N-CSRS 1 main.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-3587

Fidelity Financial Trust
 (Exact name of registrant as specified in charter)

82 Devonshire St., Boston, Massachusetts 02109
 (Address of principal executive offices)       (Zip code)

Scott C. Goebel, Secretary

82 Devonshire St.

Boston, Massachusetts 02109
(Name and address of agent for service)

Registrant's telephone number, including area code: 617-563-7000

Date of fiscal year end:

November 30

 

 

Date of reporting period:

May 31, 2011

Item 1. Reports to Stockholders

Fidelity®
Convertible Securities
Fund

Semiannual Report

May 31, 2011

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

The Chairman's message to shareholders.

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.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.

Semiannual Report

Chairman's Message

(photo_of_James_C_Curvey)

Dear Shareholder:

Amid indications the U.S. economy had turned a corner, U.S. equities continued their generally upward trend through the end of May, overcoming bouts of short-term volatility following unrest in North Africa and the natural disaster in Japan. Still, questions remained about the longer-term outlook, most notably inflationary pressure and persistently high unemployment. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.

One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.

You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).

A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.

We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.

Sincerely,


(The acting chairman's signature appears here.)

James C. Curvey
Acting Chairman

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2010 to May 31, 2011).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

Semiannual Report

Shareholder Expense Example - continued

 

Annualized
Expense Ratio

Beginning
Account Value
December 1, 2010

Ending
Account Value
May 31, 2011

Expenses Paid
During Period*
December 1, 2010 to May 31, 2011

Class A

.85%

 

 

 

Actual

 

$ 1,000.00

$ 1,148.80

$ 4.55

Hypothetical A

 

$ 1,000.00

$ 1,020.69

$ 4.28

Class T

1.13%

 

 

 

Actual

 

$ 1,000.00

$ 1,146.90

$ 6.05

Hypothetical A

 

$ 1,000.00

$ 1,019.30

$ 5.69

Class B

1.70%

 

 

 

Actual

 

$ 1,000.00

$ 1,143.70

$ 9.09

Hypothetical A

 

$ 1,000.00

$ 1,016.45

$ 8.55

Class C

1.63%

 

 

 

Actual

 

$ 1,000.00

$ 1,144.30

$ 8.71

Hypothetical A

 

$ 1,000.00

$ 1,016.80

$ 8.20

Convertible Securities

.57%

 

 

 

Actual

 

$ 1,000.00

$ 1,150.40

$ 3.06

Hypothetical A

 

$ 1,000.00

$ 1,022.09

$ 2.87

Institutional Class

.61%

 

 

 

Actual

 

$ 1,000.00

$ 1,149.90

$ 3.27

Hypothetical A

 

$ 1,000.00

$ 1,021.89

$ 3.07

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Investments as of May 31, 2011

(excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

General Motors Co. 4.75%

6.2

3.0

Peabody Energy Corp. 4.75% 12/15/66

5.6

6.6

Wells Fargo & Co. 7.50%

4.8

5.1

El Paso Corp.

4.0

0.0

MGM Mirage, Inc. 4.25% 4/15/15

3.5

0.0

Intel Corp. 3.25% 8/1/39

2.6

3.0

Ford Motor Co. 4.25% 11/15/16

2.6

3.3

Alpha Natural Resources, Inc. 2.375% 4/15/15

2.5

1.8

Chesapeake Energy Corp. 2.5% 5/15/37

2.4

2.3

Hertz Global Holdings, Inc. 5.25% 6/1/14

2.1

2.0

 

36.3

Top Five Market Sectors as of May 31, 2011

 

% of fund's
net assets

% of fund's net assets
6 months ago

Energy

20.7

23.4

Information Technology

19.1

17.9

Consumer Discretionary

17.1

13.0

Industrials

11.9

13.1

Financials

11.6

13.3

Asset Allocation (% of fund's net assets)

As of May 31, 2011*

As of November 30, 2010**

fid84

Convertible
Securities 83.4%

 

fid84

Convertible
Securities 88.7%

 

fid87

Stocks 12.1%

 

fid87

Stocks 9.6%

 

fid90

Nonconvertible
Bonds 0.0%

 

fid90

Nonconvertible
Bonds 0.1%

 

fid93

Short-Term
Investments and
Net Other Assets 4.5%

 

fid93

Short-Term
Investments and
Net Other Assets 1.6%

 

* Foreign investments

5.0%

 

** Foreign investments

4.2%

 

fid96

Semiannual Report

Investments May 31, 2011 (Unaudited)

Showing Percentage of Net Assets

Convertible Bonds - 62.9%

 

Principal Amount (000s)

Value (000s)

CONSUMER DISCRETIONARY - 8.5%

Auto Components - 0.1%

BorgWarner, Inc. 3.5% 4/15/12

$ 910

$ 2,021

Automobiles - 2.6%

Ford Motor Co. 4.25% 11/15/16

40,000

71,684

Diversified Consumer Services - 1.1%

Ingersoll-Rand Global Holding Co. Ltd. 4.5% 4/15/12

5,490

15,346

Regis Corp. 5% 7/15/14

2,230

2,658

Stewart Enterprises, Inc. 3.375% 7/15/16 (g)

11,000

10,973

 

28,977

Hotels, Restaurants & Leisure - 3.5%

MGM Mirage, Inc. 4.25% 4/15/15

82,300

95,365

Media - 1.1%

Virgin Media, Inc. 6.5% 11/15/16

8,000

15,330

XM Satellite Radio, Inc. 7% 12/1/14 (g)

10,000

15,400

 

30,730

Specialty Retail - 0.1%

Asbury Automotive Group, Inc. 3% 9/15/12 (g)

3,000

2,970

TOTAL CONSUMER DISCRETIONARY

231,747

CONSUMER STAPLES - 1.5%

Beverages - 0.6%

Molson Coors Brewing Co. 2.5% 7/30/13

14,000

15,593

Food Products - 0.9%

Smithfield Foods, Inc. 4% 6/30/13

22,250

25,890

TOTAL CONSUMER STAPLES

41,483

ENERGY - 15.6%

Energy Equipment & Services - 1.6%

Exterran Holdings, Inc. 4.25% 6/15/14

10,000

11,675

Global Industries Ltd. 2.75% 8/1/27 (g)

10,000

7,663

Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (d)(g)

5,000

4,855

Oil States International, Inc. 2.375% 7/1/25 (g)

4,500

11,219

SESI LLC 1.5% 12/15/26 (d)(g)

7,000

7,219

 

42,631

Oil, Gas & Consumable Fuels - 14.0%

Alpha Natural Resources, Inc. 2.375% 4/15/15

52,000

67,501

Chesapeake Energy Corp. 2.5% 5/15/37

60,250

66,787

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

ENERGY - continued

Oil, Gas & Consumable Fuels - continued

International Coal Group, Inc. 4% 4/1/17

$ 2,160

$ 5,584

Peabody Energy Corp. 4.75% 12/15/66

122,250

154,035

Pioneer Natural Resources Co. 2.875% 1/15/38

20,000

31,700

Quicksilver Resources, Inc. 1.875% 11/1/24 (g)

14,500

15,244

Western Refining, Inc. 5.75% 6/15/14

24,185

43,088

 

383,939

TOTAL ENERGY

426,570

FINANCIALS - 0.7%

Diversified Financial Services - 0.7%

The NASDAQ Stock Market, Inc. 2.5% 8/15/13

20,000

19,877

HEALTH CARE - 4.0%

Health Care Equipment & Supplies - 2.4%

Alere, Inc. 3% 5/15/16

31,000

35,960

Kinetic Concepts, Inc. 3.25% 4/15/15 (g)

15,000

19,740

SonoSite, Inc. 3.75% 7/15/14

7,000

8,105

Volcano Corp. 2.875% 9/1/15

1,890

2,398

 

66,203

Health Care Providers & Services - 0.2%

Omnicare, Inc.:

3.25% 12/15/35

2,086

2,003

3.75% 12/15/25

3,610

4,807

 

6,810

Life Sciences Tools & Services - 0.2%

Charles River Laboratories International, Inc. 2.25% 6/15/13 (g)

4,000

4,160

Pharmaceuticals - 1.2%

Akorn, Inc. 3.5% 6/1/16 (g)

5,000

5,294

Biovail Corp. 5.375% 8/1/14 (g)

5,000

18,445

Nektar Therapeutics 3.25% 9/28/12

9,000

8,904

 

32,643

TOTAL HEALTH CARE

109,816

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

INDUSTRIALS - 11.9%

Aerospace & Defense - 0.7%

GenCorp, Inc. 4.0625% 12/31/39

$ 7,830

$ 7,967

Textron, Inc. 4.5% 5/1/13

6,440

11,701

 

19,668

Airlines - 3.2%

AMR Corp. 6.25% 10/15/14

17,990

18,416

Continental Airlines, Inc. 4.5% 1/15/15

9,280

13,734

UAL Corp.:

4.5% 6/30/21 (g)

10,500

10,512

4.5% 6/30/21

5,000

5,006

6% 10/15/29

3,600

10,575

US Airways Group, Inc.:

7% 9/30/20 (g)

4,810

4,804

7.25% 5/15/14

11,200

24,349

 

87,396

Commercial Services & Supplies - 1.2%

Metalico, Inc. 7% 4/30/28

34,000

31,620

Construction & Engineering - 0.4%

MasTec, Inc. 4.25% 12/15/14

8,000

12,345

Electrical Equipment - 0.7%

General Cable Corp. 4.5% 11/15/29 (d)

14,800

20,190

Machinery - 2.6%

Greenbrier Companies, Inc.:

2.375% 5/15/26 (g)

5,500

5,376

2.375% 5/15/26

8,000

7,820

3.5% 4/1/18 (g)

2,860

2,948

Terex Corp. 4% 6/1/15

19,590

38,559

Trinity Industries, Inc. 3.875% 6/1/36

15,000

15,900

 

70,603

Marine - 0.9%

Excel Maritime Carriers Ltd. 1.875% 10/15/27 (g)

34,000

23,460

Road & Rail - 2.1%

Hertz Global Holdings, Inc. 5.25% 6/1/14

28,000

58,052

Trading Companies & Distributors - 0.1%

United Rentals, Inc. 4% 11/15/15

960

2,466

TOTAL INDUSTRIALS

325,800

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

INFORMATION TECHNOLOGY - 17.2%

Communications Equipment - 1.2%

Finisar Corp. 5% 10/15/29 (g)

$ 2,500

$ 6,216

JDS Uniphase Corp. 1% 5/15/26 (g)

14,000

14,989

L-3 Communications Corp. 3% 8/1/35

3,000

3,038

Lucent Technologies, Inc. 2.875% 6/15/25

10,000

9,875

 

34,118

Computers & Peripherals - 1.8%

EMC Corp.:

1.75% 12/1/13 (g)

17,000

30,738

1.75% 12/1/13

10,000

18,081

 

48,819

Electronic Equipment & Components - 1.6%

Anixter International, Inc. 1% 2/15/13 (g)

4,540

5,527

Itron, Inc. 2.5% 8/1/26

5,000

5,025

Newport Corp. 2.5% 2/15/12 (g)

3,750

3,888

SYNNEX Corp. 4% 5/15/18

10,000

12,818

Vishay Intertechnology, Inc.:

2.25% 11/15/40 (g)

7,000

8,800

2.25% 5/15/41 (g)

7,000

6,871

 

42,929

Internet Software & Services - 1.4%

Equinix, Inc.:

3% 10/15/14

10,000

11,335

4.75% 6/15/16

10,000

14,224

VeriSign, Inc. 3.25% 8/15/37

10,000

11,909

 

37,468

IT Services - 1.8%

Alliance Data Systems Corp. 4.75% 5/15/14

10,200

21,152

CACI International, Inc. 2.125% 5/1/14

6,000

7,680

DST Systems, Inc. 4.125% 8/15/23

8,267

9,631

Telvent GIT SA 5.5% 4/15/15 (g)

9,000

10,992

 

49,455

Semiconductors & Semiconductor Equipment - 8.3%

Advanced Micro Devices, Inc. 6% 5/1/15

11,916

12,371

Amkor Technology, Inc. 6% 4/15/14

13,890

31,564

Evergreen Solar, Inc. 4% 7/15/20

2,000

723

Intel Corp. 3.25% 8/1/39

58,000

72,126

Micron Technology, Inc. 4.25% 10/15/13

6,130

12,934

Novellus Systems, Inc. 2.625% 5/15/41 (g)

20,000

21,622

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

INFORMATION TECHNOLOGY - continued

Semiconductors & Semiconductor Equipment - continued

ON Semiconductor Corp.:

1.875% 12/15/25 (g)

$ 3,750

$ 6,162

2.625% 12/15/26

35,330

44,869

PMC-Sierra, Inc. 2.25% 10/15/25

10,000

11,025

SunPower Corp. 4.75% 4/15/14

2,020

2,194

Xilinx, Inc. 3.125% 3/15/37

10,000

12,478

 

228,068

Software - 1.1%

Nuance Communications, Inc. 2.75% 8/15/27

23,085

30,559

TOTAL INFORMATION TECHNOLOGY

471,416

MATERIALS - 1.1%

Metals & Mining - 1.1%

Alcoa, Inc. 5.25% 3/15/14

5,000

13,431

ArcelorMittal SA 5% 5/15/14

2,170

2,974

Goldcorp, Inc. 2% 8/1/14

5,000

6,332

Newmont Mining Corp. 1.625% 7/15/17

5,000

6,935

 

29,672

TELECOMMUNICATION SERVICES - 2.4%

Diversified Telecommunication Services - 1.2%

Clearwire Communications LLC/Clearwire Finance, Inc. 8.25% 12/1/40 (g)

9,990

10,052

Level 3 Communications, Inc. 7% 3/15/15

10,000

15,613

Time Warner Telecom, Inc. 2.375% 4/1/26

6,000

7,613

 

33,278

Wireless Telecommunication Services - 1.2%

Leap Wireless International, Inc. 4.5% 7/15/14

33,000

32,302

TOTAL TELECOMMUNICATION SERVICES

65,580

TOTAL CONVERTIBLE BONDS

(Cost $1,430,006)

1,721,961

Common Stocks - 12.1%

Shares

Value (000s)

CONSUMER DISCRETIONARY - 0.8%

Auto Components - 0.5%

Johnson Controls, Inc.

344,134

$ 13,628

Diversified Consumer Services - 0.3%

Service Corp. International

643,000

7,382

Hotels, Restaurants & Leisure - 0.0%

Ambassadors International, Inc. (a)(e)(f)

230,377

34

Media - 0.0%

HMH Holdings, Inc. (a)(h)

52,880

251

HMH Holdings, Inc. warrants 3/9/17 (a)(h)

164,823

82

 

333

TOTAL CONSUMER DISCRETIONARY

21,377

CONSUMER STAPLES - 0.3%

Food Products - 0.3%

Bunge Ltd.

97,596

7,266

ENERGY - 4.9%

Oil, Gas & Consumable Fuels - 4.9%

Chesapeake Energy Corp.

513,600

16,096

El Paso Corp.

5,191,964

109,291

McMoRan Exploration Co. (a)(e)

450,000

8,289

 

133,676

FINANCIALS - 1.8%

Commercial Banks - 1.8%

Huntington Bancshares, Inc.

5,620,500

37,095

KeyCorp

1,608,600

13,625

 

50,720

HEALTH CARE - 0.7%

Pharmaceuticals - 0.7%

Valeant Pharmaceuticals International, Inc. (Canada)

395,333

20,722

INFORMATION TECHNOLOGY - 1.9%

Communications Equipment - 0.3%

Finisar Corp. (a)

374,120

8,986

Electronic Equipment & Components - 0.5%

Viasystems Group, Inc. (a)

549,643

12,471

Common Stocks - continued

Shares

Value (000s)

INFORMATION TECHNOLOGY - continued

Semiconductors & Semiconductor Equipment - 1.1%

Amkor Technology, Inc. (a)(e)

843,200

$ 5,388

ON Semiconductor Corp. (a)

2,169,500

24,342

 

29,730

TOTAL INFORMATION TECHNOLOGY

51,187

MATERIALS - 1.7%

Chemicals - 1.7%

Celanese Corp. Class A

896,330

46,690

TOTAL COMMON STOCKS

(Cost $231,423)

331,638

Convertible Preferred Stocks - 20.5%

 

 

 

 

CONSUMER DISCRETIONARY - 7.8%

Auto Components - 0.2%

The Goodyear Tire & Rubber Co. 5.875%

100,000

5,858

Automobiles - 6.2%

General Motors Co. 4.75%

3,361,600

168,414

Household Durables - 0.1%

Hovnanian Enterprises, Inc./K. Hovanian Enterprises, Inc. 7.25%

125,000

2,085

Leisure Equipment & Products - 0.4%

Callaway Golf Co. 7.50%

100,000

11,438

Media - 0.9%

Interpublic Group of Companies, Inc. 5.25%

10,000

10,805

LodgeNet Entertainment Corp. 10.00% (g)

11,118

13,665

 

24,470

TOTAL CONSUMER DISCRETIONARY

212,265

CONSUMER STAPLES - 1.8%

Food Products - 1.8%

Archer Daniels Midland Co. 6.25%

600,000

24,492

Bunge Ltd. 4.875%

237,000

24,855

 

49,347

Convertible Preferred Stocks - continued

Shares

Value (000s)

ENERGY - 0.2%

Oil, Gas & Consumable Fuels - 0.2%

Apache Corp. 6.00%

94,200

$ 6,267

FINANCIALS - 9.1%

Commercial Banks - 4.9%

Huntington Bancshares, Inc. 8.50%

2,100

2,415

Wells Fargo & Co. 7.50%

120,550

130,797

 

133,212

Diversified Financial Services - 3.8%

Bank of America Corp. Series L, 7.25%

47,085

49,439

Citigroup, Inc. 7.50%

444,900

53,610

 

103,049

Insurance - 0.2%

Assured Guaranty Ltd. 8.50%

100,000

6,988

Real Estate Investment Trusts - 0.2%

Health Care REIT, Inc. 6.50%

98,800

5,212

TOTAL FINANCIALS

248,461

HEALTH CARE - 1.5%

Health Care Providers & Services - 1.5%

Tenet Healthcare Corp. 7.00%

40,000

41,664

UTILITIES - 0.1%

Electric Utilities - 0.1%

PPL Corp. 8.75%

38,300

2,097

TOTAL CONVERTIBLE PREFERRED STOCKS

(Cost $541,867)

560,101

Money Market Funds - 3.5%

Shares

Value (000s)

Fidelity Cash Central Fund, 0.14% (b)

89,167,402

$ 89,167

Fidelity Securities Lending Cash Central Fund, 0.14% (b)(c)

7,978,750

7,979

TOTAL MONEY MARKET FUNDS

(Cost $97,146)

97,146

TOTAL INVESTMENT PORTFOLIO - 99.0%

(Cost $2,300,442)

2,710,846

NET OTHER ASSETS (LIABILITIES) - 1.0%

28,042

NET ASSETS - 100%

$ 2,738,888

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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.

(d) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end.

(e) Security or a portion of the security is on loan at period end.

(f) Affiliated company

(g) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $309,804,000 or 11.3% of net assets.

(h) 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 $333,000 or 0.0% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost (000s)

HMH Holdings, Inc.

8/1/08 - 12/31/09

$ 6,902

HMH Holdings, Inc. warrants 3/9/17

3/9/10

$ 48

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

$ 95

Fidelity Securities Lending Cash Central Fund

12

Total

$ 107

Other Affiliated Issuers

An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:

Affiliate
(Amounts in thousands)

Value, beginning of period

Purchases

Sales Proceeds

Dividend Income

Value,
end of
period

Ambassadors International, Inc.

$ 389

$ -

$ -

$ -

$ 34

Total

$ 389

$ -

$ -

$ -

$ 34

Other Information

The following is a summary of the inputs used, as of May 31, 2011, 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 in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description
(Amounts in thousands)

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 233,642

$ 189,458

$ 44,102

$ 82

Consumer Staples

56,613

31,758

24,855

-

Energy

139,943

139,943

-

-

Financials

299,181

286,981

12,200

-

Health Care

62,386

20,722

41,664

-

Information Technology

51,187

51,187

-

-

Materials

46,690

46,690

-

-

Utilities

2,097

2,097

-

-

Corporate Bonds

1,721,961

-

1,721,961

-

Money Market Funds

97,146

97,146

-

-

Total Investments in Securities:

$ 2,710,846

$ 865,982

$ 1,844,782

$ 82

The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:

(Amounts in thousands)

 

Investments in Securities:

Beginning Balance

$ 1,876

Total Realized Gain (Loss)

-

Total Unrealized Gain (Loss)

598

Cost of Purchases

-

Proceeds of Sales

(2,392)

Amortization/Accretion

-

Transfers in to Level 3

-

Transfers out of Level 3

-

Ending Balance

$ 82

The change in unrealized gain (loss) for the period attributable to Level 3 securities held at May 31, 2011

$ -

The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.

Other Information

The composition of credit quality ratings as a percentage of net assets is as follows (Unaudited):

AAA,AA,A

4.4%

BBB

3.5%

BB

21.4%

B

10.8%

CCC,CC,C

9.9%

Not Rated

12.9%

Equities

32.6%

Short-Term Investments and Net Other Assets

4.5%

 

100.0%

We have used ratings from Moody's Investors Service, Inc. Where Moody's ratings are not available, we have used S&P ratings. All ratings are as of the report date and do not reflect subsequent changes.

