on securities | $809,103 |
Tax cost | $3,097,919 |
The Fund elected to defer to its next fiscal year approximately $8,462 of capital losses recognized during the period November 1, 2015 to November 30, 2015.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,303,572 and $1,613,660, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company (the investment adviser) 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 an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. 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 Independence as compared to its benchmark index, the S&P 500 Index, over the same 36 month performance period. For the reporting period, the total annualized management fee rate, including the performance adjustment, was .43% of the Fund's average net assets. The performance adjustment included in the management fee rate may be higher or lower than the maximum performance adjustment rate due to the difference between the average net assets for the reporting and performance periods.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, 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, transfer agent fees for each class were as follows:
Amount | % of Class-Level Average Net Assets(a) | |
Independence | $2,417 | .14 |
Class K | 99 | .05 |
$2,516 |
(a) Annualized
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each 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. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $31 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 or other affiliated entities of 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 Loan Balance | Weighted Average Interest Rate | Interest Expense |
Borrower | $5,719 | .57% | $1 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 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 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. 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. The value of securities loaned to FCM at period end was $111. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $506, including $4 from securities loaned to FCM.
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. 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 loan balance during the period for which loans were outstanding amounted to $980. The weighted average interest rate was .86%. The interest expense amounted to less than five hundred dollars under the bank borrowing program. At period end, there were no bank borrowings outstanding.
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $45 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $15.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended May 31, 2016 | Year ended November 30, 2015 | |
From net investment income | ||
Independence | $2,690 | $4,437 |
Class K | 753 | 1,300 |
Total | $3,443 | $5,737 |
From net realized gain | ||
Independence | $242,122 | $201,818 |
Class K | 30,489 | 31,373 |
Total | $272,611 | $233,191 |
11. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
Shares | Shares | Dollars | Dollars | |
Six months ended May 31, 2016 | Year ended November 30, 2015 | Six months ended May 31, 2016 | Year ended November 30, 2015 | |
Independence | ||||
Shares sold | 1,178 | 4,292 | $39,346 | $171,172 |
Reinvestment of distributions | 6,799 | 5,341 | 239,478 | 202,092 |
Shares redeemed | (7,911) | (13,538) | (266,280) | (534,016) |
Net increase (decrease) | 66 | (3,905) | $12,544 | $(160,752) |
Class K | ||||
Shares sold | 652 | 2,770 | $21,969 | $109,526 |
Reinvestment of distributions | 887 | 863 | 31,242 | 32,673 |
Shares redeemed | (2,479) | (7,348) | (83,134) | (287,994) |
Net increase (decrease) | (940) | (3,715) | $(29,923) | $(145,795) |
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.
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, 2015 to May 31, 2016).
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.
Annualized Expense Ratio-A | Beginning Account Value December 1, 2015 | Ending Account Value May 31, 2016 | Expenses Paid During Period-B December 1, 2015 to May 31, 2016 | |
Independence | .60% | |||
Actual | $1,000.00 | $936.70 | $2.91 | |
Hypothetical-C | $1,000.00 | $1,022.00 | $3.03 | |
Class K | .51% | |||
Actual | $1,000.00 | $937.10 | $2.47 | |
Hypothetical-C | $1,000.00 | $1,022.45 | $2.58 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (to reflect the one-half year period).
C 5% return per year before expenses
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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/Stacie M. Smith |
| Stacie M. Smith |
| President and Treasurer |
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|
Date: | July 25, 2016 |
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/Stacie M. Smith |
| Stacie M. Smith |
| President and Treasurer |
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|
Date: | July 25, 2016 |
By: | /s/Howard J. Galligan III |
| Howard J. Galligan III |
| Chief Financial Officer |
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Date: | July 25, 2016 |