Income Tax Information

At November 30, 2010, the Fund had a capital loss carryforward of approximately $298,128,000 all of which will expire in fiscal 2017. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $7,730) - See accompanying schedule:

Unaffiliated issuers (cost $2,198,656)

$ 2,613,666

 

Fidelity Central Funds (cost $97,146)

97,146

 

Other affiliated issuers (cost $4,640)

34

 

Total Investments (cost $2,300,442)

 

$ 2,710,846

Receivable for investments sold

24,009

Receivable for fund shares sold

2,463

Dividends receivable

5,378

Interest receivable

13,034

Distributions receivable from Fidelity Central Funds

16

Prepaid expenses

1

Other receivables

5

Total assets

2,755,752

 

 

 

Liabilities

Payable for investments purchased

$ 5,000

Payable for fund shares redeemed

2,593

Accrued management fee

756

Distribution and service plan fees payable

26

Other affiliated payables

473

Other payables and accrued expenses

37

Collateral on securities loaned, at value

7,979

Total liabilities

16,864

 

 

 

Net Assets

$ 2,738,888

Net Assets consist of:

 

Paid in capital

$ 2,506,992

Undistributed net investment income

23,587

Accumulated undistributed net realized gain (loss) on investments

(202,095)

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

410,404

Net Assets

$ 2,738,888

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($46,820.4 ÷ 1,708.85 shares)

$ 27.40

 

 

 

Maximum offering price per share (100/94.25 of $27.40)

$ 29.07

Class T:
Net Asset Value and redemption price per share ($8,116.6 ÷ 296.22 shares)

$ 27.40

 

 

 

Maximum offering price per share (100/96.50 of $27.40)

$ 28.39

Class B:
Net Asset Value and offering price per share ($1,527.7 ÷ 55.87 shares)A

$ 27.34

 

 

 

Class C:
Net Asset Value and offering price per share ($16,082.4 ÷ 589.42 shares)A

$ 27.29

 

 

 

Convertible Securities:
Net Asset Value, offering price and redemption price per share ($2,636,789.0 ÷ 95,933.58 shares)

$ 27.49

 

 

 

Institutional Class:
Net Asset Value, offering price and redemption price per share ($29,551.9 ÷ 1,076.42 shares)

$ 27.45

A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

 Amounts in thousands

Six months ended May 31, 2011 (Unaudited)

 

  

  

Investment Income

  

  

Dividends

 

$ 18,010

Interest

 

28,336

Income from Fidelity Central Funds

 

107

Total income

 

46,453

 

 

 

Expenses

Management fee
Basic fee

$ 6,001

Performance adjustment

(1,397)

Transfer agent fees

2,364

Distribution and service plan fees

114

Accounting and security lending fees

392

Custodian fees and expenses

17

Independent trustees' compensation

7

Registration fees

118

Audit

42

Legal

9

Miscellaneous

16

Total expenses before reductions

7,683

Expense reductions

(11)

7,672

Net investment income (loss)

38,781

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

 

99,576

Change in net unrealized appreciation (depreciation) on investment securities

212,113

Net gain (loss)

311,689

Net increase (decrease) in net assets resulting from operations

$ 350,470

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Changes in Net Assets

 Amounts in thousands

Six months ended May 31, 2011
(Unaudited)

Year ended
November 30, 2010

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 38,781

$ 84,135

Net realized gain (loss)

99,576

77,314

Change in net unrealized appreciation (depreciation)

212,113

227,214

Net increase (decrease) in net assets resulting
from operations

350,470

388,663

Distributions to shareholders from net investment income

(41,328)

(87,526)

Share transactions - net increase (decrease)

108,463

(332,532)

Total increase (decrease) in net assets

417,605

(31,395)

 

 

 

Net Assets

Beginning of period

2,321,283

2,352,678

End of period (including undistributed net investment income of $23,587 and undistributed net investment income of $26,134, respectively)

$ 2,738,888

$ 2,321,283

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class A

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.22

$ 21.25

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .35

  .75

  .58

Net realized and unrealized gain (loss)

  3.23

  3.01

  8.53

Total from investment operations

  3.58

  3.76

  9.11

Distributions from net investment income

  (.40)

  (.79)

  (.65)

Net asset value, end of period

$ 27.40

$ 24.22

$ 21.25

Total Return B,C,D

  14.88%

  18.05%

  72.83%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  .85% A

  .87%

  1.04% A

Expenses net of fee waivers, if any

  .85% A

  .87%

  1.04% A

Expenses net of all reductions

  .85% A

  .87%

  1.04% A

Net investment income (loss)

  2.68% A

  3.29%

  3.70% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 47

$ 19

$ 6

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the sales charges.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class T

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.23

$ 21.25

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .32

  .69

  .57

Net realized and unrealized gain (loss)

  3.22

  3.01

  8.52

Total from investment operations

  3.54

  3.70

  9.09

Distributions from net investment income

  (.37)

  (.72)

  (.63)

Net asset value, end of period

$ 27.40

$ 24.23

$ 21.25

Total Return B,C,D

  14.69%

  17.74%

  72.60%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  1.13% A

  1.13%

  1.25% A

Expenses net of fee waivers, if any

  1.13% A

  1.13%

  1.25% A

Expenses net of all reductions

  1.13% A

  1.13%

  1.25% A

Net investment income (loss)

  2.40% A

  3.03%

  3.83% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 8

$ 4

$ 2

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the sales charges.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class B

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.17

$ 21.22

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .24

  .56

  .50

Net realized and unrealized gain (loss)

  3.22

  3.01

  8.51

Total from investment operations

  3.46

  3.57

  9.01

Distributions from net investment income

  (.29)

  (.62)

  (.58)

Net asset value, end of period

$ 27.34

$ 24.17

$ 21.22

Total Return B,C,D

  14.37%

  17.08%

  71.85%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  1.70% A

  1.69%

  1.78% A

Expenses net of fee waivers, if any

  1.70% A

  1.69%

  1.78% A

Expenses net of all reductions

  1.70% A

  1.69%

  1.78% A

Net investment income (loss)

  1.84% A

  2.47%

  3.41% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 2

$ 1

$ 1

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the contingent deferred sales charge.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class C

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.14

$ 21.20

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .25

  .56

  .47

Net realized and unrealized gain (loss)

  3.21

  3.01

  8.53

Total from investment operations

  3.46

  3.57

  9.00

Distributions from net investment income

  (.31)

  (.63)

  (.59)

Net asset value, end of period

$ 27.29

$ 24.14

$ 21.20

Total Return B,C,D

  14.43%

  17.13%

  71.81%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  1.63% A

  1.66%

  1.80% A

Expenses net of fee waivers, if any

  1.63% A

  1.66%

  1.80% A

Expenses net of all reductions

  1.63% A

  1.66%

  1.80% A

Net investment income (loss)

  1.91% A

  2.50%

  3.17% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 16

$ 5

$ 2

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the contingent deferred sales charge.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Convertible Securities

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009

2008

2007

2006

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 24.29

$ 21.30

$ 13.55

$ 28.71

$ 25.21

$ 22.14

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) D

  .39

  .81

  .96

  .76

  .59

  .49

Net realized and unrealized gain (loss)

  3.23

  3.02

  7.78

  (14.43)

  3.43

  3.09

Total from investment operations

  3.62

  3.83

  8.74

  (13.67)

  4.02

  3.58

Distributions from net investment income

  (.42)

  (.84)

  (.99)

  (.64)

  (.50)

  (.50)

Distributions from net realized gain

  -

  -

  -

  (.85)

  (.02)

  (.01)

Total distributions

  (.42)

  (.84)

  (.99)

  (1.49)

  (.52)

  (.51)

Net asset value, end of period

$ 27.49

$ 24.29

$ 21.30

$ 13.55

$ 28.71

$ 25.21

Total Return B,C

  15.04%

  18.37%

  67.65%

  (50.09)%

  16.02%

  16.38%

Ratios to Average Net Assets E,G

 

 

 

 

 

Expenses before reductions

  .57% A

  .59%

  .70%

  .78%

  .79%

  .83%

Expenses net of fee waivers, if any

  .57% A

  .59%

  .69%

  .78%

  .79%

  .83%

Expenses net of all reductions

  .57% A

  .59%

  .69%

  .78%

  .79%

  .83%

Net investment income (loss)

  2.96% A

  3.57%

  5.59%

  3.06%

  2.11%

  2.09%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (in millions)

$ 2,637

$ 2,287

$ 2,340

$ 1,439

$ 2,919

$ 2,083

Portfolio turnover rate F

  30% A

  28%

  31%

  39%

  24%

  35%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Institutional Class

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 G

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.27

$ 21.29

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) D

  .39

  .80

  .63

Net realized and unrealized gain (loss)

  3.22

  3.02

  8.54

Total from investment operations

  3.61

  3.82

  9.17

Distributions from net investment income

  (.43)

  (.84)

  (.67)

Net asset value, end of period

$ 27.45

$ 24.27

$ 21.29

Total Return B,C

  14.99%

  18.34%

  73.31%

Ratios to Average Net Assets E,H

 

 

 

Expenses before reductions

  .61% A

  .60%

  .73% A

Expenses net of fee waivers, if any

  .61% A

  .60%

  .73% A

Expenses net of all reductions

  .61% A

  .60%

  .73% A

Net investment income (loss)

  2.92% A

  3.56%

  4.19% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 30

$ 6

$ 3

Portfolio turnover rate F

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended May 31, 2011 (Unaudited)

(Amounts in thousands except ratios)

1. Organization.

Fidelity Convertible Securities Fund (the Fund) is a fund of Fidelity Financial Trust (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class C, Convertible Securities, and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments by existing shareholders. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class.

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

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:

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.

Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.

When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances. 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 each business day and are categorized as Level 1 in the hierarchy.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

Expenses. 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, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years.

Distributions are 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. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, market discount, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.

The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:

Gross unrealized appreciation

$ 478,459

Gross unrealized depreciation

(62,328)

Net unrealized appreciation (depreciation) on securities and other investments

$ 416,131

Tax cost

$ 2,294,715

Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be November 30, 2012.

Semiannual Report

3. Significant Accounting Policies - continued

New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $392,813 and $374,746, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .15% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of Convertible Securities as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .35% of the Fund's average net assets.

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 FMR,

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

6. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan Fees - continued

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%

$ 40

$ 3

Class T

.25%

.25%

15

-

Class B

.75%

.25%

7

5

Class C

.75%

.25%

52

32

 

 

 

$ 114

$ 40

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% to 1% for Class B, 1% for Class C, 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

$ 32

Class T

2

Class B*

1

Class C*

1

 

$ 36

* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of 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
Average
Net Assets*

Class A

$ 33

.21

Class T

7

.24

Class B

2

.30

Class C

12

.23

Convertible Securities

2,290

.18

Institutional Class

20

.22

 

$ 2,364

 

* Annualized

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $8 for the period.

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.0 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, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

8. Security Lending - continued

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. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and 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, and includes one hundred thirteen dollars from securities loaned to FCM. Total security lending income during the period amounted to $12.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $10 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

 

Six months ended
May 31,
2011

Year ended
November 30,
2010

From net investment income

 

 

Class A

$ 419

$ 362

Class T

72

84

Class B

14

26

Class C

99

87

Convertible Securities

40,483

86,745

Institutional Class

241

222

Total

$ 41,328

$ 87,526

Semiannual Report

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

 

Six months ended May 31,
2011

Year ended
November 30,
2010

Six months ended May 31,
2011

Year ended
November 30,
2010

Class A

 

 

 

 

Shares sold

1,187

1,087

$ 31,556

$ 24,711

Reinvestment of distributions

13

13

327

297

Shares redeemed

(269)

(592)

(7,082)

(13,289)

Net increase (decrease)

931

508

$ 24,801

$ 11,719

Class T

 

 

 

 

Shares sold

165

218

$ 4,400

$ 5,074

Reinvestment of distributions

3

4

70

81

Shares redeemed

(17)

(168)

(462)

(3,714)

Net increase (decrease)

151

54

$ 4,008

$ 1,441

Class B

 

 

 

 

Shares sold

16

44

$ 413

$ 1,007

Reinvestment of distributions

-

1

10

17

Shares redeemed

(8)

(27)

(206)

(604)

Net increase (decrease)

8

18

$ 217

$ 420

Class C

 

 

 

 

Shares sold

398

180

$ 10,561

$ 4,099

Reinvestment of distributions

3

3

74

72

Shares redeemed

(22)

(52)

(587)

(1,197)

Net increase (decrease)

379

131

$ 10,048

$ 2,974

Convertible Securities

 

 

 

 

Shares sold

15,097

18,970

$ 401,986

$ 430,425

Reinvestment of distributions

1,391

3,506

36,002

78,155

Shares redeemed

(14,696)

(38,186)

(390,510)

(860,169)

Net increase (decrease)

1,792

(15,710)

$ 47,478

$ (351,589)

Institutional Class

 

 

 

 

Shares sold

971

400

$ 25,898

$ 9,185

Reinvestment of distributions

6

6

147

133

Shares redeemed

(154)

(298)

(4,134)

(6,815)

Net increase (decrease)

823

108

$ 21,911

$ 2,503

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

12. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research (U.K.) Inc.

Fidelity Management & Research (Hong Kong) Limited

Fidelity Management & Research (Japan) Inc.

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.

Boston, MA

Fidelity Service Company, Inc.

Boston, MA

Custodian

Citibank, N.A.

New York, NY

The Fidelity Telephone Connection

Mutual Fund 24-Hour Service

Exchanges/Redemptions
and Account Assistance 1-800-544-6666

Product Information 1-800-544-6666

Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)

TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Fidelity Automated Service
Telephone (FAST®) fid98
1-800-544-5555

fid98
Automated line for quickest service 

CVS-USAN-0711
1.786810.108

fid101

(Fidelity Investment logo)(registered trademark)
Fidelity Advisor®
Convertible Securities
Fund - Class A, Class T, Class B
and Class C

Semiannual Report

May 31, 2011

Class A, Class T, Class B, and Class C are classes of Fidelity® Convertible Securities Fund

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

The Chairman's message to shareholders.

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.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.

Semiannual Report

Chairman's Message

(photo_of_James_C_Curvey)

Dear Shareholder:

Amid indications the U.S. economy had turned a corner, U.S. equities continued their generally upward trend through the end of May, overcoming bouts of short-term volatility following unrest in North Africa and the natural disaster in Japan. Still, questions remained about the longer-term outlook, most notably inflationary pressure and persistently high unemployment. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.

One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.

You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).

A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.

We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.

Sincerely,


(The acting chairman's signature appears here.)

James C. Curvey
Acting Chairman

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2010 to May 31, 2011).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

Semiannual Report

Shareholder Expense Example - continued

 

Annualized
Expense Ratio

Beginning
Account Value
December 1, 2010

Ending
Account Value
May 31, 2011

Expenses Paid
During Period*
December 1, 2010 to May 31, 2011

Class A

.85%

 

 

 

Actual

 

$ 1,000.00

$ 1,148.80

$ 4.55

Hypothetical A

 

$ 1,000.00

$ 1,020.69

$ 4.28

Class T

1.13%

 

 

 

Actual

 

$ 1,000.00

$ 1,146.90

$ 6.05

Hypothetical A

 

$ 1,000.00

$ 1,019.30

$ 5.69

Class B

1.70%

 

 

 

Actual

 

$ 1,000.00

$ 1,143.70

$ 9.09

Hypothetical A

 

$ 1,000.00

$ 1,016.45

$ 8.55

Class C

1.63%

 

 

 

Actual

 

$ 1,000.00

$ 1,144.30

$ 8.71

Hypothetical A

 

$ 1,000.00

$ 1,016.80

$ 8.20

Convertible Securities

.57%

 

 

 

Actual

 

$ 1,000.00

$ 1,150.40

$ 3.06

Hypothetical A

 

$ 1,000.00

$ 1,022.09

$ 2.87

Institutional Class

.61%

 

 

 

Actual

 

$ 1,000.00

$ 1,149.90

$ 3.27

Hypothetical A

 

$ 1,000.00

$ 1,021.89

$ 3.07

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Investments as of May 31, 2011

(excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

General Motors Co. 4.75%

6.2

3.0

Peabody Energy Corp. 4.75% 12/15/66

5.6

6.6

Wells Fargo & Co. 7.50%

4.8

5.1

El Paso Corp.

4.0

0.0

MGM Mirage, Inc. 4.25% 4/15/15

3.5

0.0

Intel Corp. 3.25% 8/1/39

2.6

3.0

Ford Motor Co. 4.25% 11/15/16

2.6

3.3

Alpha Natural Resources, Inc. 2.375% 4/15/15

2.5

1.8

Chesapeake Energy Corp. 2.5% 5/15/37

2.4

2.3

Hertz Global Holdings, Inc. 5.25% 6/1/14

2.1

2.0

 

36.3

Top Five Market Sectors as of May 31, 2011

 

% of fund's
net assets

% of fund's net assets
6 months ago

Energy

20.7

23.4

Information Technology

19.1

17.9

Consumer Discretionary

17.1

13.0

Industrials

11.9

13.1

Financials

11.6

13.3

Asset Allocation (% of fund's net assets)

As of May 31, 2011*

As of November 30, 2010**

fid84

Convertible
Securities 83.4%

 

fid84

Convertible
Securities 88.7%

 

fid87

Stocks 12.1%

 

fid87

Stocks 9.6%

 

fid90

Nonconvertible
Bonds 0.0%

 

fid90

Nonconvertible
Bonds 0.1%

 

fid93

Short-Term
Investments and
Net Other Assets 4.5%

 

fid93

Short-Term
Investments and
Net Other Assets 1.6%

 

* Foreign investments

5.0%

 

** Foreign investments

4.2%

 

fid117

Semiannual Report

Investments May 31, 2011 (Unaudited)

Showing Percentage of Net Assets

Convertible Bonds - 62.9%

 

Principal Amount (000s)

Value (000s)

CONSUMER DISCRETIONARY - 8.5%

Auto Components - 0.1%

BorgWarner, Inc. 3.5% 4/15/12

$ 910

$ 2,021

Automobiles - 2.6%

Ford Motor Co. 4.25% 11/15/16

40,000

71,684

Diversified Consumer Services - 1.1%

Ingersoll-Rand Global Holding Co. Ltd. 4.5% 4/15/12

5,490

15,346

Regis Corp. 5% 7/15/14

2,230

2,658

Stewart Enterprises, Inc. 3.375% 7/15/16 (g)

11,000

10,973

 

28,977

Hotels, Restaurants & Leisure - 3.5%

MGM Mirage, Inc. 4.25% 4/15/15

82,300

95,365

Media - 1.1%

Virgin Media, Inc. 6.5% 11/15/16

8,000

15,330

XM Satellite Radio, Inc. 7% 12/1/14 (g)

10,000

15,400

 

30,730

Specialty Retail - 0.1%

Asbury Automotive Group, Inc. 3% 9/15/12 (g)

3,000

2,970

TOTAL CONSUMER DISCRETIONARY

231,747

CONSUMER STAPLES - 1.5%

Beverages - 0.6%

Molson Coors Brewing Co. 2.5% 7/30/13

14,000

15,593

Food Products - 0.9%

Smithfield Foods, Inc. 4% 6/30/13

22,250

25,890

TOTAL CONSUMER STAPLES

41,483

ENERGY - 15.6%

Energy Equipment & Services - 1.6%

Exterran Holdings, Inc. 4.25% 6/15/14

10,000

11,675

Global Industries Ltd. 2.75% 8/1/27 (g)

10,000

7,663

Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (d)(g)

5,000

4,855

Oil States International, Inc. 2.375% 7/1/25 (g)

4,500

11,219

SESI LLC 1.5% 12/15/26 (d)(g)

7,000

7,219

 

42,631

Oil, Gas & Consumable Fuels - 14.0%

Alpha Natural Resources, Inc. 2.375% 4/15/15

52,000

67,501

Chesapeake Energy Corp. 2.5% 5/15/37

60,250

66,787

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

ENERGY - continued

Oil, Gas & Consumable Fuels - continued

International Coal Group, Inc. 4% 4/1/17

$ 2,160

$ 5,584

Peabody Energy Corp. 4.75% 12/15/66

122,250

154,035

Pioneer Natural Resources Co. 2.875% 1/15/38

20,000

31,700

Quicksilver Resources, Inc. 1.875% 11/1/24 (g)

14,500

15,244

Western Refining, Inc. 5.75% 6/15/14

24,185

43,088

 

383,939

TOTAL ENERGY

426,570

FINANCIALS - 0.7%

Diversified Financial Services - 0.7%

The NASDAQ Stock Market, Inc. 2.5% 8/15/13

20,000

19,877

HEALTH CARE - 4.0%

Health Care Equipment & Supplies - 2.4%

Alere, Inc. 3% 5/15/16

31,000

35,960

Kinetic Concepts, Inc. 3.25% 4/15/15 (g)

15,000

19,740

SonoSite, Inc. 3.75% 7/15/14

7,000

8,105

Volcano Corp. 2.875% 9/1/15

1,890

2,398

 

66,203

Health Care Providers & Services - 0.2%

Omnicare, Inc.:

3.25% 12/15/35

2,086

2,003

3.75% 12/15/25

3,610

4,807

 

6,810

Life Sciences Tools & Services - 0.2%

Charles River Laboratories International, Inc. 2.25% 6/15/13 (g)

4,000

4,160

Pharmaceuticals - 1.2%

Akorn, Inc. 3.5% 6/1/16 (g)

5,000

5,294

Biovail Corp. 5.375% 8/1/14 (g)

5,000

18,445

Nektar Therapeutics 3.25% 9/28/12

9,000

8,904

 

32,643

TOTAL HEALTH CARE

109,816

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

INDUSTRIALS - 11.9%

Aerospace & Defense - 0.7%

GenCorp, Inc. 4.0625% 12/31/39

$ 7,830

$ 7,967

Textron, Inc. 4.5% 5/1/13

6,440

11,701

 

19,668

Airlines - 3.2%

AMR Corp. 6.25% 10/15/14

17,990

18,416

Continental Airlines, Inc. 4.5% 1/15/15

9,280

13,734

UAL Corp.:

4.5% 6/30/21 (g)

10,500

10,512

4.5% 6/30/21

5,000

5,006

6% 10/15/29

3,600

10,575

US Airways Group, Inc.:

7% 9/30/20 (g)

4,810

4,804

7.25% 5/15/14

11,200

24,349

 

87,396

Commercial Services & Supplies - 1.2%

Metalico, Inc. 7% 4/30/28

34,000

31,620

Construction & Engineering - 0.4%

MasTec, Inc. 4.25% 12/15/14

8,000

12,345

Electrical Equipment - 0.7%

General Cable Corp. 4.5% 11/15/29 (d)

14,800

20,190

Machinery - 2.6%

Greenbrier Companies, Inc.:

2.375% 5/15/26 (g)

5,500

5,376

2.375% 5/15/26

8,000

7,820

3.5% 4/1/18 (g)

2,860

2,948

Terex Corp. 4% 6/1/15

19,590

38,559

Trinity Industries, Inc. 3.875% 6/1/36

15,000

15,900

 

70,603

Marine - 0.9%

Excel Maritime Carriers Ltd. 1.875% 10/15/27 (g)

34,000

23,460

Road & Rail - 2.1%

Hertz Global Holdings, Inc. 5.25% 6/1/14

28,000

58,052

Trading Companies & Distributors - 0.1%

United Rentals, Inc. 4% 11/15/15

960

2,466

TOTAL INDUSTRIALS

325,800

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

INFORMATION TECHNOLOGY - 17.2%

Communications Equipment - 1.2%

Finisar Corp. 5% 10/15/29 (g)

$ 2,500

$ 6,216

JDS Uniphase Corp. 1% 5/15/26 (g)

14,000

14,989

L-3 Communications Corp. 3% 8/1/35

3,000

3,038

Lucent Technologies, Inc. 2.875% 6/15/25

10,000

9,875

 

34,118

Computers & Peripherals - 1.8%

EMC Corp.:

1.75% 12/1/13 (g)

17,000

30,738

1.75% 12/1/13

10,000

18,081

 

48,819

Electronic Equipment & Components - 1.6%

Anixter International, Inc. 1% 2/15/13 (g)

4,540

5,527

Itron, Inc. 2.5% 8/1/26

5,000

5,025

Newport Corp. 2.5% 2/15/12 (g)

3,750

3,888

SYNNEX Corp. 4% 5/15/18

10,000

12,818

Vishay Intertechnology, Inc.:

2.25% 11/15/40 (g)

7,000

8,800

2.25% 5/15/41 (g)

7,000

6,871

 

42,929

Internet Software & Services - 1.4%

Equinix, Inc.:

3% 10/15/14

10,000

11,335

4.75% 6/15/16

10,000

14,224

VeriSign, Inc. 3.25% 8/15/37

10,000

11,909

 

37,468

IT Services - 1.8%

Alliance Data Systems Corp. 4.75% 5/15/14

10,200

21,152

CACI International, Inc. 2.125% 5/1/14

6,000

7,680

DST Systems, Inc. 4.125% 8/15/23

8,267

9,631

Telvent GIT SA 5.5% 4/15/15 (g)

9,000

10,992

 

49,455

Semiconductors & Semiconductor Equipment - 8.3%

Advanced Micro Devices, Inc. 6% 5/1/15

11,916

12,371

Amkor Technology, Inc. 6% 4/15/14

13,890

31,564

Evergreen Solar, Inc. 4% 7/15/20

2,000

723

Intel Corp. 3.25% 8/1/39

58,000

72,126

Micron Technology, Inc. 4.25% 10/15/13

6,130

12,934

Novellus Systems, Inc. 2.625% 5/15/41 (g)

20,000

21,622

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

INFORMATION TECHNOLOGY - continued

Semiconductors & Semiconductor Equipment - continued

ON Semiconductor Corp.:

1.875% 12/15/25 (g)

$ 3,750

$ 6,162

2.625% 12/15/26

35,330

44,869

PMC-Sierra, Inc. 2.25% 10/15/25

10,000

11,025

SunPower Corp. 4.75% 4/15/14

2,020

2,194

Xilinx, Inc. 3.125% 3/15/37

10,000

12,478

 

228,068

Software - 1.1%

Nuance Communications, Inc. 2.75% 8/15/27

23,085

30,559

TOTAL INFORMATION TECHNOLOGY

471,416

MATERIALS - 1.1%

Metals & Mining - 1.1%

Alcoa, Inc. 5.25% 3/15/14

5,000

13,431

ArcelorMittal SA 5% 5/15/14

2,170

2,974

Goldcorp, Inc. 2% 8/1/14

5,000

6,332

Newmont Mining Corp. 1.625% 7/15/17

5,000

6,935

 

29,672

TELECOMMUNICATION SERVICES - 2.4%

Diversified Telecommunication Services - 1.2%

Clearwire Communications LLC/Clearwire Finance, Inc. 8.25% 12/1/40 (g)

9,990

10,052

Level 3 Communications, Inc. 7% 3/15/15

10,000

15,613

Time Warner Telecom, Inc. 2.375% 4/1/26

6,000

7,613

 

33,278

Wireless Telecommunication Services - 1.2%

Leap Wireless International, Inc. 4.5% 7/15/14

33,000

32,302

TOTAL TELECOMMUNICATION SERVICES

65,580

TOTAL CONVERTIBLE BONDS

(Cost $1,430,006)

1,721,961

Common Stocks - 12.1%

Shares

Value (000s)

CONSUMER DISCRETIONARY - 0.8%

Auto Components - 0.5%

Johnson Controls, Inc.

344,134

$ 13,628

Diversified Consumer Services - 0.3%

Service Corp. International

643,000

7,382

Hotels, Restaurants & Leisure - 0.0%

Ambassadors International, Inc. (a)(e)(f)

230,377

34

Media - 0.0%

HMH Holdings, Inc. (a)(h)

52,880

251

HMH Holdings, Inc. warrants 3/9/17 (a)(h)

164,823

82

 

333

TOTAL CONSUMER DISCRETIONARY

21,377

CONSUMER STAPLES - 0.3%

Food Products - 0.3%

Bunge Ltd.

97,596

7,266

ENERGY - 4.9%

Oil, Gas & Consumable Fuels - 4.9%

Chesapeake Energy Corp.

513,600

16,096

El Paso Corp.

5,191,964

109,291

McMoRan Exploration Co. (a)(e)

450,000

8,289

 

133,676

FINANCIALS - 1.8%

Commercial Banks - 1.8%

Huntington Bancshares, Inc.

5,620,500

37,095

KeyCorp

1,608,600

13,625

 

50,720

HEALTH CARE - 0.7%

Pharmaceuticals - 0.7%

Valeant Pharmaceuticals International, Inc. (Canada)

395,333

20,722

INFORMATION TECHNOLOGY - 1.9%

Communications Equipment - 0.3%

Finisar Corp. (a)

374,120

8,986

Electronic Equipment & Components - 0.5%

Viasystems Group, Inc. (a)

549,643

12,471

Common Stocks - continued

Shares

Value (000s)

INFORMATION TECHNOLOGY - continued

Semiconductors & Semiconductor Equipment - 1.1%

Amkor Technology, Inc. (a)(e)

843,200

$ 5,388

ON Semiconductor Corp. (a)

2,169,500

24,342

 

29,730

TOTAL INFORMATION TECHNOLOGY

51,187

MATERIALS - 1.7%

Chemicals - 1.7%

Celanese Corp. Class A

896,330

46,690

TOTAL COMMON STOCKS

(Cost $231,423)

331,638

Convertible Preferred Stocks - 20.5%

 

 

 

 

CONSUMER DISCRETIONARY - 7.8%

Auto Components - 0.2%

The Goodyear Tire & Rubber Co. 5.875%

100,000

5,858

Automobiles - 6.2%

General Motors Co. 4.75%

3,361,600

168,414

Household Durables - 0.1%

Hovnanian Enterprises, Inc./K. Hovanian Enterprises, Inc. 7.25%

125,000

2,085

Leisure Equipment & Products - 0.4%

Callaway Golf Co. 7.50%

100,000

11,438

Media - 0.9%

Interpublic Group of Companies, Inc. 5.25%

10,000

10,805

LodgeNet Entertainment Corp. 10.00% (g)

11,118

13,665

 

24,470

TOTAL CONSUMER DISCRETIONARY

212,265

CONSUMER STAPLES - 1.8%

Food Products - 1.8%

Archer Daniels Midland Co. 6.25%

600,000

24,492

Bunge Ltd. 4.875%

237,000

24,855

 

49,347

Convertible Preferred Stocks - continued

Shares

Value (000s)

ENERGY - 0.2%

Oil, Gas & Consumable Fuels - 0.2%

Apache Corp. 6.00%

94,200

$ 6,267

FINANCIALS - 9.1%

Commercial Banks - 4.9%

Huntington Bancshares, Inc. 8.50%

2,100

2,415

Wells Fargo & Co. 7.50%

120,550

130,797

 

133,212

Diversified Financial Services - 3.8%

Bank of America Corp. Series L, 7.25%

47,085

49,439

Citigroup, Inc. 7.50%

444,900

53,610

 

103,049

Insurance - 0.2%

Assured Guaranty Ltd. 8.50%

100,000

6,988

Real Estate Investment Trusts - 0.2%

Health Care REIT, Inc. 6.50%

98,800

5,212

TOTAL FINANCIALS

248,461

HEALTH CARE - 1.5%

Health Care Providers & Services - 1.5%

Tenet Healthcare Corp. 7.00%

40,000

41,664

UTILITIES - 0.1%

Electric Utilities - 0.1%

PPL Corp. 8.75%

38,300

2,097

TOTAL CONVERTIBLE PREFERRED STOCKS

(Cost $541,867)

560,101

Money Market Funds - 3.5%

Shares

Value (000s)

Fidelity Cash Central Fund, 0.14% (b)

89,167,402

$ 89,167

Fidelity Securities Lending Cash Central Fund, 0.14% (b)(c)

7,978,750

7,979

TOTAL MONEY MARKET FUNDS

(Cost $97,146)

97,146

TOTAL INVESTMENT PORTFOLIO - 99.0%

(Cost $2,300,442)

2,710,846

NET OTHER ASSETS (LIABILITIES) - 1.0%

28,042

NET ASSETS - 100%

$ 2,738,888

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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.

(d) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end.

(e) Security or a portion of the security is on loan at period end.

(f) Affiliated company

(g) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $309,804,000 or 11.3% of net assets.

(h) 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 $333,000 or 0.0% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost (000s)

HMH Holdings, Inc.

8/1/08 - 12/31/09

$ 6,902

HMH Holdings, Inc. warrants 3/9/17

3/9/10

$ 48

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

$ 95

Fidelity Securities Lending Cash Central Fund

12

Total

$ 107

Other Affiliated Issuers

An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:

Affiliate
(Amounts in thousands)

Value, beginning of period

Purchases

Sales Proceeds

Dividend Income

Value,
end of
period

Ambassadors International, Inc.

$ 389

$ -

$ -

$ -

$ 34

Total

$ 389

$ -

$ -

$ -

$ 34

Other Information

The following is a summary of the inputs used, as of May 31, 2011, 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 in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description
(Amounts in thousands)

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 233,642

$ 189,458

$ 44,102

$ 82

Consumer Staples

56,613

31,758

24,855

-

Energy

139,943

139,943

-

-

Financials

299,181

286,981

12,200

-

Health Care

62,386

20,722

41,664

-

Information Technology

51,187

51,187

-

-

Materials

46,690

46,690

-

-

Utilities

2,097

2,097

-

-

Corporate Bonds

1,721,961

-

1,721,961

-

Money Market Funds

97,146

97,146

-

-

Total Investments in Securities:

$ 2,710,846

$ 865,982

$ 1,844,782

$ 82

The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:

(Amounts in thousands)

 

Investments in Securities:

Beginning Balance

$ 1,876

Total Realized Gain (Loss)

-

Total Unrealized Gain (Loss)

598

Cost of Purchases

-

Proceeds of Sales

(2,392)

Amortization/Accretion

-

Transfers in to Level 3

-

Transfers out of Level 3

-

Ending Balance

$ 82

The change in unrealized gain (loss) for the period attributable to Level 3 securities held at May 31, 2011

$ -

The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.

Other Information

The composition of credit quality ratings as a percentage of net assets is as follows (Unaudited):

AAA,AA,A

4.4%

BBB

3.5%

BB

21.4%

B

10.8%

CCC,CC,C

9.9%

Not Rated

12.9%

Equities

32.6%

Short-Term Investments and Net Other Assets

4.5%

 

100.0%

We have used ratings from Moody's Investors Service, Inc. Where Moody's ratings are not available, we have used S&P ratings. All ratings are as of the report date and do not reflect subsequent changes.

Income Tax Information

At November 30, 2010, the Fund had a capital loss carryforward of approximately $298,128,000 all of which will expire in fiscal 2017. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $7,730) - See accompanying schedule:

Unaffiliated issuers (cost $2,198,656)

$ 2,613,666

 

Fidelity Central Funds (cost $97,146)

97,146

 

Other affiliated issuers (cost $4,640)

34

 

Total Investments (cost $2,300,442)

 

$ 2,710,846

Receivable for investments sold

24,009

Receivable for fund shares sold

2,463

Dividends receivable

5,378

Interest receivable

13,034

Distributions receivable from Fidelity Central Funds

16

Prepaid expenses

1

Other receivables

5

Total assets

2,755,752

 

 

 

Liabilities

Payable for investments purchased

$ 5,000

Payable for fund shares redeemed

2,593

Accrued management fee

756

Distribution and service plan fees payable

26

Other affiliated payables

473

Other payables and accrued expenses

37

Collateral on securities loaned, at value

7,979

Total liabilities

16,864

 

 

 

Net Assets

$ 2,738,888

Net Assets consist of:

 

Paid in capital

$ 2,506,992

Undistributed net investment income

23,587

Accumulated undistributed net realized gain (loss) on investments

(202,095)

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

410,404

Net Assets

$ 2,738,888

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($46,820.4 ÷ 1,708.85 shares)

$ 27.40

 

 

 

Maximum offering price per share (100/94.25 of $27.40)

$ 29.07

Class T:
Net Asset Value and redemption price per share ($8,116.6 ÷ 296.22 shares)

$ 27.40

 

 

 

Maximum offering price per share (100/96.50 of $27.40)

$ 28.39

Class B:
Net Asset Value and offering price per share ($1,527.7 ÷ 55.87 shares)A

$ 27.34

 

 

 

Class C:
Net Asset Value and offering price per share ($16,082.4 ÷ 589.42 shares)A

$ 27.29

 

 

 

Convertible Securities:
Net Asset Value, offering price and redemption price per share ($2,636,789.0 ÷ 95,933.58 shares)

$ 27.49

 

 

 

Institutional Class:
Net Asset Value, offering price and redemption price per share ($29,551.9 ÷ 1,076.42 shares)

$ 27.45

A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

 Amounts in thousands

Six months ended May 31, 2011 (Unaudited)

 

  

  

Investment Income

  

  

Dividends

 

$ 18,010

Interest

 

28,336

Income from Fidelity Central Funds

 

107

Total income

 

46,453

 

 

 

Expenses

Management fee
Basic fee

$ 6,001

Performance adjustment

(1,397)

Transfer agent fees

2,364

Distribution and service plan fees

114

Accounting and security lending fees

392

Custodian fees and expenses

17

Independent trustees' compensation

7

Registration fees

118

Audit

42

Legal

9

Miscellaneous

16

Total expenses before reductions

7,683

Expense reductions

(11)

7,672

Net investment income (loss)

38,781

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

 

99,576

Change in net unrealized appreciation (depreciation) on investment securities

212,113

Net gain (loss)

311,689

Net increase (decrease) in net assets resulting from operations

$ 350,470

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Changes in Net Assets

 Amounts in thousands

Six months ended May 31, 2011
(Unaudited)

Year ended
November 30, 2010

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 38,781

$ 84,135

Net realized gain (loss)

99,576

77,314

Change in net unrealized appreciation (depreciation)

212,113

227,214

Net increase (decrease) in net assets resulting
from operations

350,470

388,663

Distributions to shareholders from net investment income

(41,328)

(87,526)

Share transactions - net increase (decrease)

108,463

(332,532)

Total increase (decrease) in net assets

417,605

(31,395)

 

 

 

Net Assets

Beginning of period

2,321,283

2,352,678

End of period (including undistributed net investment income of $23,587 and undistributed net investment income of $26,134, respectively)

$ 2,738,888

$ 2,321,283

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class A

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.22

$ 21.25

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .35

  .75

  .58

Net realized and unrealized gain (loss)

  3.23

  3.01

  8.53

Total from investment operations

  3.58

  3.76

  9.11

Distributions from net investment income

  (.40)

  (.79)

  (.65)

Net asset value, end of period

$ 27.40

$ 24.22

$ 21.25

Total Return B,C,D

  14.88%

  18.05%

  72.83%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  .85% A

  .87%

  1.04% A

Expenses net of fee waivers, if any

  .85% A

  .87%

  1.04% A

Expenses net of all reductions

  .85% A

  .87%

  1.04% A

Net investment income (loss)

  2.68% A

  3.29%

  3.70% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 47

$ 19

$ 6

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the sales charges.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class T

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.23

$ 21.25

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .32

  .69

  .57

Net realized and unrealized gain (loss)

  3.22

  3.01

  8.52

Total from investment operations

  3.54

  3.70

  9.09

Distributions from net investment income

  (.37)

  (.72)

  (.63)

Net asset value, end of period

$ 27.40

$ 24.23

$ 21.25

Total Return B,C,D

  14.69%

  17.74%

  72.60%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  1.13% A

  1.13%

  1.25% A

Expenses net of fee waivers, if any

  1.13% A

  1.13%

  1.25% A

Expenses net of all reductions

  1.13% A

  1.13%

  1.25% A

Net investment income (loss)

  2.40% A

  3.03%

  3.83% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 8

$ 4

$ 2

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the sales charges.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class B

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.17

$ 21.22

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .24

  .56

  .50

Net realized and unrealized gain (loss)

  3.22

  3.01

  8.51

Total from investment operations

  3.46

  3.57

  9.01

Distributions from net investment income

  (.29)

  (.62)

  (.58)

Net asset value, end of period

$ 27.34

$ 24.17

$ 21.22

Total Return B,C,D

  14.37%

  17.08%

  71.85%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  1.70% A

  1.69%

  1.78% A

Expenses net of fee waivers, if any

  1.70% A

  1.69%

  1.78% A

Expenses net of all reductions

  1.70% A

  1.69%

  1.78% A

Net investment income (loss)

  1.84% A

  2.47%

  3.41% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 2

$ 1

$ 1

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the contingent deferred sales charge.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class C

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.14

$ 21.20

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .25

  .56

  .47

Net realized and unrealized gain (loss)

  3.21

  3.01

  8.53

Total from investment operations

  3.46

  3.57

  9.00

Distributions from net investment income

  (.31)

  (.63)

  (.59)

Net asset value, end of period

$ 27.29

$ 24.14

$ 21.20

Total Return B,C,D

  14.43%

  17.13%

  71.81%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  1.63% A

  1.66%

  1.80% A

Expenses net of fee waivers, if any

  1.63% A

  1.66%

  1.80% A

Expenses net of all reductions

  1.63% A

  1.66%

  1.80% A

Net investment income (loss)

  1.91% A

  2.50%

  3.17% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 16

$ 5

$ 2

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the contingent deferred sales charge.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Convertible Securities

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009

2008

2007

2006

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 24.29

$ 21.30

$ 13.55

$ 28.71

$ 25.21

$ 22.14

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) D

  .39

  .81

  .96

  .76

  .59

  .49

Net realized and unrealized gain (loss)

  3.23

  3.02

  7.78

  (14.43)

  3.43

  3.09

Total from investment operations

  3.62

  3.83

  8.74

  (13.67)

  4.02

  3.58

Distributions from net investment income

  (.42)

  (.84)

  (.99)

  (.64)

  (.50)

  (.50)

Distributions from net realized gain

  -

  -

  -

  (.85)

  (.02)

  (.01)

Total distributions

  (.42)

  (.84)

  (.99)

  (1.49)

  (.52)

  (.51)

Net asset value, end of period

$ 27.49

$ 24.29

$ 21.30

$ 13.55

$ 28.71

$ 25.21

Total Return B,C

  15.04%

  18.37%

  67.65%

  (50.09)%

  16.02%

  16.38%

Ratios to Average Net Assets E,G

 

 

 

 

 

Expenses before reductions

  .57% A

  .59%

  .70%

  .78%

  .79%

  .83%

Expenses net of fee waivers, if any

  .57% A

  .59%

  .69%

  .78%

  .79%

  .83%

Expenses net of all reductions

  .57% A

  .59%

  .69%

  .78%

  .79%

  .83%

Net investment income (loss)

  2.96% A

  3.57%

  5.59%

  3.06%

  2.11%

  2.09%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (in millions)

$ 2,637

$ 2,287

$ 2,340

$ 1,439

$ 2,919

$ 2,083

Portfolio turnover rate F

  30% A

  28%

  31%

  39%

  24%

  35%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Institutional Class

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 G

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.27

$ 21.29

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) D

  .39

  .80

  .63

Net realized and unrealized gain (loss)

  3.22

  3.02

  8.54

Total from investment operations

  3.61

  3.82

  9.17

Distributions from net investment income

  (.43)

  (.84)

  (.67)

Net asset value, end of period

$ 27.45

$ 24.27

$ 21.29

Total Return B,C

  14.99%

  18.34%

  73.31%

Ratios to Average Net Assets E,H

 

 

 

Expenses before reductions

  .61% A

  .60%

  .73% A

Expenses net of fee waivers, if any

  .61% A

  .60%

  .73% A

Expenses net of all reductions

  .61% A

  .60%

  .73% A

Net investment income (loss)

  2.92% A

  3.56%

  4.19% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 30

$ 6

$ 3

Portfolio turnover rate F

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended May 31, 2011 (Unaudited)

(Amounts in thousands except ratios)

1. Organization.

Fidelity Convertible Securities Fund (the Fund) is a fund of Fidelity Financial Trust (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class C, Convertible Securities, and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments by existing shareholders. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class.

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

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:

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.

Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.

When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances. 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 each business day and are categorized as Level 1 in the hierarchy.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

Expenses. 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, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years.

Distributions are 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. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, market discount, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.

The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:

Gross unrealized appreciation

$ 478,459

Gross unrealized depreciation

(62,328)

Net unrealized appreciation (depreciation) on securities and other investments

$ 416,131

Tax cost

$ 2,294,715

Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be November 30, 2012.

Semiannual Report

3. Significant Accounting Policies - continued

New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $392,813 and $374,746, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .15% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of Convertible Securities as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .35% of the Fund's average net assets.

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 FMR,

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

6. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan Fees - continued

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%

$ 40

$ 3

Class T

.25%

.25%

15

-

Class B

.75%

.25%

7

5

Class C

.75%

.25%

52

32

 

 

 

$ 114

$ 40

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% to 1% for Class B, 1% for Class C, 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

$ 32

Class T

2

Class B*

1

Class C*

1

 

$ 36

* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of 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
Average
Net Assets*

Class A

$ 33

.21

Class T

7

.24

Class B

2

.30

Class C

12

.23

Convertible Securities

2,290

.18

Institutional Class

20

.22

 

$ 2,364

 

* Annualized

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $8 for the period.

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.0 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, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

8. Security Lending - continued

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. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and 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, and includes one hundred thirteen dollars from securities loaned to FCM. Total security lending income during the period amounted to $12.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $10 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

 

Six months ended
May 31,
2011

Year ended
November 30,
2010

From net investment income

 

 

Class A

$ 419

$ 362

Class T

72

84

Class B

14

26

Class C

99

87

Convertible Securities

40,483

86,745

Institutional Class

241

222

Total

$ 41,328

$ 87,526

Semiannual Report

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

 

Six months ended May 31,
2011

Year ended
November 30,
2010

Six months ended May 31,
2011

Year ended
November 30,
2010

Class A

 

 

 

 

Shares sold

1,187

1,087

$ 31,556

$ 24,711

Reinvestment of distributions

13

13

327

297

Shares redeemed

(269)

(592)

(7,082)

(13,289)

Net increase (decrease)

931

508

$ 24,801

$ 11,719

Class T

 

 

 

 

Shares sold

165

218

$ 4,400

$ 5,074

Reinvestment of distributions

3

4

70

81

Shares redeemed

(17)

(168)

(462)

(3,714)

Net increase (decrease)

151

54

$ 4,008

$ 1,441

Class B

 

 

 

 

Shares sold

16

44

$ 413

$ 1,007

Reinvestment of distributions

-

1

10

17

Shares redeemed

(8)

(27)

(206)

(604)

Net increase (decrease)

8

18

$ 217

$ 420

Class C

 

 

 

 

Shares sold

398

180

$ 10,561

$ 4,099

Reinvestment of distributions

3

3

74

72

Shares redeemed

(22)

(52)

(587)

(1,197)

Net increase (decrease)

379

131

$ 10,048

$ 2,974

Convertible Securities

 

 

 

 

Shares sold

15,097

18,970

$ 401,986

$ 430,425

Reinvestment of distributions

1,391

3,506

36,002

78,155

Shares redeemed

(14,696)

(38,186)

(390,510)

(860,169)

Net increase (decrease)

1,792

(15,710)

$ 47,478

$ (351,589)

Institutional Class

 

 

 

 

Shares sold

971

400

$ 25,898

$ 9,185

Reinvestment of distributions

6

6

147

133

Shares redeemed

(154)

(298)

(4,134)

(6,815)

Net increase (decrease)

823

108

$ 21,911

$ 2,503

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

12. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research
(U.K.) Inc.

Fidelity Management & Research
(Hong Kong) Limited

Fidelity Management & Research
(Japan) Inc.

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional
Operations Company, Inc.

Boston, MA

Fidelity Service Company, Inc.

Boston, MA

Custodian

Citibank, N.A.

New York, NY 

ACVS-USAN-0711
1.884069.102

fid119

(Fidelity Investment logo)(registered trademark)
Fidelity Advisor®
Convertible Securities
Fund - Institutional Class

Semiannual Report

May 31, 2011

Institutional Class is a class
of Fidelity® Convertible
Securities Fund

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

The Chairman's message to shareholders.

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.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.

Semiannual Report

Chairman's Message

(photo_of_James_C_Curvey)

Dear Shareholder:

Amid indications the U.S. economy had turned a corner, U.S. equities continued their generally upward trend through the end of May, overcoming bouts of short-term volatility following unrest in North Africa and the natural disaster in Japan. Still, questions remained about the longer-term outlook, most notably inflationary pressure and persistently high unemployment. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.

One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.

You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).

A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.

We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.

Sincerely,


(The acting chairman's signature appears here.)

James C. Curvey
Acting Chairman

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2010 to May 31, 2011).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

Semiannual Report

Shareholder Expense Example - continued

 

Annualized
Expense Ratio

Beginning
Account Value
December 1, 2010

Ending
Account Value
May 31, 2011

Expenses Paid
During Period*
December 1, 2010 to May 31, 2011

Class A

.85%

 

 

 

Actual

 

$ 1,000.00

$ 1,148.80

$ 4.55

Hypothetical A

 

$ 1,000.00

$ 1,020.69

$ 4.28

Class T

1.13%

 

 

 

Actual

 

$ 1,000.00

$ 1,146.90

$ 6.05

Hypothetical A

 

$ 1,000.00

$ 1,019.30

$ 5.69

Class B

1.70%

 

 

 

Actual

 

$ 1,000.00

$ 1,143.70

$ 9.09

Hypothetical A

 

$ 1,000.00

$ 1,016.45

$ 8.55

Class C

1.63%

 

 

 

Actual

 

$ 1,000.00

$ 1,144.30

$ 8.71

Hypothetical A

 

$ 1,000.00

$ 1,016.80

$ 8.20

Convertible Securities

.57%

 

 

 

Actual

 

$ 1,000.00

$ 1,150.40

$ 3.06

Hypothetical A

 

$ 1,000.00

$ 1,022.09

$ 2.87

Institutional Class

.61%

 

 

 

Actual

 

$ 1,000.00

$ 1,149.90

$ 3.27

Hypothetical A

 

$ 1,000.00

$ 1,021.89

$ 3.07

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Investments as of May 31, 2011

(excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

General Motors Co. 4.75%

6.2

3.0

Peabody Energy Corp. 4.75% 12/15/66

5.6

6.6

Wells Fargo & Co. 7.50%

4.8

5.1

El Paso Corp.

4.0

0.0

MGM Mirage, Inc. 4.25% 4/15/15

3.5

0.0

Intel Corp. 3.25% 8/1/39

2.6

3.0

Ford Motor Co. 4.25% 11/15/16

2.6

3.3

Alpha Natural Resources, Inc. 2.375% 4/15/15

2.5

1.8

Chesapeake Energy Corp. 2.5% 5/15/37

2.4

2.3

Hertz Global Holdings, Inc. 5.25% 6/1/14

2.1

2.0

 

36.3

Top Five Market Sectors as of May 31, 2011

 

% of fund's
net assets

% of fund's net assets
6 months ago

Energy

20.7

23.4

Information Technology

19.1

17.9

Consumer Discretionary

17.1

13.0

Industrials

11.9

13.1

Financials

11.6

13.3

Asset Allocation (% of fund's net assets)

As of May 31, 2011*

As of November 30, 2010**

fid84

Convertible
Securities 83.4%

 

fid84

Convertible
Securities 88.7%

 

fid87

Stocks 12.1%

 

fid87

Stocks 9.6%

 

fid90

Nonconvertible
Bonds 0.0%

 

fid90

Nonconvertible
Bonds 0.1%

 

fid93

Short-Term
Investments and
Net Other Assets 4.5%

 

fid93

Short-Term
Investments and
Net Other Assets 1.6%

 

* Foreign investments

5.0%

 

** Foreign investments

4.2%

 

fid135

Semiannual Report

Investments May 31, 2011 (Unaudited)

Showing Percentage of Net Assets

Convertible Bonds - 62.9%

 

Principal Amount (000s)

Value (000s)

CONSUMER DISCRETIONARY - 8.5%

Auto Components - 0.1%

BorgWarner, Inc. 3.5% 4/15/12

$ 910

$ 2,021

Automobiles - 2.6%

Ford Motor Co. 4.25% 11/15/16

40,000

71,684

Diversified Consumer Services - 1.1%

Ingersoll-Rand Global Holding Co. Ltd. 4.5% 4/15/12

5,490

15,346

Regis Corp. 5% 7/15/14

2,230

2,658

Stewart Enterprises, Inc. 3.375% 7/15/16 (g)

11,000

10,973

 

28,977

Hotels, Restaurants & Leisure - 3.5%

MGM Mirage, Inc. 4.25% 4/15/15

82,300

95,365

Media - 1.1%

Virgin Media, Inc. 6.5% 11/15/16

8,000

15,330

XM Satellite Radio, Inc. 7% 12/1/14 (g)

10,000

15,400

 

30,730

Specialty Retail - 0.1%

Asbury Automotive Group, Inc. 3% 9/15/12 (g)

3,000

2,970

TOTAL CONSUMER DISCRETIONARY

231,747

CONSUMER STAPLES - 1.5%

Beverages - 0.6%

Molson Coors Brewing Co. 2.5% 7/30/13

14,000

15,593

Food Products - 0.9%

Smithfield Foods, Inc. 4% 6/30/13

22,250

25,890

TOTAL CONSUMER STAPLES

41,483

ENERGY - 15.6%

Energy Equipment & Services - 1.6%

Exterran Holdings, Inc. 4.25% 6/15/14

10,000

11,675

Global Industries Ltd. 2.75% 8/1/27 (g)

10,000

7,663

Hornbeck Offshore Services, Inc. 1.625% 11/15/26 (d)(g)

5,000

4,855

Oil States International, Inc. 2.375% 7/1/25 (g)

4,500

11,219

SESI LLC 1.5% 12/15/26 (d)(g)

7,000

7,219

 

42,631

Oil, Gas & Consumable Fuels - 14.0%

Alpha Natural Resources, Inc. 2.375% 4/15/15

52,000

67,501

Chesapeake Energy Corp. 2.5% 5/15/37

60,250

66,787

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

ENERGY - continued

Oil, Gas & Consumable Fuels - continued

International Coal Group, Inc. 4% 4/1/17

$ 2,160

$ 5,584

Peabody Energy Corp. 4.75% 12/15/66

122,250

154,035

Pioneer Natural Resources Co. 2.875% 1/15/38

20,000

31,700

Quicksilver Resources, Inc. 1.875% 11/1/24 (g)

14,500

15,244

Western Refining, Inc. 5.75% 6/15/14

24,185

43,088

 

383,939

TOTAL ENERGY

426,570

FINANCIALS - 0.7%

Diversified Financial Services - 0.7%

The NASDAQ Stock Market, Inc. 2.5% 8/15/13

20,000

19,877

HEALTH CARE - 4.0%

Health Care Equipment & Supplies - 2.4%

Alere, Inc. 3% 5/15/16

31,000

35,960

Kinetic Concepts, Inc. 3.25% 4/15/15 (g)

15,000

19,740

SonoSite, Inc. 3.75% 7/15/14

7,000

8,105

Volcano Corp. 2.875% 9/1/15

1,890

2,398

 

66,203

Health Care Providers & Services - 0.2%

Omnicare, Inc.:

3.25% 12/15/35

2,086

2,003

3.75% 12/15/25

3,610

4,807

 

6,810

Life Sciences Tools & Services - 0.2%

Charles River Laboratories International, Inc. 2.25% 6/15/13 (g)

4,000

4,160

Pharmaceuticals - 1.2%

Akorn, Inc. 3.5% 6/1/16 (g)

5,000

5,294

Biovail Corp. 5.375% 8/1/14 (g)

5,000

18,445

Nektar Therapeutics 3.25% 9/28/12

9,000

8,904

 

32,643

TOTAL HEALTH CARE

109,816

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

INDUSTRIALS - 11.9%

Aerospace & Defense - 0.7%

GenCorp, Inc. 4.0625% 12/31/39

$ 7,830

$ 7,967

Textron, Inc. 4.5% 5/1/13

6,440

11,701

 

19,668

Airlines - 3.2%

AMR Corp. 6.25% 10/15/14

17,990

18,416

Continental Airlines, Inc. 4.5% 1/15/15

9,280

13,734

UAL Corp.:

4.5% 6/30/21 (g)

10,500

10,512

4.5% 6/30/21

5,000

5,006

6% 10/15/29

3,600

10,575

US Airways Group, Inc.:

7% 9/30/20 (g)

4,810

4,804

7.25% 5/15/14

11,200

24,349

 

87,396

Commercial Services & Supplies - 1.2%

Metalico, Inc. 7% 4/30/28

34,000

31,620

Construction & Engineering - 0.4%

MasTec, Inc. 4.25% 12/15/14

8,000

12,345

Electrical Equipment - 0.7%

General Cable Corp. 4.5% 11/15/29 (d)

14,800

20,190

Machinery - 2.6%

Greenbrier Companies, Inc.:

2.375% 5/15/26 (g)

5,500

5,376

2.375% 5/15/26

8,000

7,820

3.5% 4/1/18 (g)

2,860

2,948

Terex Corp. 4% 6/1/15

19,590

38,559

Trinity Industries, Inc. 3.875% 6/1/36

15,000

15,900

 

70,603

Marine - 0.9%

Excel Maritime Carriers Ltd. 1.875% 10/15/27 (g)

34,000

23,460

Road & Rail - 2.1%

Hertz Global Holdings, Inc. 5.25% 6/1/14

28,000

58,052

Trading Companies & Distributors - 0.1%

United Rentals, Inc. 4% 11/15/15

960

2,466

TOTAL INDUSTRIALS

325,800

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

INFORMATION TECHNOLOGY - 17.2%

Communications Equipment - 1.2%

Finisar Corp. 5% 10/15/29 (g)

$ 2,500

$ 6,216

JDS Uniphase Corp. 1% 5/15/26 (g)

14,000

14,989

L-3 Communications Corp. 3% 8/1/35

3,000

3,038

Lucent Technologies, Inc. 2.875% 6/15/25

10,000

9,875

 

34,118

Computers & Peripherals - 1.8%

EMC Corp.:

1.75% 12/1/13 (g)

17,000

30,738

1.75% 12/1/13

10,000

18,081

 

48,819

Electronic Equipment & Components - 1.6%

Anixter International, Inc. 1% 2/15/13 (g)

4,540

5,527

Itron, Inc. 2.5% 8/1/26

5,000

5,025

Newport Corp. 2.5% 2/15/12 (g)

3,750

3,888

SYNNEX Corp. 4% 5/15/18

10,000

12,818

Vishay Intertechnology, Inc.:

2.25% 11/15/40 (g)

7,000

8,800

2.25% 5/15/41 (g)

7,000

6,871

 

42,929

Internet Software & Services - 1.4%

Equinix, Inc.:

3% 10/15/14

10,000

11,335

4.75% 6/15/16

10,000

14,224

VeriSign, Inc. 3.25% 8/15/37

10,000

11,909

 

37,468

IT Services - 1.8%

Alliance Data Systems Corp. 4.75% 5/15/14

10,200

21,152

CACI International, Inc. 2.125% 5/1/14

6,000

7,680

DST Systems, Inc. 4.125% 8/15/23

8,267

9,631

Telvent GIT SA 5.5% 4/15/15 (g)

9,000

10,992

 

49,455

Semiconductors & Semiconductor Equipment - 8.3%

Advanced Micro Devices, Inc. 6% 5/1/15

11,916

12,371

Amkor Technology, Inc. 6% 4/15/14

13,890

31,564

Evergreen Solar, Inc. 4% 7/15/20

2,000

723

Intel Corp. 3.25% 8/1/39

58,000

72,126

Micron Technology, Inc. 4.25% 10/15/13

6,130

12,934

Novellus Systems, Inc. 2.625% 5/15/41 (g)

20,000

21,622

Convertible Bonds - continued

 

Principal Amount (000s)

Value (000s)

INFORMATION TECHNOLOGY - continued

Semiconductors & Semiconductor Equipment - continued

ON Semiconductor Corp.:

1.875% 12/15/25 (g)

$ 3,750

$ 6,162

2.625% 12/15/26

35,330

44,869

PMC-Sierra, Inc. 2.25% 10/15/25

10,000

11,025

SunPower Corp. 4.75% 4/15/14

2,020

2,194

Xilinx, Inc. 3.125% 3/15/37

10,000

12,478

 

228,068

Software - 1.1%

Nuance Communications, Inc. 2.75% 8/15/27

23,085

30,559

TOTAL INFORMATION TECHNOLOGY

471,416

MATERIALS - 1.1%

Metals & Mining - 1.1%

Alcoa, Inc. 5.25% 3/15/14

5,000

13,431

ArcelorMittal SA 5% 5/15/14

2,170

2,974

Goldcorp, Inc. 2% 8/1/14

5,000

6,332

Newmont Mining Corp. 1.625% 7/15/17

5,000

6,935

 

29,672

TELECOMMUNICATION SERVICES - 2.4%

Diversified Telecommunication Services - 1.2%

Clearwire Communications LLC/Clearwire Finance, Inc. 8.25% 12/1/40 (g)

9,990

10,052

Level 3 Communications, Inc. 7% 3/15/15

10,000

15,613

Time Warner Telecom, Inc. 2.375% 4/1/26

6,000

7,613

 

33,278

Wireless Telecommunication Services - 1.2%

Leap Wireless International, Inc. 4.5% 7/15/14

33,000

32,302

TOTAL TELECOMMUNICATION SERVICES

65,580

TOTAL CONVERTIBLE BONDS

(Cost $1,430,006)

1,721,961

Common Stocks - 12.1%

Shares

Value (000s)

CONSUMER DISCRETIONARY - 0.8%

Auto Components - 0.5%

Johnson Controls, Inc.

344,134

$ 13,628

Diversified Consumer Services - 0.3%

Service Corp. International

643,000

7,382

Hotels, Restaurants & Leisure - 0.0%

Ambassadors International, Inc. (a)(e)(f)

230,377

34

Media - 0.0%

HMH Holdings, Inc. (a)(h)

52,880

251

HMH Holdings, Inc. warrants 3/9/17 (a)(h)

164,823

82

 

333

TOTAL CONSUMER DISCRETIONARY

21,377

CONSUMER STAPLES - 0.3%

Food Products - 0.3%

Bunge Ltd.

97,596

7,266

ENERGY - 4.9%

Oil, Gas & Consumable Fuels - 4.9%

Chesapeake Energy Corp.

513,600

16,096

El Paso Corp.

5,191,964

109,291

McMoRan Exploration Co. (a)(e)

450,000

8,289

 

133,676

FINANCIALS - 1.8%

Commercial Banks - 1.8%

Huntington Bancshares, Inc.

5,620,500

37,095

KeyCorp

1,608,600

13,625

 

50,720

HEALTH CARE - 0.7%

Pharmaceuticals - 0.7%

Valeant Pharmaceuticals International, Inc. (Canada)

395,333

20,722

INFORMATION TECHNOLOGY - 1.9%

Communications Equipment - 0.3%

Finisar Corp. (a)

374,120

8,986

Electronic Equipment & Components - 0.5%

Viasystems Group, Inc. (a)

549,643

12,471

Common Stocks - continued

Shares

Value (000s)

INFORMATION TECHNOLOGY - continued

Semiconductors & Semiconductor Equipment - 1.1%

Amkor Technology, Inc. (a)(e)

843,200

$ 5,388

ON Semiconductor Corp. (a)

2,169,500

24,342

 

29,730

TOTAL INFORMATION TECHNOLOGY

51,187

MATERIALS - 1.7%

Chemicals - 1.7%

Celanese Corp. Class A

896,330

46,690

TOTAL COMMON STOCKS

(Cost $231,423)

331,638

Convertible Preferred Stocks - 20.5%

 

 

 

 

CONSUMER DISCRETIONARY - 7.8%

Auto Components - 0.2%

The Goodyear Tire & Rubber Co. 5.875%

100,000

5,858

Automobiles - 6.2%

General Motors Co. 4.75%

3,361,600

168,414

Household Durables - 0.1%

Hovnanian Enterprises, Inc./K. Hovanian Enterprises, Inc. 7.25%

125,000

2,085

Leisure Equipment & Products - 0.4%

Callaway Golf Co. 7.50%

100,000

11,438

Media - 0.9%

Interpublic Group of Companies, Inc. 5.25%

10,000

10,805

LodgeNet Entertainment Corp. 10.00% (g)

11,118

13,665

 

24,470

TOTAL CONSUMER DISCRETIONARY

212,265

CONSUMER STAPLES - 1.8%

Food Products - 1.8%

Archer Daniels Midland Co. 6.25%

600,000

24,492

Bunge Ltd. 4.875%

237,000

24,855

 

49,347

Convertible Preferred Stocks - continued

Shares

Value (000s)

ENERGY - 0.2%

Oil, Gas & Consumable Fuels - 0.2%

Apache Corp. 6.00%

94,200

$ 6,267

FINANCIALS - 9.1%

Commercial Banks - 4.9%

Huntington Bancshares, Inc. 8.50%

2,100

2,415

Wells Fargo & Co. 7.50%

120,550

130,797

 

133,212

Diversified Financial Services - 3.8%

Bank of America Corp. Series L, 7.25%

47,085

49,439

Citigroup, Inc. 7.50%

444,900

53,610

 

103,049

Insurance - 0.2%

Assured Guaranty Ltd. 8.50%

100,000

6,988

Real Estate Investment Trusts - 0.2%

Health Care REIT, Inc. 6.50%

98,800

5,212

TOTAL FINANCIALS

248,461

HEALTH CARE - 1.5%

Health Care Providers & Services - 1.5%

Tenet Healthcare Corp. 7.00%

40,000

41,664

UTILITIES - 0.1%

Electric Utilities - 0.1%

PPL Corp. 8.75%

38,300

2,097

TOTAL CONVERTIBLE PREFERRED STOCKS

(Cost $541,867)

560,101

Money Market Funds - 3.5%

Shares

Value (000s)

Fidelity Cash Central Fund, 0.14% (b)

89,167,402

$ 89,167

Fidelity Securities Lending Cash Central Fund, 0.14% (b)(c)

7,978,750

7,979

TOTAL MONEY MARKET FUNDS

(Cost $97,146)

97,146

TOTAL INVESTMENT PORTFOLIO - 99.0%

(Cost $2,300,442)

2,710,846

NET OTHER ASSETS (LIABILITIES) - 1.0%

28,042

NET ASSETS - 100%

$ 2,738,888

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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.

(d) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end.

(e) Security or a portion of the security is on loan at period end.

(f) Affiliated company

(g) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $309,804,000 or 11.3% of net assets.

(h) 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 $333,000 or 0.0% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost (000s)

HMH Holdings, Inc.

8/1/08 - 12/31/09

$ 6,902

HMH Holdings, Inc. warrants 3/9/17

3/9/10

$ 48

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

$ 95

Fidelity Securities Lending Cash Central Fund

12

Total

$ 107

Other Affiliated Issuers

An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:

Affiliate
(Amounts in thousands)

Value, beginning of period

Purchases

Sales Proceeds

Dividend Income

Value,
end of
period

Ambassadors International, Inc.

$ 389

$ -

$ -

$ -

$ 34

Total

$ 389

$ -

$ -

$ -

$ 34

Other Information

The following is a summary of the inputs used, as of May 31, 2011, 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 in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description
(Amounts in thousands)

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 233,642

$ 189,458

$ 44,102

$ 82

Consumer Staples

56,613

31,758

24,855

-

Energy

139,943

139,943

-

-

Financials

299,181

286,981

12,200

-

Health Care

62,386

20,722

41,664

-

Information Technology

51,187

51,187

-

-

Materials

46,690

46,690

-

-

Utilities

2,097

2,097

-

-

Corporate Bonds

1,721,961

-

1,721,961

-

Money Market Funds

97,146

97,146

-

-

Total Investments in Securities:

$ 2,710,846

$ 865,982

$ 1,844,782

$ 82

The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:

(Amounts in thousands)

 

Investments in Securities:

Beginning Balance

$ 1,876

Total Realized Gain (Loss)

-

Total Unrealized Gain (Loss)

598

Cost of Purchases

-

Proceeds of Sales

(2,392)

Amortization/Accretion

-

Transfers in to Level 3

-

Transfers out of Level 3

-

Ending Balance

$ 82

The change in unrealized gain (loss) for the period attributable to Level 3 securities held at May 31, 2011

$ -

The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.

Other Information

The composition of credit quality ratings as a percentage of net assets is as follows (Unaudited):

AAA,AA,A

4.4%

BBB

3.5%

BB

21.4%

B

10.8%

CCC,CC,C

9.9%

Not Rated

12.9%

Equities

32.6%

Short-Term Investments and Net Other Assets

4.5%

 

100.0%

We have used ratings from Moody's Investors Service, Inc. Where Moody's ratings are not available, we have used S&P ratings. All ratings are as of the report date and do not reflect subsequent changes.

Income Tax Information

At November 30, 2010, the Fund had a capital loss carryforward of approximately $298,128,000 all of which will expire in fiscal 2017. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $7,730) - See accompanying schedule:

Unaffiliated issuers (cost $2,198,656)

$ 2,613,666

 

Fidelity Central Funds (cost $97,146)

97,146

 

Other affiliated issuers (cost $4,640)

34

 

Total Investments (cost $2,300,442)

 

$ 2,710,846

Receivable for investments sold

24,009

Receivable for fund shares sold

2,463

Dividends receivable

5,378

Interest receivable

13,034

Distributions receivable from Fidelity Central Funds

16

Prepaid expenses

1

Other receivables

5

Total assets

2,755,752

 

 

 

Liabilities

Payable for investments purchased

$ 5,000

Payable for fund shares redeemed

2,593

Accrued management fee

756

Distribution and service plan fees payable

26

Other affiliated payables

473

Other payables and accrued expenses

37

Collateral on securities loaned, at value

7,979

Total liabilities

16,864

 

 

 

Net Assets

$ 2,738,888

Net Assets consist of:

 

Paid in capital

$ 2,506,992

Undistributed net investment income

23,587

Accumulated undistributed net realized gain (loss) on investments

(202,095)

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

410,404

Net Assets

$ 2,738,888

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Calculation of Maximum Offering Price

Class A:
Net Asset Value and redemption price per share ($46,820.4 ÷ 1,708.85 shares)

$ 27.40

 

 

 

Maximum offering price per share (100/94.25 of $27.40)

$ 29.07

Class T:
Net Asset Value and redemption price per share ($8,116.6 ÷ 296.22 shares)

$ 27.40

 

 

 

Maximum offering price per share (100/96.50 of $27.40)

$ 28.39

Class B:
Net Asset Value and offering price per share ($1,527.7 ÷ 55.87 shares)A

$ 27.34

 

 

 

Class C:
Net Asset Value and offering price per share ($16,082.4 ÷ 589.42 shares)A

$ 27.29

 

 

 

Convertible Securities:
Net Asset Value, offering price and redemption price per share ($2,636,789.0 ÷ 95,933.58 shares)

$ 27.49

 

 

 

Institutional Class:
Net Asset Value, offering price and redemption price per share ($29,551.9 ÷ 1,076.42 shares)

$ 27.45

A Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

 Amounts in thousands

Six months ended May 31, 2011 (Unaudited)

 

  

  

Investment Income

  

  

Dividends

 

$ 18,010

Interest

 

28,336

Income from Fidelity Central Funds

 

107

Total income

 

46,453

 

 

 

Expenses

Management fee
Basic fee

$ 6,001

Performance adjustment

(1,397)

Transfer agent fees

2,364

Distribution and service plan fees

114

Accounting and security lending fees

392

Custodian fees and expenses

17

Independent trustees' compensation

7

Registration fees

118

Audit

42

Legal

9

Miscellaneous

16

Total expenses before reductions

7,683

Expense reductions

(11)

7,672

Net investment income (loss)

38,781

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

 

99,576

Change in net unrealized appreciation (depreciation) on investment securities

212,113

Net gain (loss)

311,689

Net increase (decrease) in net assets resulting from operations

$ 350,470

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Changes in Net Assets

 Amounts in thousands

Six months ended May 31, 2011
(Unaudited)

Year ended
November 30, 2010

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 38,781

$ 84,135

Net realized gain (loss)

99,576

77,314

Change in net unrealized appreciation (depreciation)

212,113

227,214

Net increase (decrease) in net assets resulting
from operations

350,470

388,663

Distributions to shareholders from net investment income

(41,328)

(87,526)

Share transactions - net increase (decrease)

108,463

(332,532)

Total increase (decrease) in net assets

417,605

(31,395)

 

 

 

Net Assets

Beginning of period

2,321,283

2,352,678

End of period (including undistributed net investment income of $23,587 and undistributed net investment income of $26,134, respectively)

$ 2,738,888

$ 2,321,283

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class A

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.22

$ 21.25

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .35

  .75

  .58

Net realized and unrealized gain (loss)

  3.23

  3.01

  8.53

Total from investment operations

  3.58

  3.76

  9.11

Distributions from net investment income

  (.40)

  (.79)

  (.65)

Net asset value, end of period

$ 27.40

$ 24.22

$ 21.25

Total Return B,C,D

  14.88%

  18.05%

  72.83%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  .85% A

  .87%

  1.04% A

Expenses net of fee waivers, if any

  .85% A

  .87%

  1.04% A

Expenses net of all reductions

  .85% A

  .87%

  1.04% A

Net investment income (loss)

  2.68% A

  3.29%

  3.70% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 47

$ 19

$ 6

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the sales charges.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class T

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.23

$ 21.25

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .32

  .69

  .57

Net realized and unrealized gain (loss)

  3.22

  3.01

  8.52

Total from investment operations

  3.54

  3.70

  9.09

Distributions from net investment income

  (.37)

  (.72)

  (.63)

Net asset value, end of period

$ 27.40

$ 24.23

$ 21.25

Total Return B,C,D

  14.69%

  17.74%

  72.60%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  1.13% A

  1.13%

  1.25% A

Expenses net of fee waivers, if any

  1.13% A

  1.13%

  1.25% A

Expenses net of all reductions

  1.13% A

  1.13%

  1.25% A

Net investment income (loss)

  2.40% A

  3.03%

  3.83% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 8

$ 4

$ 2

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the sales charges.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class B

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.17

$ 21.22

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .24

  .56

  .50

Net realized and unrealized gain (loss)

  3.22

  3.01

  8.51

Total from investment operations

  3.46

  3.57

  9.01

Distributions from net investment income

  (.29)

  (.62)

  (.58)

Net asset value, end of period

$ 27.34

$ 24.17

$ 21.22

Total Return B,C,D

  14.37%

  17.08%

  71.85%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  1.70% A

  1.69%

  1.78% A

Expenses net of fee waivers, if any

  1.70% A

  1.69%

  1.78% A

Expenses net of all reductions

  1.70% A

  1.69%

  1.78% A

Net investment income (loss)

  1.84% A

  2.47%

  3.41% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 2

$ 1

$ 1

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the contingent deferred sales charge.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class C

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 H

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.14

$ 21.20

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) E

  .25

  .56

  .47

Net realized and unrealized gain (loss)

  3.21

  3.01

  8.53

Total from investment operations

  3.46

  3.57

  9.00

Distributions from net investment income

  (.31)

  (.63)

  (.59)

Net asset value, end of period

$ 27.29

$ 24.14

$ 21.20

Total Return B,C,D

  14.43%

  17.13%

  71.81%

Ratios to Average Net Assets F,I

 

 

 

Expenses before reductions

  1.63% A

  1.66%

  1.80% A

Expenses net of fee waivers, if any

  1.63% A

  1.66%

  1.80% A

Expenses net of all reductions

  1.63% A

  1.66%

  1.80% A

Net investment income (loss)

  1.91% A

  2.50%

  3.17% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 16

$ 5

$ 2

Portfolio turnover rate G

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Total returns do not include the effect of the contingent deferred sales charge.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of 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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Convertible Securities

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009

2008

2007

2006

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 24.29

$ 21.30

$ 13.55

$ 28.71

$ 25.21

$ 22.14

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) D

  .39

  .81

  .96

  .76

  .59

  .49

Net realized and unrealized gain (loss)

  3.23

  3.02

  7.78

  (14.43)

  3.43

  3.09

Total from investment operations

  3.62

  3.83

  8.74

  (13.67)

  4.02

  3.58

Distributions from net investment income

  (.42)

  (.84)

  (.99)

  (.64)

  (.50)

  (.50)

Distributions from net realized gain

  -

  -

  -

  (.85)

  (.02)

  (.01)

Total distributions

  (.42)

  (.84)

  (.99)

  (1.49)

  (.52)

  (.51)

Net asset value, end of period

$ 27.49

$ 24.29

$ 21.30

$ 13.55

$ 28.71

$ 25.21

Total Return B,C

  15.04%

  18.37%

  67.65%

  (50.09)%

  16.02%

  16.38%

Ratios to Average Net Assets E,G

 

 

 

 

 

Expenses before reductions

  .57% A

  .59%

  .70%

  .78%

  .79%

  .83%

Expenses net of fee waivers, if any

  .57% A

  .59%

  .69%

  .78%

  .79%

  .83%

Expenses net of all reductions

  .57% A

  .59%

  .69%

  .78%

  .79%

  .83%

Net investment income (loss)

  2.96% A

  3.57%

  5.59%

  3.06%

  2.11%

  2.09%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (in millions)

$ 2,637

$ 2,287

$ 2,340

$ 1,439

$ 2,919

$ 2,083

Portfolio turnover rate F

  30% A

  28%

  31%

  39%

  24%

  35%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Institutional Class

 

Six months ended May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009 G

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 24.27

$ 21.29

$ 12.79

Income from Investment Operations

 

 

 

Net investment income (loss) D

  .39

  .80

  .63

Net realized and unrealized gain (loss)

  3.22

  3.02

  8.54

Total from investment operations

  3.61

  3.82

  9.17

Distributions from net investment income

  (.43)

  (.84)

  (.67)

Net asset value, end of period

$ 27.45

$ 24.27

$ 21.29

Total Return B,C

  14.99%

  18.34%

  73.31%

Ratios to Average Net Assets E,H

 

 

 

Expenses before reductions

  .61% A

  .60%

  .73% A

Expenses net of fee waivers, if any

  .61% A

  .60%

  .73% A

Expenses net of all reductions

  .61% A

  .60%

  .73% A

Net investment income (loss)

  2.92% A

  3.56%

  4.19% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 30

$ 6

$ 3

Portfolio turnover rate F

  30% A

  28%

  31%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G For the period February 19, 2009 (commencement of sale of shares) to November 30, 2009.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended May 31, 2011 (Unaudited)

(Amounts in thousands except ratios)

1. Organization.

Fidelity Convertible Securities Fund (the Fund) is a fund of Fidelity Financial Trust (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Class A, Class T, Class C, Convertible Securities, and Institutional Class shares, each of which, along with Class B shares, has equal rights as to assets and voting privileges. Effective after the close of business on September 1, 2010, Class B shares were closed to new accounts and additional purchases, except for exchanges and reinvestments by existing shareholders. Each class has exclusive voting rights with respect to matters that affect that class. Class B shares will automatically convert to Class A shares after a holding period of seven years from the initial date of purchase. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class.

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

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:

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.

Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.

When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances. 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 each business day and are categorized as Level 1 in the hierarchy.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

Expenses. 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, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years.

Distributions are 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. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to the short-term gain distributions from the Fidelity Central Funds, market discount, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.

The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:

Gross unrealized appreciation

$ 478,459

Gross unrealized depreciation

(62,328)

Net unrealized appreciation (depreciation) on securities and other investments

$ 416,131

Tax cost

$ 2,294,715

Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be November 30, 2012.

Semiannual Report

3. Significant Accounting Policies - continued

New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $392,813 and $374,746, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .15% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of Convertible Securities as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .35% of the Fund's average net assets.

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 FMR,

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

6. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan Fees - continued

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%

$ 40

$ 3

Class T

.25%

.25%

15

-

Class B

.75%

.25%

7

5

Class C

.75%

.25%

52

32

 

 

 

$ 114

$ 40

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% to 1% for Class B, 1% for Class C, 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

$ 32

Class T

2

Class B*

1

Class C*

1

 

$ 36

* When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of 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
Average
Net Assets*

Class A

$ 33

.21

Class T

7

.24

Class B

2

.30

Class C

12

.23

Convertible Securities

2,290

.18

Institutional Class

20

.22

 

$ 2,364

 

* Annualized

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $8 for the period.

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.0 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, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent may loan securities to certain qualified

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

8. Security Lending - continued

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. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and 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, and includes one hundred thirteen dollars from securities loaned to FCM. Total security lending income during the period amounted to $12.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $10 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

 

Six months ended
May 31,
2011

Year ended
November 30,
2010

From net investment income

 

 

Class A

$ 419

$ 362

Class T

72

84

Class B

14

26

Class C

99

87

Convertible Securities

40,483

86,745

Institutional Class

241

222

Total

$ 41,328

$ 87,526

Semiannual Report

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

 

Six months ended May 31,
2011

Year ended
November 30,
2010

Six months ended May 31,
2011

Year ended
November 30,
2010

Class A

 

 

 

 

Shares sold

1,187

1,087

$ 31,556

$ 24,711

Reinvestment of distributions

13

13

327

297

Shares redeemed

(269)

(592)

(7,082)

(13,289)

Net increase (decrease)

931

508

$ 24,801

$ 11,719

Class T

 

 

 

 

Shares sold

165

218

$ 4,400

$ 5,074

Reinvestment of distributions

3

4

70

81

Shares redeemed

(17)

(168)

(462)

(3,714)

Net increase (decrease)

151

54

$ 4,008

$ 1,441

Class B

 

 

 

 

Shares sold

16

44

$ 413

$ 1,007

Reinvestment of distributions

-

1

10

17

Shares redeemed

(8)

(27)

(206)

(604)

Net increase (decrease)

8

18

$ 217

$ 420

Class C

 

 

 

 

Shares sold

398

180

$ 10,561

$ 4,099

Reinvestment of distributions

3

3

74

72

Shares redeemed

(22)

(52)

(587)

(1,197)

Net increase (decrease)

379

131

$ 10,048

$ 2,974

Convertible Securities

 

 

 

 

Shares sold

15,097

18,970

$ 401,986

$ 430,425

Reinvestment of distributions

1,391

3,506

36,002

78,155

Shares redeemed

(14,696)

(38,186)

(390,510)

(860,169)

Net increase (decrease)

1,792

(15,710)

$ 47,478

$ (351,589)

Institutional Class

 

 

 

 

Shares sold

971

400

$ 25,898

$ 9,185

Reinvestment of distributions

6

6

147

133

Shares redeemed

(154)

(298)

(4,134)

(6,815)

Net increase (decrease)

823

108

$ 21,911

$ 2,503

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

12. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research
(U.K.) Inc.

Fidelity Management & Research
(Hong Kong) Limited

Fidelity Management & Research
(Japan) Inc.

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional
Operations Company, Inc.

Boston, MA

Fidelity Service Company, Inc.

Boston, MA

Custodian

Citibank, N.A.

New York, NY 

ACVSI-USAN-0711
1.884061.102

fid119

Fidelity®
Equity-Income II
Fund

Semiannual Report

May 31, 2011

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

The Chairman's message to shareholders.

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.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.

Semiannual Report

Chairman's Message

(photo_of_James_C_Curvey)

Dear Shareholder:

Amid indications the U.S. economy had turned a corner, U.S. equities continued their generally upward trend through the end of May, overcoming bouts of short-term volatility following unrest in North Africa and the natural disaster in Japan. Still, questions remained about the longer-term outlook, most notably inflationary pressure and persistently high unemployment. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.

One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.

You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).

A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.

We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.

Sincerely,


(The acting chairman's signature appears here.)

James C. Curvey
Acting Chairman

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2010 to May 31, 2011).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

Semiannual Report

Shareholder Expense Example - continued

 

Annualized
Expense Ratio

Beginning
Account Value
December 1, 2010

Ending
Account Value
May 31, 2011

Expenses Paid
During Period*
December 1, 2010 to
May 31, 2011

Equity-Income II

.67%

 

 

 

Actual

 

$ 1,000.00

$ 1,171.50

$ 3.63

HypotheticalA

 

$ 1,000.00

$ 1,021.59

$ 3.38

Class K

.54%

 

 

 

Actual

 

$ 1,000.00

$ 1,171.60

$ 2.92

HypotheticalA

 

$ 1,000.00

$ 1,022.24

$ 2.72

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of May 31, 2011

 

% of fund's
net assets

% of fund's net assets
6 months ago

JPMorgan Chase & Co.

3.4

3.2

Wells Fargo & Co.

2.9

3.1

AT&T, Inc.

2.9

2.3

Chevron Corp.

2.6

2.5

Pfizer, Inc.

2.5

2.1

Royal Dutch Shell PLC Class A sponsored ADR

2.3

1.6

PNC Financial Services Group, Inc.

2.1

2.0

Bank of America Corp.

2.0

2.1

Exxon Mobil Corp.

2.0

2.2

General Electric Co.

1.8

1.6

 

24.5

Top Five Market Sectors as of May 31, 2011

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

27.4

26.3

Energy

14.3

14.4

Consumer Discretionary

12.9

14.8

Industrials

10.9

11.2

Health Care

9.7

8.5

Asset Allocation (% of fund's net assets)

As of May 31, 2011 *

As of November 30, 2010 **

fid84

Stocks 96.5%

 

fid84

Stocks 96.6%

 

fid146

Convertible
Securities 2.5%

 

fid146

Convertible
Securities 2.1%

 

fid93

Short-Term
Investments and
Net Other Assets 1.0%

 

fid93

Short-Term
Investments and
Net Other Assets 1.3%

 

* Foreign investments

14.5%

 

** Foreign investments

11.6%

 

fid151

Semiannual Report

Investments May 31, 2011 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 96.3%

Shares

Value (000s)

CONSUMER DISCRETIONARY - 11.4%

Auto Components - 0.6%

Denso Corp.

90,300

$ 3,247

Denso Corp. sponsored ADR

240,700

4,289

Johnson Controls, Inc.

634,064

25,109

 

32,645

Automobiles - 1.2%

Ford Motor Co. (a)

867,528

12,944

Harley-Davidson, Inc.

1,137,758

42,279

Thor Industries, Inc.

35,760

1,155

Winnebago Industries, Inc. (a)

544,000

6,229

 

62,607

Distributors - 0.0%

Indiabulls Wholesale Services Ltd.

319,812

74

Diversified Consumer Services - 0.5%

H&R Block, Inc.

1,576,500

25,539

Household Durables - 3.5%

KB Home

276,700

3,398

Lennar Corp. Class A

562,700

10,680

Newell Rubbermaid, Inc.

327,640

5,835

PulteGroup, Inc. (a)

2,500,300

21,103

Stanley Black & Decker, Inc.

547,986

40,485

Toll Brothers, Inc. (a)

4,402,250

95,749

Whirlpool Corp.

196,088

16,432

 

193,682

Media - 2.4%

Belo Corp. Series A

888,073

7,051

Comcast Corp.:

Class A

961,900

24,278

Class A (special) (non-vtg.)

809,100

19,054

The Walt Disney Co.

1,210,514

50,394

Time Warner, Inc.

855,117

31,152

 

131,929

Multiline Retail - 0.7%

Macy's, Inc.

854,319

24,673

Target Corp.

242,156

11,994

Tuesday Morning Corp. (a)

468,400

2,314

 

38,981

Specialty Retail - 1.7%

Home Depot, Inc.

1,812,200

65,747

Common Stocks - continued

Shares

Value (000s)

CONSUMER DISCRETIONARY - continued

Specialty Retail - continued

Lowe's Companies, Inc.

907,400

$ 21,905

OfficeMax, Inc. (a)

639,100

5,343

 

92,995

Textiles, Apparel & Luxury Goods - 0.8%

adidas AG

254,600

19,190

Phillips-Van Heusen Corp.

267,754

17,664

Warnaco Group, Inc. (a)

152,059

8,386

 

45,240

TOTAL CONSUMER DISCRETIONARY

623,692

CONSUMER STAPLES - 7.2%

Beverages - 1.8%

Carlsberg A/S Series B

129,700

14,992

PepsiCo, Inc.

777,471

55,294

The Coca-Cola Co.

426,190

28,474

 

98,760

Food & Staples Retailing - 0.8%

CVS Caremark Corp.

176,242

6,819

Sysco Corp.

382,796

12,330

Walgreen Co.

536,827

23,422

 

42,571

Food Products - 0.5%

Kraft Foods, Inc. Class A

814,674

28,489

Household Products - 2.0%

Kimberly-Clark Corp.

242,821

16,585

Procter & Gamble Co.

1,373,605

92,032

 

108,617

Personal Products - 0.5%

Avon Products, Inc.

1,000,148

29,714

Tobacco - 1.6%

Imperial Tobacco Group PLC

334,302

11,966

Japan Tobacco, Inc.

3,519

13,619

Philip Morris International, Inc.

835,459

59,944

 

85,529

TOTAL CONSUMER STAPLES

393,680

Common Stocks - continued

Shares

Value (000s)

ENERGY - 14.2%

Energy Equipment & Services - 2.5%

Baker Hughes, Inc.

791,363

$ 58,505

Halliburton Co.

598,403

30,010

Noble Corp.

1,034,491

43,314

Transocean Ltd. (United States)

80,718

5,595

 

137,424

Oil, Gas & Consumable Fuels - 11.7%

Anadarko Petroleum Corp.

183,866

14,621

Apache Corp.

274,758

34,235

BP PLC sponsored ADR

1,131,142

52,304

Chevron Corp.

1,336,170

140,178

ConocoPhillips

523,165

38,306

Exxon Mobil Corp.

1,332,885

111,256

Kinder Morgan Holding Co. LLC (d)

880,400

25,787

Marathon Oil Corp.

709,868

38,454

Occidental Petroleum Corp.

315,857

34,065

Royal Dutch Shell PLC Class A sponsored ADR

1,773,800

126,703

Southwestern Energy Co. (a)

612,717

26,819

Tesoro Logistics LP

21,300

529

 

643,257

TOTAL ENERGY

780,681

FINANCIALS - 26.5%

Capital Markets - 4.2%

Bank of New York Mellon Corp.

873,810

24,563

Bank Sarasin & Co. Ltd. Series B (Reg.)

196,477

9,192

Credit Suisse Group sponsored ADR (d)

323,985

13,970

Goldman Sachs Group, Inc.

328,297

46,201

Morgan Stanley

2,522,092

60,934

State Street Corp.

749,400

34,300

UBS AG (a)

621,000

11,949

UBS AG (NY Shares) (a)

1,406,735

27,178

 

228,287

Commercial Banks - 9.2%

Associated Banc-Corp.

1,907,952

26,883

Barclays PLC

5,118,685

23,394

BB&T Corp.

1,195,103

32,913

BNP Paribas SA (d)

181,600

14,166

Comerica, Inc.

380,000

13,722

Huntington Bancshares, Inc.

2,476,200

16,343

Common Stocks - continued

Shares

Value (000s)

FINANCIALS - continued

Commercial Banks - continued

KeyCorp

3,261,074

$ 27,621

Mitsubishi UFJ Financial Group, Inc. sponsored ADR (d)

3,692,100

16,873

PNC Financial Services Group, Inc.

1,840,000

114,853

SunTrust Banks, Inc.

535,500

15,064

U.S. Bancorp, Delaware

1,754,700

44,920

Wells Fargo & Co.

5,573,408

158,118

 

504,870

Consumer Finance - 1.6%

American Express Co.

457,831

23,624

Capital One Financial Corp.

187,433

10,185

Discover Financial Services

1,612,100

38,432

SLM Corp.

867,281

14,778

 

87,019

Diversified Financial Services - 7.4%

Bank of America Corp.

9,483,073

111,426

Citigroup, Inc.

2,342,165

96,380

CME Group, Inc.

35,388

10,112

JPMorgan Chase & Co.

4,345,153

187,887

 

405,805

Insurance - 1.9%

Berkshire Hathaway, Inc. Class B (a)

282,427

22,332

First American Financial Corp.

738,862

11,881

Hartford Financial Services Group, Inc.

495,700

13,210

MetLife, Inc.

118,500

5,226

MetLife, Inc. unit

163,500

13,499

Unum Group

1,172,809

30,857

XL Group PLC Class A

386,032

9,134

 

106,139

Real Estate Investment Trusts - 1.8%

Camden Property Trust (SBI)

141,673

9,107

HCP, Inc.

849,676

32,237

ProLogis Trust

327,800

5,428

Rayonier, Inc.

163,429

10,850

Segro PLC

1,329,512

7,101

Ventas, Inc.

347,773

19,614

Weyerhaeuser Co.

661,308

14,245

 

98,582

Real Estate Management & Development - 0.3%

CB Richard Ellis Group, Inc. Class A (a)

193,658

5,118

Common Stocks - continued

Shares

Value (000s)

FINANCIALS - continued

Real Estate Management & Development - continued

Indiabulls Real Estate Ltd. (a)

2,558,497

$ 6,665

Unite Group PLC (a)

1,158,697

4,111

 

15,894

Thrifts & Mortgage Finance - 0.1%

BankUnited, Inc.

36,500

1,035

Hudson City Bancorp, Inc.

605,300

5,526

 

6,561

TOTAL FINANCIALS

1,453,157

HEALTH CARE - 9.7%

Biotechnology - 1.3%

Amgen, Inc. (a)

656,100

39,720

Cephalon, Inc. (a)

124,400

9,913

Gilead Sciences, Inc. (a)

512,559

21,394

 

71,027

Health Care Equipment & Supplies - 0.8%

CareFusion Corp. (a)

970,243

28,118

Covidien PLC

247,090

13,590

 

41,708

Health Care Providers & Services - 0.8%

HCA Holdings, Inc.

335,500

11,706

UnitedHealth Group, Inc.

661,900

32,400

 

44,106

Pharmaceuticals - 6.8%

Eli Lilly & Co.

450,952

17,353

GlaxoSmithKline PLC

1,143,323

24,856

GlaxoSmithKline PLC sponsored ADR

40,500

1,760

Johnson & Johnson

1,144,466

77,011

Merck & Co., Inc.

2,257,528

82,964

Pfizer, Inc.

6,419,635

137,701

Sanofi-Aventis

426,206

33,790

 

375,435

TOTAL HEALTH CARE

532,276

INDUSTRIALS - 10.9%

Aerospace & Defense - 3.0%

Goodrich Corp.

118,058

10,305

Common Stocks - continued

Shares

Value (000s)

INDUSTRIALS - continued

Aerospace & Defense - continued

Honeywell International, Inc.

818,800

$ 48,760

Textron, Inc.

522,886

11,964

The Boeing Co.

428,117

33,406

United Technologies Corp.

663,328

58,220

 

162,655

Building Products - 0.5%

Armstrong World Industries, Inc.

111,359

5,346

Masco Corp.

1,733,500

24,702

 

30,048

Commercial Services & Supplies - 0.7%

Pitney Bowes, Inc. (d)

539,800

12,896

Republic Services, Inc.

772,285

24,342

 

37,238

Construction & Engineering - 0.3%

Chiyoda Corp.

856,000

9,342

Fluor Corp.

84,894

5,852

 

15,194

Electrical Equipment - 0.2%

Alstom SA

163,185

10,100

Industrial Conglomerates - 3.8%

General Electric Co.

5,037,497

98,936

Koninklijke Philips Electronics NV (depositary receipt) (NY Reg.)

1,048,100

29,200

Rheinmetall AG

310,542

26,708

Siemens AG sponsored ADR

346,400

46,366

Tyco International Ltd.

151,988

7,501

 

208,711

Machinery - 1.4%

Briggs & Stratton Corp.

1,051,595

21,926

Cummins, Inc.

150,900

15,881

Ingersoll-Rand Co. Ltd.

615,053

30,691

SPX Corp.

134,400

11,143

 

79,641

Road & Rail - 1.0%

CSX Corp.

347,800

27,581

Union Pacific Corp.

248,400

26,075

 

53,656

Common Stocks - continued

Shares

Value (000s)

INDUSTRIALS - continued

Trading Companies & Distributors - 0.0%

Mitsubishi Corp.

90,100

$ 2,290

TOTAL INDUSTRIALS

599,533

INFORMATION TECHNOLOGY - 5.4%

Communications Equipment - 0.6%

Cisco Systems, Inc.

1,003,315

16,856

Comverse Technology, Inc. (a)

2,142,080

15,916

 

32,772

Computers & Peripherals - 0.8%

Hewlett-Packard Co.

1,162,948

43,471

Electronic Equipment & Components - 0.6%

Arrow Electronics, Inc. (a)

237,538

10,601

Avnet, Inc. (a)

216,514

7,838

TE Connectivity Ltd.

454,316

16,732

 

35,171

IT Services - 0.4%

Visa, Inc. Class A

282,179

22,873

Office Electronics - 0.9%

Canon, Inc. sponsored ADR

283,910

13,622

Xerox Corp.

3,409,299

34,809

 

48,431

Semiconductors & Semiconductor Equipment - 2.1%

Applied Materials, Inc.

2,546,100

35,085

Intel Corp.

1,376,819

30,992

Micron Technology, Inc. (a)

1,472,300

15,017

National Semiconductor Corp.

733,102

17,983

Samsung Electronics Co. Ltd.

10,453

8,742

Teradyne, Inc. (a)

303,600

4,861

 

112,680

Software - 0.0%

Microsoft Corp.

90,200

2,256

TOTAL INFORMATION TECHNOLOGY

297,654

MATERIALS - 2.2%

Chemicals - 1.5%

Clariant AG (Reg.) (a)

1,307,528

28,729

Dow Chemical Co.

700,232

25,299

Common Stocks - continued

Shares

Value (000s)

MATERIALS - continued

Chemicals - continued

E.I. du Pont de Nemours & Co.

362,774

$ 19,336

PPG Industries, Inc.

121,400

10,768

 

84,132

Metals & Mining - 0.7%

Alcoa, Inc.

606,603

10,197

Commercial Metals Co.

407,409

6,066

Freeport-McMoRan Copper & Gold, Inc.

142,552

7,361

United States Steel Corp. (d)

244,411

11,270

 

34,894

TOTAL MATERIALS

119,026

TELECOMMUNICATION SERVICES - 5.3%

Diversified Telecommunication Services - 4.7%

AT&T, Inc.

5,008,639

158,073

CenturyLink, Inc.

821,749

35,491

Koninklijke KPN NV

634,807

9,320

Verizon Communications, Inc.

1,470,348

54,300

 

257,184

Wireless Telecommunication Services - 0.6%

Sprint Nextel Corp. (a)

5,793,247

33,890

TOTAL TELECOMMUNICATION SERVICES

291,074

UTILITIES - 3.5%

Electric Utilities - 2.7%

American Electric Power Co., Inc.

1,141,609

43,609

Edison International

601,721

23,684

Entergy Corp.

73,650

5,019

FirstEnergy Corp.

1,325,797

59,157

PPL Corp.

576,309

16,246

 

147,715

Multi-Utilities - 0.8%

National Grid PLC

510,000

5,265

PG&E Corp.

387,878

16,826

Common Stocks - continued

Shares

Value (000s)

UTILITIES - continued

Multi-Utilities - continued

Public Service Enterprise Group, Inc.

625,920

$ 20,968

Veolia Environnement

122,600

3,730

 

46,789

TOTAL UTILITIES

194,504

TOTAL COMMON STOCKS

(Cost $4,460,220)

5,285,277

Preferred Stocks - 2.0%

 

 

 

 

Convertible Preferred Stocks - 1.8%

CONSUMER DISCRETIONARY - 0.8%

Automobiles - 0.8%

General Motors Co. 4.75%

849,200

42,545

Household Durables - 0.0%

Stanley Black & Decker, Inc. 4.75%

12,800

1,542

TOTAL CONSUMER DISCRETIONARY

44,087

ENERGY - 0.1%

Oil, Gas & Consumable Fuels - 0.1%

Apache Corp. 6.00%

102,900

6,846

FINANCIALS - 0.8%

Commercial Banks - 0.2%

Huntington Bancshares, Inc. 8.50%

7,600

8,740

Diversified Financial Services - 0.2%

Citigroup, Inc. 7.50%

81,000

9,761

Insurance - 0.4%

Hartford Financial Services Group, Inc. Series F 7.25%

285,900

7,513

XL Group PLC 10.75%

462,200

14,721

 

22,234

TOTAL FINANCIALS

40,735

Preferred Stocks - continued

Shares

Value (000s)

Convertible Preferred Stocks - continued

UTILITIES - 0.1%

Electric Utilities - 0.1%

PPL Corp. 9.50%

112,300

$ 6,482

TOTAL CONVERTIBLE PREFERRED STOCKS

98,150

Nonconvertible Preferred Stocks - 0.2%

CONSUMER DISCRETIONARY - 0.2%

Automobiles - 0.2%

Volkswagen AG

76,000

13,493

TOTAL PREFERRED STOCKS

(Cost $94,440)

111,643

Convertible Bonds - 0.7%

 

Principal
Amount (000s)

 

CONSUMER DISCRETIONARY - 0.5%

Hotels, Restaurants & Leisure - 0.3%

MGM Mirage, Inc. 4.25% 4/15/15

$ 13,500

15,643

Leisure Equipment & Products - 0.2%

Eastman Kodak Co. 7% 4/1/17

14,555

12,977

TOTAL CONSUMER DISCRETIONARY

28,620

FINANCIALS - 0.1%

Thrifts & Mortgage Finance - 0.1%

MGIC Investment Corp. 9% 4/1/63 (e)

5,910

5,792

INFORMATION TECHNOLOGY - 0.1%

Semiconductors & Semiconductor Equipment - 0.1%

Micron Technology, Inc. 1.875% 6/1/27

3,686

4,188

TOTAL CONVERTIBLE BONDS

(Cost $35,602)

38,600

Money Market Funds - 2.4%

Shares

Value (000s)

Fidelity Cash Central Fund, 0.14% (b)

53,889,258

$ 53,889

Fidelity Securities Lending Cash Central Fund, 0.14% (b)(c)

79,698,650

79,699

TOTAL MONEY MARKET FUNDS

(Cost $133,588)

133,588

TOTAL INVESTMENT PORTFOLIO - 101.4%

(Cost $4,723,850)

5,569,108

NET OTHER ASSETS (LIABILITIES) - (1.4)%

(78,633)

NET ASSETS - 100%

$ 5,490,475

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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.

(d) Security or a portion of the security is on loan at period end.

(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $5,792,000 or 0.1% of net assets.

Affiliated Central Funds

Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:

Fund

Income earned
(Amounts in thousands)

Fidelity Cash Central Fund

$ 30

Fidelity Securities Lending Cash Central Fund

786

Total

$ 816

Other Information

The following is a summary of the inputs used, as of May 31, 2011, 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 in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description
(Amounts in thousands)

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 681,272

$ 677,951

$ 3,247

$ 74

Consumer Staples

393,680

380,061

13,619

-

Energy

787,527

787,527

-

-

Financials

1,493,892

1,445,050

48,842

-

Health Care

532,276

473,630

58,646

-

Industrials

599,533

587,901

11,632

-

Information Technology

297,654

297,654

-

-

Materials

119,026

119,026

-

-

Telecommunication Services

291,074

291,074

-

-

Utilities

200,986

191,991

8,995

-

Corporate Bonds

38,600

-

38,600

-

Money Market Funds

133,588

133,588

-

-

Total Investments in Securities:

$ 5,569,108

$ 5,385,453

$ 183,581

$ 74

The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:

(Amounts in thousands)

 

Investments in Securities:

Beginning Balance

$ -

Total Realized Gain (Loss)

-

Total Unrealized Gain (Loss)

(1)

Cost of Purchases

75

Proceeds of Sales

-

Amortization/Accretion

-

Transfers in to Level 3

-

Transfers out of Level 3

-

Ending Balance

$ 74

The change in unrealized gain (loss) for the period attributable to Level 3 securities held at May 31, 2011

$ (1)

The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.

Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited)

United States of America

85.5%

United Kingdom

4.6%

Switzerland

3.0%

Germany

1.9%

Ireland

1.3%

Japan

1.3%

France

1.1%

Others (Individually Less Than 1%)

1.3%

 

100.0%

Income Tax Information

At November 30, 2010, the Fund had a capital loss carryforward of approximately $1,810,776,000 of which $801,080,000 and $1,009,696,000 will expire in fiscal 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $77,994) - See accompanying schedule:

Unaffiliated issuers (cost $4,590,262)

$ 5,435,520

 

Fidelity Central Funds (cost $133,588)

133,588

 

Total Investments (cost $4,723,850)

 

$ 5,569,108

Receivable for investments sold

12,314

Receivable for fund shares sold

925

Dividends receivable

15,456

Interest receivable

366

Distributions receivable from Fidelity Central Funds

489

Prepaid expenses

3

Other receivables

347

Total assets

5,599,008

 

 

 

Liabilities

Payable for investments purchased

$ 16,373

Payable for fund shares redeemed

9,093

Accrued management fee

2,082

Other affiliated payables

913

Other payables and accrued expenses

373

Collateral on securities loaned, at value

79,699

Total liabilities

108,533

 

 

 

Net Assets

$ 5,490,475

Net Assets consist of:

 

Paid in capital

$ 6,178,672

Undistributed net investment income

22,621

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

(1,556,156)

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

845,338

Net Assets

$ 5,490,475

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Equity-Income II:
Net Asset Value, offering price and redemption price per share ($5,118,586 ÷ 261,851 shares)

$ 19.55

 

 

 

Class K:
Net Asset Value, offering price and redemption price per share ($371,889 ÷ 19,022 shares)

$ 19.55

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

 Amounts in thousands

Six months ended May 31, 2011 (Unaudited)

 

  

  

Investment Income

  

  

Dividends

 

$ 59,388

Interest

 

865

Income from Fidelity Central Funds

 

816

Total income

 

61,069

 

 

 

Expenses

Management fee

$ 12,585

Transfer agent fees

4,934

Accounting and security lending fees

556

Custodian fees and expenses

67

Independent trustees' compensation

14

Appreciation in deferred trustee compensation account

1

Registration fees

36

Audit

40

Legal

11

Miscellaneous

35

Total expenses before reductions

18,279

Expense reductions

(90)

18,189

Net investment income (loss)

42,880

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

392,767

Foreign currency transactions

10

Total net realized gain (loss)

 

392,777

Change in net unrealized appreciation (depreciation) on:

Investment securities

422,492

Assets and liabilities in foreign currencies

70

Total change in net unrealized appreciation (depreciation)

 

422,562

Net gain (loss)

815,339

Net increase (decrease) in net assets resulting from operations

$ 858,219

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Changes in Net Assets

 Amounts in thousands

Six months ended
May 31, 2011
(Unaudited)

Year ended
November 30,
2010

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 42,880

$ 83,324

Net realized gain (loss)

392,777

519,317

Change in net unrealized appreciation (depreciation)

422,562

(309,540)

Net increase (decrease) in net assets resulting
from operations

858,219

293,101

Distributions to shareholders from net investment income

(40,401)

(78,814)

Share transactions - net increase (decrease)

(472,569)

(564,531)

Total increase (decrease) in net assets

345,249

(350,244)

 

 

 

Net Assets

Beginning of period

5,145,226

5,495,470

End of period (including undistributed net investment income of $22,621 and undistributed net investment income of $20,142, respectively)

$ 5,490,475

$ 5,145,226

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Equity-Income II

 

Six months ended
May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009

2008

2007

2006

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 16.81

$ 16.16

$ 13.32

$ 24.29

$ 25.12

$ 24.57

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) D

  .15

  .26

  .27

  .33

  .33

  .35

Net realized and unrealized gain (loss)

  2.73

  .63

  2.86

  (9.72)

  1.29

  2.44

Total from investment operations

  2.88

  .89

  3.13

  (9.39)

  1.62

  2.79

Distributions from net investment income

  (.14)

  (.24)

  (.29)

  (.36)

  (.38)

  (.33)

Distributions from net realized gain

  -

  -

  -

  (1.22)

  (2.07)

  (1.91)

Total distributions

  (.14)

  (.24)

  (.29)

  (1.58)

  (2.45)

  (2.24)

Net asset value, end of period

$ 19.55

$ 16.81

$ 16.16

$ 13.32

$ 24.29

$ 25.12

Total Return B, C

  17.15%

  5.57%

  24.07%

  (41.13)%

  6.90%

  12.28%

Ratios to Average Net Assets E, G

 

 

 

 

 

Expenses before reductions

  .67% A

  .69%

  .75%

  .67%

  .65%

  .67%

Expenses net of fee waivers, if any

  .67% A

  .69%

  .75%

  .67%

  .65%

  .67%

Expenses net of all reductions

  .67% A

  .69%

  .74%

  .67%

  .65%

  .66%

Net investment income (loss)

  1.55% A

  1.57%

  1.98%

  1.70%

  1.34%

  1.50%

Supplemental Data

 

 

 

 

 

Net assets, end of period (in millions)

$ 5,119

$ 4,777

$ 5,288

$ 5,212

$ 10,530

$ 11,635

Portfolio turnover rate F

  28% A

  30%

  75%

  76%

  47%

  160%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class K

 

Six months ended
May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009

2008 G

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 16.82

$ 16.16

$ 13.32

$ 21.42

Income from Investment Operations

 

 

 

 

Net investment income (loss) D

  .16

  .28

  .29

  .17

Net realized and unrealized gain (loss)

  2.72

  .65

  2.87

  (8.08)

Total from investment operations

  2.88

  .93

  3.16

  (7.91)

Distributions from net investment income

  (.15)

  (.27)

  (.32)

  (.19)

Net asset value, end of period

$ 19.55

$ 16.82

$ 16.16

$ 13.32

Total Return B, C

  17.16%

  5.80%

  24.30%

  (37.13)%

Ratios to Average Net Assets E, H

 

 

 

Expenses before reductions

  .54% A

  .54%

  .56%

  .54% A

Expenses net of fee waivers, if any

  .54% A

  .54%

  .56%

  .54% A

Expenses net of all reductions

  .53% A

  .54%

  .56%

  .54% A

Net investment income (loss)

  1.68% A

  1.72%

  2.17%

  2.11% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 372

$ 368

$ 208

$ 154

Portfolio turnover rate F

  28% A

  30%

  75%

  76%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended May 31, 2011 (Unaudited)

(Amounts in thousands except ratios)

1. Organization.

Fidelity Equity-Income II Fund (the Fund) is a fund of Fidelity Financial Trust (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Equity-Income II and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class.

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.

When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.

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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

Investment Transactions and Income - continued

securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. 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, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are 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. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to short-term gain distributions from Fidelity Central Funds, foreign currency transactions, certain foreign taxes, market discount,

Semiannual Report

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

deferred trustees compensation, capital loss carryforwards 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

$ 1,118,619

Gross unrealized depreciation

(410,149)

Net unrealized appreciation (depreciation) on securities and other investments

$ 708,470

Tax cost

$ 4,860,638

Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be November, 30, 2012.

New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $765,847 and $1,219,760, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .46% of the Fund's average net assets.

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Equity Income II. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:

 

Amount

% of
Average
Net Assets*

Equity-Income II

$ 4,838

.19

Class K

96

.05

 

$ 4,934

 

* Annualized

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $25 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

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Interfund Lending Program - continued

with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. The interest expense amounted to two hundred fourteen dollars under the interfund lending program. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:

Borrower or Lender

Average Daily
Loan Balance

Weighted Average
Interest Rate

Borrower

$ 10,379

.37%

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $10 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent 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. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

8. Security Lending - continued

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 $786. During the period, there were no securities loaned to FCM.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $90 for the period.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
May 31,
2011

Year ended
November 30,
2010

From net investment income

 

 

Equity-Income II

$ 37,339

$ 74,940

Class K

3,062

3,874

Total

$ 40,401

$ 78,814

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
May 31,
2011

Year ended
November 30,
2010

Six months ended
May 31,
2011

Year ended
November 30,
2010

Equity-Income II

 

 

 

 

Shares sold

6,224

11,830

$ 117,479

$ 195,399

Reinvestment of distributions

1,916

4,305

35,347

71,108

Shares redeemed

(30,374)

(59,267)

(572,625)

(980,367)

Net increase (decrease)

(22,234)

(43,132)

$ (419,799)

$ (713,860)

Class K

 

 

 

 

Shares sold

1,728

12,200

$ 32,763

$ 201,326

Reinvestment of distributions

166

235

3,062

3,874

Shares redeemed

(4,780)

(3,385)

(88,595)

(55,871)

Net increase (decrease)

(2,886)

9,050

$ (52,770)

$ 149,329

Semiannual Report

12. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Semiannual Report

Managing Your Investments

Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.

By Phone

Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.

(phone_graphic)

Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555

Press

fid153For mutual fund and brokerage trading.

fid155For quotes.*

fid157For account balances and holdings.

fid159To review orders and mutual
fund activity.

fid161To change your PIN.

fid163fid165To speak to a Fidelity representative.

By PC

Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.

(computer_graphic)

Fidelity's Web Site
www.fidelity.com

* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains distributions, and the effects of any sales charges.

Semiannual Report

To Visit Fidelity

For directions and hours, 
please call 1-800-544-9797.

Arizona

7001 West Ray Road
Chandler, AZ

15445 N. Scottsdale Road
Scottsdale, AZ

17550 North 75th Avenue
Glendale, AZ

5330 E. Broadway Blvd
Tucson, AZ

California

815 East Birch Street
Brea, CA

1411 Chapin Avenue
Burlingame, CA

851 East Hamilton Avenue
Campbell, CA

601 Larkspur Landing Circle
Larkspur, CA

2000 Avenue of the Stars
Los Angeles, CA

27101 Puerta Real
Mission Viejo, CA

73575 El Paseo
Palm Desert, CA

251 University Avenue
Palo Alto, CA

123 South Lake Avenue
Pasadena, CA

16656 Bernardo Ctr. Drive
Rancho Bernardo, CA

1220 Roseville Parkway
Roseville, CA

1740 Arden Way
Sacramento, CA

7676 Hazard Center Drive
San Diego, CA

11943 El Camino Real
San Diego, CA

8 Montgomery Street
San Francisco, CA

3793 State Street
Santa Barbara, CA

1200 Wilshire Boulevard
Santa Monica, CA

398 West El Camino Real
Sunnyvale, CA

111 South Westlake Blvd
Thousand Oaks, CA

21701 Hawthorne Boulevard
Torrance, CA

2001 North Main Street
Walnut Creek, CA

6326 Canoga Avenue
Woodland Hills, CA

2211 Michelson Drive
Irvine, CA

Colorado

281 East Flatiron Circle
Broomfield, CO

1625 Broadway
Denver, CO

9185 Westview Road
Lone Tree, CO

Connecticut

48 West Putnam Avenue
Greenwich, CT

265 Church Street
New Haven, CT

300 Atlantic Street
Stamford, CT

29 South Main Street
West Hartford, CT

1261 Post Road
Fairfield, CT

Delaware

400 Delaware Avenue
Wilmington, DE

Florida

175 East Altamonte Drive
Altamonte Springs, FL

1400 Glades Road
Boca Raton, FL

121 Alhambra Plaza
Coral Gables, FL

2948 N. Federal Highway
Ft. Lauderdale, FL

4671 Town Center Parkway
Jacksonville, FL

8880 Tamiami Trail, North
Naples, FL

230 Royal Palm Way
Palm Beach, FL

3501 PGA Boulevard
Palm Beach Gardens, FL

3550 Tamiami Trail, South
Sarasota, FL

1502 N. Westshore Blvd.
Tampa, FL

2465 State Road 7
Wellington, FL

Georgia

3242 Peachtree Road
Atlanta, GA

1000 Abernathy Road
Atlanta, GA

Illinois

One North LaSalle Street
Chicago, IL

401 North Michigan Avenue
Chicago, IL

One Skokie Valley Road
Highland Park, IL

1415 West 22nd Street
Oak Brook, IL

15105 S LaGrange Road
Orland Park, IL

1572 East Golf Road
Schaumburg, IL

1823 Freedom Drive
Naperville, IL

Indiana

8480 Keystone Crossing
Indianapolis, IN

Kansas

5400 College Boulevard
Overland Park, KS

Maine

Three Canal Plaza
Portland, ME

Maryland

7315 Wisconsin Avenue
Bethesda, MD

610 York Road
Towson, MD

Massachusetts

801 Boylston Street
Boston, MA

155 Congress Street
Boston, MA

300 Granite Street
Braintree, MA

44 Mall Road
Burlington, MA

238 Main Street
Cambridge, MA

200 Endicott Street
Danvers, MA

Semiannual Report

405 Cochituate Road
Framingham, MA

551 Boston Turnpike
Shrewsbury, MA

Michigan

500 E. Eisenhower Pkwy.
Ann Arbor, MI

280 N. Old Woodward Ave.
Birmingham, MI

30200 Northwestern Hwy.
Farmington Hills, MI

43420 Grand River Avenue
Novi, MI

3480 28th Street
Grand Rapids, MI

2425 S. Linden Road STE E
Flint, MI

Minnesota

7740 France Avenue South
Edina, MN

8342 3rd Street North
Oakdale, MN

Missouri

1524 South Lindbergh Blvd.
St. Louis, MO

Nevada

2225 Village Walk Drive
Henderson, NV

New Jersey

501 Route 73 South
Marlton, NJ

150 Essex Street
Millburn, NJ

35 Morris Street
Morristown, NJ

396 Route 17, North
Paramus, NJ

3518 Route 1 North
Princeton, NJ

530 Broad Street
Shrewsbury, NJ

New Mexico

2261 Q Street NE
Albuquerque, NM

New York

1130 Franklin Avenue
Garden City, NY

37 West Jericho Turnpike
Huntington Station, NY

1271 Avenue of the Americas
New York, NY

980 Madison Avenue
New York, NY

61 Broadway
New York, NY

350 Park Avenue
New York, NY

200 Fifth Avenue
New York, NY

733 Third Avenue
New York, NY

2070 Broadway
New York, NY

1075 Northern Blvd.
Roslyn, NY

799 Central Park Avenue
Scarsdale, NY

3349 Monroe Avenue
Rochester, NY

North Carolina

4611 Sharon Road
Charlotte, NC

7011 Fayetteville Road
Durham, NC

Ohio

3805 Edwards Road
Cincinnati, OH

1324 Polaris Parkway
Columbus, OH

1800 Crocker Road
Westlake, OH

28699 Chagrin Boulevard
Woodmere Village, OH

Oregon

7493 SW Bridgeport Road
Tigard, OR

Pennsylvania

600 West DeKalb Pike
King of Prussia, PA

1735 Market Street
Philadelphia, PA

12001 Perry Highway
Wexford, PA

Rhode Island

10 Memorial Boulevard
Providence, RI

Tennessee

3018 Peoples Street
Johnson City, TN

7628 West Farmington Blvd.
Germantown, TN

2035 Mallory Lane
Franklin, TN

Texas

10000 Research Boulevard
Austin, TX

4001 Northwest Parkway
Dallas, TX

12532 Memorial Drive
Houston, TX

2701 Drexel Drive
Houston, TX

6560 Fannin Street
Houston, TX

1701 Lake Robbins Drive
The Woodlands, TX

6500 N. MacArthur Blvd.
Irving, TX

6005 West Park Boulevard
Plano, TX

1576 East Southlake Blvd.
Southlake, TX

15600 Southwest Freeway
Sugar Land, TX

139 N. Loop 1604 East
San Antonio, TX

Utah

279 West South Temple
Salt Lake City, UT

Virginia

1861 International Drive
McLean, VA

11957 Democracy Drive
Reston, VA

Washington

10500 NE 8th Street
Bellevue, WA

1518 6th Avenue
Seattle, WA

304 Strander Blvd
Tukwila, WA

Washington, DC

1900 K Street, N.W.
Washington, DC

Wisconsin

16020 West Bluemound Road
Brookfield, WI

Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC

Semiannual Report

To Write Fidelity

We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.

(letter_graphic)

Making Changes
To Your Account

(such as changing name, address, bank, etc.)

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002

(letter_graphic)

For Non-Retirement
Accounts

Buying shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003

Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

Selling shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035

Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

General Correspondence

Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500

(letter_graphic)

For Retirement
Accounts

Buying shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003

Selling shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035

Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

General Correspondence

Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research (U.K.) Inc.

Fidelity Management & Research
(Hong Kong) Limited

Fidelity Management & Research (Japan) Inc.

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional
Operations Company, Inc.

Boston, MA

Fidelity Service Company, Inc.

Boston, MA

Custodian

The Northern Trust Company

Chicago, IL

The Fidelity Telephone Connection

Mutual Fund 24-Hour Service

Exchanges/Redemptions
and Account Assistance 1-800-544-6666

Product Information 1-800-544-8888

Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)

TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Fidelity Automated Service
Telephone (FAST®) fid98
1-800-544-5555

fid98
Automated line for quickest service 

EII-USAN-0711
1.786811.108

fid101

Fidelity®
Equity-Income II
Fund -
Class K

Semiannual Report

May 31, 2011

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

The Chairman's message to shareholders.

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-835-5092 to request a free copy of the proxy voting guidelines.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.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.

Semiannual Report

Chairman's Message

(photo_of_James_C_Curvey)

Dear Shareholder:

Amid indications the U.S. economy had turned a corner, U.S. equities continued their generally upward trend through the end of May, overcoming bouts of short-term volatility following unrest in North Africa and the natural disaster in Japan. Still, questions remained about the longer-term outlook, most notably inflationary pressure and persistently high unemployment. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.

One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.

You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).

A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.

We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.

Sincerely,


(The acting chairman's signature appears here.)

James C. Curvey
Acting Chairman

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2010 to May 31, 2011).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

Semiannual Report

Shareholder Expense Example - continued

 

Annualized
Expense Ratio

Beginning
Account Value
December 1, 2010

Ending
Account Value
May 31, 2011

Expenses Paid
During Period*
December 1, 2010 to
May 31, 2011

Equity-Income II

.67%

 

 

 

Actual

 

$ 1,000.00

$ 1,171.50

$ 3.63

HypotheticalA

 

$ 1,000.00

$ 1,021.59

$ 3.38

Class K

.54%

 

 

 

Actual

 

$ 1,000.00

$ 1,171.60

$ 2.92

HypotheticalA

 

$ 1,000.00

$ 1,022.24

$ 2.72

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of May 31, 2011

 

% of fund's
net assets

% of fund's net assets
6 months ago

JPMorgan Chase & Co.

3.4

3.2

Wells Fargo & Co.

2.9

3.1

AT&T, Inc.

2.9

2.3

Chevron Corp.

2.6

2.5

Pfizer, Inc.

2.5

2.1

Royal Dutch Shell PLC Class A sponsored ADR

2.3

1.6

PNC Financial Services Group, Inc.

2.1

2.0

Bank of America Corp.

2.0

2.1

Exxon Mobil Corp.

2.0

2.2

General Electric Co.

1.8

1.6

 

24.5

Top Five Market Sectors as of May 31, 2011

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

27.4

26.3

Energy

14.3

14.4

Consumer Discretionary

12.9

14.8

Industrials

10.9

11.2

Health Care

9.7

8.5

Asset Allocation (% of fund's net assets)

As of May 31, 2011 *

As of November 30, 2010 **

fid84

Stocks 96.5%

 

fid84

Stocks 96.6%

 

fid146

Convertible
Securities 2.5%

 

fid146

Convertible
Securities 2.1%

 

fid93

Short-Term
Investments and
Net Other Assets 1.0%

 

fid93

Short-Term
Investments and
Net Other Assets 1.3%

 

* Foreign investments

14.5%

 

** Foreign investments

11.6%

 

fid182

Semiannual Report

Investments May 31, 2011 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 96.3%

Shares

Value (000s)

CONSUMER DISCRETIONARY - 11.4%

Auto Components - 0.6%

Denso Corp.

90,300

$ 3,247

Denso Corp. sponsored ADR

240,700

4,289

Johnson Controls, Inc.

634,064

25,109

 

32,645

Automobiles - 1.2%

Ford Motor Co. (a)

867,528

12,944

Harley-Davidson, Inc.

1,137,758

42,279

Thor Industries, Inc.

35,760

1,155

Winnebago Industries, Inc. (a)

544,000

6,229

 

62,607

Distributors - 0.0%

Indiabulls Wholesale Services Ltd.

319,812

74

Diversified Consumer Services - 0.5%

H&R Block, Inc.

1,576,500

25,539

Household Durables - 3.5%

KB Home

276,700

3,398

Lennar Corp. Class A

562,700

10,680

Newell Rubbermaid, Inc.

327,640

5,835

PulteGroup, Inc. (a)

2,500,300

21,103

Stanley Black & Decker, Inc.

547,986

40,485

Toll Brothers, Inc. (a)

4,402,250

95,749

Whirlpool Corp.

196,088

16,432

 

193,682

Media - 2.4%

Belo Corp. Series A

888,073

7,051

Comcast Corp.:

Class A

961,900

24,278

Class A (special) (non-vtg.)

809,100

19,054

The Walt Disney Co.

1,210,514

50,394

Time Warner, Inc.

855,117

31,152

 

131,929

Multiline Retail - 0.7%

Macy's, Inc.

854,319

24,673

Target Corp.

242,156

11,994

Tuesday Morning Corp. (a)

468,400

2,314

 

38,981

Specialty Retail - 1.7%

Home Depot, Inc.

1,812,200

65,747

Common Stocks - continued

Shares

Value (000s)

CONSUMER DISCRETIONARY - continued

Specialty Retail - continued

Lowe's Companies, Inc.

907,400

$ 21,905

OfficeMax, Inc. (a)

639,100

5,343

 

92,995

Textiles, Apparel & Luxury Goods - 0.8%

adidas AG

254,600

19,190

Phillips-Van Heusen Corp.

267,754

17,664

Warnaco Group, Inc. (a)

152,059

8,386

 

45,240

TOTAL CONSUMER DISCRETIONARY

623,692

CONSUMER STAPLES - 7.2%

Beverages - 1.8%

Carlsberg A/S Series B

129,700

14,992

PepsiCo, Inc.

777,471

55,294

The Coca-Cola Co.

426,190

28,474

 

98,760

Food & Staples Retailing - 0.8%

CVS Caremark Corp.

176,242

6,819

Sysco Corp.

382,796

12,330

Walgreen Co.

536,827

23,422

 

42,571

Food Products - 0.5%

Kraft Foods, Inc. Class A

814,674

28,489

Household Products - 2.0%

Kimberly-Clark Corp.

242,821

16,585

Procter & Gamble Co.

1,373,605

92,032

 

108,617

Personal Products - 0.5%

Avon Products, Inc.

1,000,148

29,714

Tobacco - 1.6%

Imperial Tobacco Group PLC

334,302

11,966

Japan Tobacco, Inc.

3,519

13,619

Philip Morris International, Inc.

835,459

59,944

 

85,529

TOTAL CONSUMER STAPLES

393,680

Common Stocks - continued

Shares

Value (000s)

ENERGY - 14.2%

Energy Equipment & Services - 2.5%

Baker Hughes, Inc.

791,363

$ 58,505

Halliburton Co.

598,403

30,010

Noble Corp.

1,034,491

43,314

Transocean Ltd. (United States)

80,718

5,595

 

137,424

Oil, Gas & Consumable Fuels - 11.7%

Anadarko Petroleum Corp.

183,866

14,621

Apache Corp.

274,758

34,235

BP PLC sponsored ADR

1,131,142

52,304

Chevron Corp.

1,336,170

140,178

ConocoPhillips

523,165

38,306

Exxon Mobil Corp.

1,332,885

111,256

Kinder Morgan Holding Co. LLC (d)

880,400

25,787

Marathon Oil Corp.

709,868

38,454

Occidental Petroleum Corp.

315,857

34,065

Royal Dutch Shell PLC Class A sponsored ADR

1,773,800

126,703

Southwestern Energy Co. (a)

612,717

26,819

Tesoro Logistics LP

21,300

529

 

643,257

TOTAL ENERGY

780,681

FINANCIALS - 26.5%

Capital Markets - 4.2%

Bank of New York Mellon Corp.

873,810

24,563

Bank Sarasin & Co. Ltd. Series B (Reg.)

196,477

9,192

Credit Suisse Group sponsored ADR (d)

323,985

13,970

Goldman Sachs Group, Inc.

328,297

46,201

Morgan Stanley

2,522,092

60,934

State Street Corp.

749,400

34,300

UBS AG (a)

621,000

11,949

UBS AG (NY Shares) (a)

1,406,735

27,178

 

228,287

Commercial Banks - 9.2%

Associated Banc-Corp.

1,907,952

26,883

Barclays PLC

5,118,685

23,394

BB&T Corp.

1,195,103

32,913

BNP Paribas SA (d)

181,600

14,166

Comerica, Inc.

380,000

13,722

Huntington Bancshares, Inc.

2,476,200

16,343

Common Stocks - continued

Shares

Value (000s)

FINANCIALS - continued

Commercial Banks - continued

KeyCorp

3,261,074

$ 27,621

Mitsubishi UFJ Financial Group, Inc. sponsored ADR (d)

3,692,100

16,873

PNC Financial Services Group, Inc.

1,840,000

114,853

SunTrust Banks, Inc.

535,500

15,064

U.S. Bancorp, Delaware

1,754,700

44,920

Wells Fargo & Co.

5,573,408

158,118

 

504,870

Consumer Finance - 1.6%

American Express Co.

457,831

23,624

Capital One Financial Corp.

187,433

10,185

Discover Financial Services

1,612,100

38,432

SLM Corp.

867,281

14,778

 

87,019

Diversified Financial Services - 7.4%

Bank of America Corp.

9,483,073

111,426

Citigroup, Inc.

2,342,165

96,380

CME Group, Inc.

35,388

10,112

JPMorgan Chase & Co.

4,345,153

187,887

 

405,805

Insurance - 1.9%

Berkshire Hathaway, Inc. Class B (a)

282,427

22,332

First American Financial Corp.

738,862

11,881

Hartford Financial Services Group, Inc.

495,700

13,210

MetLife, Inc.

118,500

5,226

MetLife, Inc. unit

163,500

13,499

Unum Group

1,172,809

30,857

XL Group PLC Class A

386,032

9,134

 

106,139

Real Estate Investment Trusts - 1.8%

Camden Property Trust (SBI)

141,673

9,107

HCP, Inc.

849,676

32,237

ProLogis Trust

327,800

5,428

Rayonier, Inc.

163,429

10,850

Segro PLC

1,329,512

7,101

Ventas, Inc.

347,773

19,614

Weyerhaeuser Co.

661,308

14,245

 

98,582

Real Estate Management & Development - 0.3%

CB Richard Ellis Group, Inc. Class A (a)

193,658

5,118

Common Stocks - continued

Shares

Value (000s)

FINANCIALS - continued

Real Estate Management & Development - continued

Indiabulls Real Estate Ltd. (a)

2,558,497

$ 6,665

Unite Group PLC (a)

1,158,697

4,111

 

15,894

Thrifts & Mortgage Finance - 0.1%

BankUnited, Inc.

36,500

1,035

Hudson City Bancorp, Inc.

605,300

5,526

 

6,561

TOTAL FINANCIALS

1,453,157

HEALTH CARE - 9.7%

Biotechnology - 1.3%

Amgen, Inc. (a)

656,100

39,720

Cephalon, Inc. (a)

124,400

9,913

Gilead Sciences, Inc. (a)

512,559

21,394

 

71,027

Health Care Equipment & Supplies - 0.8%

CareFusion Corp. (a)

970,243

28,118

Covidien PLC

247,090

13,590

 

41,708

Health Care Providers & Services - 0.8%

HCA Holdings, Inc.

335,500

11,706

UnitedHealth Group, Inc.

661,900

32,400

 

44,106

Pharmaceuticals - 6.8%

Eli Lilly & Co.

450,952

17,353

GlaxoSmithKline PLC

1,143,323

24,856

GlaxoSmithKline PLC sponsored ADR

40,500

1,760

Johnson & Johnson

1,144,466

77,011

Merck & Co., Inc.

2,257,528

82,964

Pfizer, Inc.

6,419,635

137,701

Sanofi-Aventis

426,206

33,790

 

375,435

TOTAL HEALTH CARE

532,276

INDUSTRIALS - 10.9%

Aerospace & Defense - 3.0%

Goodrich Corp.

118,058

10,305

Common Stocks - continued

Shares

Value (000s)

INDUSTRIALS - continued

Aerospace & Defense - continued

Honeywell International, Inc.

818,800

$ 48,760

Textron, Inc.

522,886

11,964

The Boeing Co.

428,117

33,406

United Technologies Corp.

663,328

58,220

 

162,655

Building Products - 0.5%

Armstrong World Industries, Inc.

111,359

5,346

Masco Corp.

1,733,500

24,702

 

30,048

Commercial Services & Supplies - 0.7%

Pitney Bowes, Inc. (d)

539,800

12,896

Republic Services, Inc.

772,285

24,342

 

37,238

Construction & Engineering - 0.3%

Chiyoda Corp.

856,000

9,342

Fluor Corp.

84,894

5,852

 

15,194

Electrical Equipment - 0.2%

Alstom SA

163,185

10,100

Industrial Conglomerates - 3.8%

General Electric Co.

5,037,497

98,936

Koninklijke Philips Electronics NV (depositary receipt) (NY Reg.)

1,048,100

29,200

Rheinmetall AG

310,542

26,708

Siemens AG sponsored ADR

346,400

46,366

Tyco International Ltd.

151,988

7,501

 

208,711

Machinery - 1.4%

Briggs & Stratton Corp.

1,051,595

21,926

Cummins, Inc.

150,900

15,881

Ingersoll-Rand Co. Ltd.

615,053

30,691

SPX Corp.

134,400

11,143

 

79,641

Road & Rail - 1.0%

CSX Corp.

347,800

27,581

Union Pacific Corp.

248,400

26,075

 

53,656

Common Stocks - continued

Shares

Value (000s)

INDUSTRIALS - continued

Trading Companies & Distributors - 0.0%

Mitsubishi Corp.

90,100

$ 2,290

TOTAL INDUSTRIALS

599,533

INFORMATION TECHNOLOGY - 5.4%

Communications Equipment - 0.6%

Cisco Systems, Inc.

1,003,315

16,856

Comverse Technology, Inc. (a)

2,142,080

15,916

 

32,772

Computers & Peripherals - 0.8%

Hewlett-Packard Co.

1,162,948

43,471

Electronic Equipment & Components - 0.6%

Arrow Electronics, Inc. (a)

237,538

10,601

Avnet, Inc. (a)

216,514

7,838

TE Connectivity Ltd.

454,316

16,732

 

35,171

IT Services - 0.4%

Visa, Inc. Class A

282,179

22,873

Office Electronics - 0.9%

Canon, Inc. sponsored ADR

283,910

13,622

Xerox Corp.

3,409,299

34,809

 

48,431

Semiconductors & Semiconductor Equipment - 2.1%

Applied Materials, Inc.

2,546,100

35,085

Intel Corp.

1,376,819

30,992

Micron Technology, Inc. (a)

1,472,300

15,017

National Semiconductor Corp.

733,102

17,983

Samsung Electronics Co. Ltd.

10,453

8,742

Teradyne, Inc. (a)

303,600

4,861

 

112,680

Software - 0.0%

Microsoft Corp.

90,200

2,256

TOTAL INFORMATION TECHNOLOGY

297,654

MATERIALS - 2.2%

Chemicals - 1.5%

Clariant AG (Reg.) (a)

1,307,528

28,729

Dow Chemical Co.

700,232

25,299

Common Stocks - continued

Shares

Value (000s)

MATERIALS - continued

Chemicals - continued

E.I. du Pont de Nemours & Co.

362,774

$ 19,336

PPG Industries, Inc.

121,400

10,768

 

84,132

Metals & Mining - 0.7%

Alcoa, Inc.

606,603

10,197

Commercial Metals Co.

407,409

6,066

Freeport-McMoRan Copper & Gold, Inc.

142,552

7,361

United States Steel Corp. (d)

244,411

11,270

 

34,894

TOTAL MATERIALS

119,026

TELECOMMUNICATION SERVICES - 5.3%

Diversified Telecommunication Services - 4.7%

AT&T, Inc.

5,008,639

158,073

CenturyLink, Inc.

821,749

35,491

Koninklijke KPN NV

634,807

9,320

Verizon Communications, Inc.

1,470,348

54,300

 

257,184

Wireless Telecommunication Services - 0.6%

Sprint Nextel Corp. (a)

5,793,247

33,890

TOTAL TELECOMMUNICATION SERVICES

291,074

UTILITIES - 3.5%

Electric Utilities - 2.7%

American Electric Power Co., Inc.

1,141,609

43,609

Edison International

601,721

23,684

Entergy Corp.

73,650

5,019

FirstEnergy Corp.

1,325,797

59,157

PPL Corp.

576,309

16,246

 

147,715

Multi-Utilities - 0.8%

National Grid PLC

510,000

5,265

PG&E Corp.

387,878

16,826

Common Stocks - continued

Shares

Value (000s)

UTILITIES - continued

Multi-Utilities - continued

Public Service Enterprise Group, Inc.

625,920

$ 20,968

Veolia Environnement

122,600

3,730

 

46,789

TOTAL UTILITIES

194,504

TOTAL COMMON STOCKS

(Cost $4,460,220)

5,285,277

Preferred Stocks - 2.0%

 

 

 

 

Convertible Preferred Stocks - 1.8%

CONSUMER DISCRETIONARY - 0.8%

Automobiles - 0.8%

General Motors Co. 4.75%

849,200

42,545

Household Durables - 0.0%

Stanley Black & Decker, Inc. 4.75%

12,800

1,542

TOTAL CONSUMER DISCRETIONARY

44,087

ENERGY - 0.1%

Oil, Gas & Consumable Fuels - 0.1%

Apache Corp. 6.00%

102,900

6,846

FINANCIALS - 0.8%

Commercial Banks - 0.2%

Huntington Bancshares, Inc. 8.50%

7,600

8,740

Diversified Financial Services - 0.2%

Citigroup, Inc. 7.50%

81,000

9,761

Insurance - 0.4%

Hartford Financial Services Group, Inc. Series F 7.25%

285,900

7,513

XL Group PLC 10.75%

462,200

14,721

 

22,234

TOTAL FINANCIALS

40,735

Preferred Stocks - continued

Shares

Value (000s)

Convertible Preferred Stocks - continued

UTILITIES - 0.1%

Electric Utilities - 0.1%

PPL Corp. 9.50%

112,300

$ 6,482

TOTAL CONVERTIBLE PREFERRED STOCKS

98,150

Nonconvertible Preferred Stocks - 0.2%

CONSUMER DISCRETIONARY - 0.2%

Automobiles - 0.2%

Volkswagen AG

76,000

13,493

TOTAL PREFERRED STOCKS

(Cost $94,440)

111,643

Convertible Bonds - 0.7%

 

Principal
Amount (000s)

 

CONSUMER DISCRETIONARY - 0.5%

Hotels, Restaurants & Leisure - 0.3%

MGM Mirage, Inc. 4.25% 4/15/15

$ 13,500

15,643

Leisure Equipment & Products - 0.2%

Eastman Kodak Co. 7% 4/1/17

14,555

12,977

TOTAL CONSUMER DISCRETIONARY

28,620

FINANCIALS - 0.1%

Thrifts & Mortgage Finance - 0.1%

MGIC Investment Corp. 9% 4/1/63 (e)

5,910

5,792

INFORMATION TECHNOLOGY - 0.1%

Semiconductors & Semiconductor Equipment - 0.1%

Micron Technology, Inc. 1.875% 6/1/27

3,686

4,188

TOTAL CONVERTIBLE BONDS

(Cost $35,602)

38,600

Money Market Funds - 2.4%

Shares

Value (000s)

Fidelity Cash Central Fund, 0.14% (b)

53,889,258

$ 53,889

Fidelity Securities Lending Cash Central Fund, 0.14% (b)(c)

79,698,650

79,699

TOTAL MONEY MARKET FUNDS

(Cost $133,588)

133,588

TOTAL INVESTMENT PORTFOLIO - 101.4%

(Cost $4,723,850)

5,569,108

NET OTHER ASSETS (LIABILITIES) - (1.4)%

(78,633)

NET ASSETS - 100%

$ 5,490,475

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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.

(d) Security or a portion of the security is on loan at period end.

(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $5,792,000 or 0.1% of net assets.

Affiliated Central Funds

Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:

Fund

Income earned
(Amounts in thousands)

Fidelity Cash Central Fund

$ 30

Fidelity Securities Lending Cash Central Fund

786

Total

$ 816

Other Information

The following is a summary of the inputs used, as of May 31, 2011, 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 in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description
(Amounts in thousands)

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 681,272

$ 677,951

$ 3,247

$ 74

Consumer Staples

393,680

380,061

13,619

-

Energy

787,527

787,527

-

-

Financials

1,493,892

1,445,050

48,842

-

Health Care

532,276

473,630

58,646

-

Industrials

599,533

587,901

11,632

-

Information Technology

297,654

297,654

-

-

Materials

119,026

119,026

-

-

Telecommunication Services

291,074

291,074

-

-

Utilities

200,986

191,991

8,995

-

Corporate Bonds

38,600

-

38,600

-

Money Market Funds

133,588

133,588

-

-

Total Investments in Securities:

$ 5,569,108

$ 5,385,453

$ 183,581

$ 74

The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:

(Amounts in thousands)

 

Investments in Securities:

Beginning Balance

$ -

Total Realized Gain (Loss)

-

Total Unrealized Gain (Loss)

(1)

Cost of Purchases

75

Proceeds of Sales

-

Amortization/Accretion

-

Transfers in to Level 3

-

Transfers out of Level 3

-

Ending Balance

$ 74

The change in unrealized gain (loss) for the period attributable to Level 3 securities held at May 31, 2011

$ (1)

The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.

Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited)

United States of America

85.5%

United Kingdom

4.6%

Switzerland

3.0%

Germany

1.9%

Ireland

1.3%

Japan

1.3%

France

1.1%

Others (Individually Less Than 1%)

1.3%

 

100.0%

Income Tax Information

At November 30, 2010, the Fund had a capital loss carryforward of approximately $1,810,776,000 of which $801,080,000 and $1,009,696,000 will expire in fiscal 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $77,994) - See accompanying schedule:

Unaffiliated issuers (cost $4,590,262)

$ 5,435,520

 

Fidelity Central Funds (cost $133,588)

133,588

 

Total Investments (cost $4,723,850)

 

$ 5,569,108

Receivable for investments sold

12,314

Receivable for fund shares sold

925

Dividends receivable

15,456

Interest receivable

366

Distributions receivable from Fidelity Central Funds

489

Prepaid expenses

3

Other receivables

347

Total assets

5,599,008

 

 

 

Liabilities

Payable for investments purchased

$ 16,373

Payable for fund shares redeemed

9,093

Accrued management fee

2,082

Other affiliated payables

913

Other payables and accrued expenses

373

Collateral on securities loaned, at value

79,699

Total liabilities

108,533

 

 

 

Net Assets

$ 5,490,475

Net Assets consist of:

 

Paid in capital

$ 6,178,672

Undistributed net investment income

22,621

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

(1,556,156)

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

845,338

Net Assets

$ 5,490,475

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Equity-Income II:
Net Asset Value, offering price and redemption price per share ($5,118,586 ÷ 261,851 shares)

$ 19.55

 

 

 

Class K:
Net Asset Value, offering price and redemption price per share ($371,889 ÷ 19,022 shares)

$ 19.55

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

 Amounts in thousands

Six months ended May 31, 2011 (Unaudited)

 

  

  

Investment Income

  

  

Dividends

 

$ 59,388

Interest

 

865

Income from Fidelity Central Funds

 

816

Total income

 

61,069

 

 

 

Expenses

Management fee

$ 12,585

Transfer agent fees

4,934

Accounting and security lending fees

556

Custodian fees and expenses

67

Independent trustees' compensation

14

Appreciation in deferred trustee compensation account

1

Registration fees

36

Audit

40

Legal

11

Miscellaneous

35

Total expenses before reductions

18,279

Expense reductions

(90)

18,189

Net investment income (loss)

42,880

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

392,767

Foreign currency transactions

10

Total net realized gain (loss)

 

392,777

Change in net unrealized appreciation (depreciation) on:

Investment securities

422,492

Assets and liabilities in foreign currencies

70

Total change in net unrealized appreciation (depreciation)

 

422,562

Net gain (loss)

815,339

Net increase (decrease) in net assets resulting from operations

$ 858,219

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Changes in Net Assets

 Amounts in thousands

Six months ended
May 31, 2011
(Unaudited)

Year ended
November 30,
2010

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 42,880

$ 83,324

Net realized gain (loss)

392,777

519,317

Change in net unrealized appreciation (depreciation)

422,562

(309,540)

Net increase (decrease) in net assets resulting
from operations

858,219

293,101

Distributions to shareholders from net investment income

(40,401)

(78,814)

Share transactions - net increase (decrease)

(472,569)

(564,531)

Total increase (decrease) in net assets

345,249

(350,244)

 

 

 

Net Assets

Beginning of period

5,145,226

5,495,470

End of period (including undistributed net investment income of $22,621 and undistributed net investment income of $20,142, respectively)

$ 5,490,475

$ 5,145,226

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Equity-Income II

 

Six months ended
May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009

2008

2007

2006

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 16.81

$ 16.16

$ 13.32

$ 24.29

$ 25.12

$ 24.57

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) D

  .15

  .26

  .27

  .33

  .33

  .35

Net realized and unrealized gain (loss)

  2.73

  .63

  2.86

  (9.72)

  1.29

  2.44

Total from investment operations

  2.88

  .89

  3.13

  (9.39)

  1.62

  2.79

Distributions from net investment income

  (.14)

  (.24)

  (.29)

  (.36)

  (.38)

  (.33)

Distributions from net realized gain

  -

  -

  -

  (1.22)

  (2.07)

  (1.91)

Total distributions

  (.14)

  (.24)

  (.29)

  (1.58)

  (2.45)

  (2.24)

Net asset value, end of period

$ 19.55

$ 16.81

$ 16.16

$ 13.32

$ 24.29

$ 25.12

Total Return B, C

  17.15%

  5.57%

  24.07%

  (41.13)%

  6.90%

  12.28%

Ratios to Average Net Assets E, G

 

 

 

 

 

Expenses before reductions

  .67% A

  .69%

  .75%

  .67%

  .65%

  .67%

Expenses net of fee waivers, if any

  .67% A

  .69%

  .75%

  .67%

  .65%

  .67%

Expenses net of all reductions

  .67% A

  .69%

  .74%

  .67%

  .65%

  .66%

Net investment income (loss)

  1.55% A

  1.57%

  1.98%

  1.70%

  1.34%

  1.50%

Supplemental Data

 

 

 

 

 

Net assets, end of period (in millions)

$ 5,119

$ 4,777

$ 5,288

$ 5,212

$ 10,530

$ 11,635

Portfolio turnover rate F

  28% A

  30%

  75%

  76%

  47%

  160%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class K

 

Six months ended
May 31, 2011

Years ended November 30,

 

(Unaudited)

2010

2009

2008 G

Selected Per-Share Data

 

 

 

Net asset value, beginning of period

$ 16.82

$ 16.16

$ 13.32

$ 21.42

Income from Investment Operations

 

 

 

 

Net investment income (loss) D

  .16

  .28

  .29

  .17

Net realized and unrealized gain (loss)

  2.72

  .65

  2.87

  (8.08)

Total from investment operations

  2.88

  .93

  3.16

  (7.91)

Distributions from net investment income

  (.15)

  (.27)

  (.32)

  (.19)

Net asset value, end of period

$ 19.55

$ 16.82

$ 16.16

$ 13.32

Total Return B, C

  17.16%

  5.80%

  24.30%

  (37.13)%

Ratios to Average Net Assets E, H

 

 

 

Expenses before reductions

  .54% A

  .54%

  .56%

  .54% A

Expenses net of fee waivers, if any

  .54% A

  .54%

  .56%

  .54% A

Expenses net of all reductions

  .53% A

  .54%

  .56%

  .54% A

Net investment income (loss)

  1.68% A

  1.72%

  2.17%

  2.11% A

Supplemental Data

 

 

 

Net assets, end of period (in millions)

$ 372

$ 368

$ 208

$ 154

Portfolio turnover rate F

  28% A

  30%

  75%

  76%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended May 31, 2011 (Unaudited)

(Amounts in thousands except ratios)

1. Organization.

Fidelity Equity-Income II Fund (the Fund) is a fund of Fidelity Financial Trust (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Equity-Income II and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class.

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

Debt securities, including restricted securities, are valued based on evaluated prices received from independent pricing services or from dealers who make markets in such securities. For corporate bonds, pricing services utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally categorized as Level 2 in the hierarchy.

When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing matrices which consider similar factors that would be used by independent pricing services. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.

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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

Investment Transactions and Income - continued

securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. 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, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are 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. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to short-term gain distributions from Fidelity Central Funds, foreign currency transactions, certain foreign taxes, market discount,

Semiannual Report

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

deferred trustees compensation, capital loss carryforwards 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

$ 1,118,619

Gross unrealized depreciation

(410,149)

Net unrealized appreciation (depreciation) on securities and other investments

$ 708,470

Tax cost

$ 4,860,638

Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be November, 30, 2012.

New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $765,847 and $1,219,760, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .46% of the Fund's average net assets.

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Equity Income II. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:

 

Amount

% of
Average
Net Assets*

Equity-Income II

$ 4,838

.19

Class K

96

.05

 

$ 4,934

 

* Annualized

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $25 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

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Interfund Lending Program - continued

with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. The interest expense amounted to two hundred fourteen dollars under the interfund lending program. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:

Borrower or Lender

Average Daily
Loan Balance

Weighted Average
Interest Rate

Borrower

$ 10,379

.37%

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $10 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent 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. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and lending agent fees associated with the loan, plus any premium payments received for

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

8. Security Lending - continued

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 $786. During the period, there were no securities loaned to FCM.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $90 for the period.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
May 31,
2011

Year ended
November 30,
2010

From net investment income

 

 

Equity-Income II

$ 37,339

$ 74,940

Class K

3,062

3,874

Total

$ 40,401

$ 78,814

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
May 31,
2011

Year ended
November 30,
2010

Six months ended
May 31,
2011

Year ended
November 30,
2010

Equity-Income II

 

 

 

 

Shares sold

6,224

11,830

$ 117,479

$ 195,399

Reinvestment of distributions

1,916

4,305

35,347

71,108

Shares redeemed

(30,374)

(59,267)

(572,625)

(980,367)

Net increase (decrease)

(22,234)

(43,132)

$ (419,799)

$ (713,860)

Class K

 

 

 

 

Shares sold

1,728

12,200

$ 32,763

$ 201,326

Reinvestment of distributions

166

235

3,062

3,874

Shares redeemed

(4,780)

(3,385)

(88,595)

(55,871)

Net increase (decrease)

(2,886)

9,050

$ (52,770)

$ 149,329

Semiannual Report

12. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Semiannual Report

Managing Your Investments

Fidelity offers several ways to conveniently manage your workplace benefits (including your workplace savings plan, investments, and additional services) via your telephone or PC. You can access your plan and account information and research your investments 24 hours a day.

By Phone

Fidelity provides a single toll-free number to access plan information, account balances, positions, and quotes*. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.

(phone_graphic)

Fidelity Workplace
Investing
1-800-835-5092

By PC

Fidelity's web site on the Internet provides a wide range of information, including plan information, daily financial news, fund performance, interactive planning tools, and news about Fidelity products and services.

(computer_graphic)

Fidelity's Web Site
www.401k.com

* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains distributions, and the effects of any sales charges.

Semiannual Report

To Write Fidelity

We'll give your correspondence immediate attention and send you written confirmation upon completion of your request.

(letter_graphic)

For Non-Retirement
Accounts

Buying shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003

Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

Selling shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035

Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

General Correspondence

Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500

(letter_graphic)

For Retirement
Accounts

Buying shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003

Selling shares

Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0035

Overnight Express
Fidelity Investments
Attn: Distribution Services
100 Crosby Parkway - KC1H
Covington, KY 41015

General Correspondence

Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research (U.K.) Inc.

Fidelity Management & Research
(Hong Kong) Limited

Fidelity Management & Research (Japan) Inc.

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional
Operations Company, Inc.

Boston, MA

Fidelity Service Company, Inc.

Boston, MA

Custodian

The Northern Trust Company

Chicago, IL 

EII-K-USAN-0711
1.863199.102

fid101

Fidelity®
Independence
Fund

Semiannual Report

May 31, 2011

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

The Chairman's message to shareholders.

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) website at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.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.

Semiannual Report

Chairman's Message

(photo_of_James_C_Curvey)

Dear Shareholder:

Amid indications the U.S. economy had turned a corner, U.S. equities continued their generally upward trend through the end of May, overcoming bouts of short-term volatility following unrest in North Africa and the natural disaster in Japan. Still, questions remained about the longer-term outlook, most notably inflationary pressure and persistently high unemployment. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.

One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.

You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).

A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.

We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.

Sincerely,


(The acting chairman's signature appears here.)

James C. Curvey
Acting Chairman

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2010 to May 31, 2011).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

Semiannual Report

Shareholder Expense Example - continued

 

Annualized Expense Ratio

Beginning
Account Value
December 1, 2010

Ending
Account Value
May 31, 2011

Expenses Paid
During Period*
December 1, 2010
to May 31, 2011

Independence

.67%

 

 

 

Actual

 

$ 1,000.00

$ 1,126.20

$ 3.55

HypotheticalA

 

$ 1,000.00

$ 1,021.59

$ 3.38

Class K

.54%

 

 

 

Actual

 

$ 1,000.00

$ 1,127.00

$ 2.86

HypotheticalA

 

$ 1,000.00

$ 1,022.24

$ 2.72

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of May 31, 2011

 

% of fund's
net assets

% of fund's net assets
6 months ago

Apple, Inc.

3.7

5.5

Chevron Corp.

2.7

0.0

United Continental Holdings, Inc.

2.5

2.6

Deckers Outdoor Corp.

1.8

1.5

Schlumberger Ltd.

1.8

1.9

Green Mountain Coffee Roasters, Inc.

1.7

0.0

Halliburton Co.

1.7

0.0

Informatica Corp.

1.6

1.3

LyondellBasell Industries NV Class A

1.6

0.8

Delta Air Lines, Inc.

1.6

3.4

 

20.7

Top Five Market Sectors as of May 31, 2011

 

% of fund's
net assets

% of fund's net assets
6 months ago

Information Technology

20.6

25.9

Consumer Discretionary

19.3

22.8

Energy

17.4

8.8

Industrials

13.6

17.5

Health Care

11.4

7.3

Asset Allocation (% of fund's net assets)

As of May 31, 2011 *

As of November 30, 2010 **

fid84

Stocks 99.6%

 

fid84

Stocks 99.7%

 

fid93

Short-Term
Investments and
Net Other Assets 0.4%

 

fid93

Short-Term
Investments and
Net Other Assets 0.3%

 

* Foreign investments

20.0%

 

** Foreign investments

17.6%

 

fid195

Semiannual Report

Investments May 31, 2011 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 99.6%

Shares

Value (000s)

CONSUMER DISCRETIONARY - 19.3%

Auto Components - 0.6%

BorgWarner, Inc. (a)

400,000

$ 29,004

Automobiles - 1.8%

Bayerische Motoren Werke AG (BMW)

500,000

44,226

Ford Motor Co. (a)

2,500,000

37,300

 

81,526

Diversified Consumer Services - 1.1%

Anhanguera Educacional Participacoes SA

465,700

9,980

Weight Watchers International, Inc.

500,000

40,120

 

50,100

Hotels, Restaurants & Leisure - 2.8%

Arcos Dorados Holdings, Inc.

530,000

12,058

Chipotle Mexican Grill, Inc. (a)

100,000

28,907

Las Vegas Sands Corp. (a)

469,000

19,482

Panera Bread Co. Class A (a)

450,000

56,264

Starwood Hotels & Resorts Worldwide, Inc.

150,000

9,147

 

125,858

Household Durables - 0.6%

Gafisa SA sponsored ADR

2,584,000

28,527

Internet & Catalog Retail - 1.5%

Amazon.com, Inc. (a)

89,800

17,663

Priceline.com, Inc. (a)

97,000

49,973

 

67,636

Media - 1.0%

Comcast Corp. Class A

1,000,000

25,240

Focus Media Holding Ltd. ADR (a)(d)

600,000

18,750

 

43,990

Multiline Retail - 1.2%

Lojas Renner SA

100,000

3,795

Macy's, Inc.

1,770,800

51,141

Marisa Lojas SA

100,000

1,699

 

56,635

Specialty Retail - 2.2%

China ZhengTong Auto Services Holdings Ltd.

4,660,000

5,369

Tiffany & Co., Inc.

400,000

30,264

Williams-Sonoma, Inc.

1,636,100

64,053

 

99,686

Textiles, Apparel & Luxury Goods - 6.5%

Arezzo Industria e Comercio SA

596,000

9,822

Common Stocks - continued

Shares

Value (000s)

CONSUMER DISCRETIONARY - continued

Textiles, Apparel & Luxury Goods - continued

Burberry Group PLC

800,000

$ 17,358

Coach, Inc.

900,000

57,294

Deckers Outdoor Corp. (a)

900,000

81,990

Fossil, Inc. (a)

500,000

52,920

LVMH Moet Hennessy - Louis Vuitton

50,000

8,697

Phillips-Van Heusen Corp.

625,800

41,284

The Swatch Group AG (Bearer)

40,000

19,899

Vera Bradley, Inc.

133,889

6,618

 

295,882

TOTAL CONSUMER DISCRETIONARY

878,844

CONSUMER STAPLES - 3.8%

Beverages - 0.6%

Hansen Natural Corp. (a)

400,000

28,660

Food & Staples Retailing - 0.1%

Droga Raia SA

197,000

3,496

Food Products - 1.7%

Green Mountain Coffee Roasters, Inc. (a)

966,500

79,611

Personal Products - 1.4%

Estee Lauder Companies, Inc. Class A

371,600

38,093

Hengan International Group Co. Ltd.

2,781,000

23,976

 

62,069

TOTAL CONSUMER STAPLES

173,836

ENERGY - 17.4%

Energy Equipment & Services - 6.3%

Baker Hughes, Inc.

850,000

62,841

Carbo Ceramics, Inc. (d)

300,000

45,081

Halliburton Co.

1,550,000

77,733

Saipem SpA

400,000

21,103

Schlumberger Ltd.

942,006

80,749

 

287,507

Oil, Gas & Consumable Fuels - 11.1%

Alpha Natural Resources, Inc. (a)(d)

300,000

16,437

Chevron Corp.

1,150,000

120,647

Concho Resources, Inc. (a)

666,300

63,039

Continental Resources, Inc. (a)(d)

725,000

48,010

Denbury Resources, Inc. (a)

500,000

10,980

Common Stocks - continued

Shares

Value (000s)

ENERGY - continued

Oil, Gas & Consumable Fuels - continued

Kosmos Energy Ltd.

367,500

$ 7,038

Massey Energy Co.

90,000

5,940

OAO Gazprom sponsored ADR

300,000

4,425

Oasis Petroleum, Inc. (a)(d)

600,000

18,150

Occidental Petroleum Corp.

300,000

32,355

Pioneer Natural Resources Co.

750,000

68,865

Tesoro Corp. (a)

300,000

7,320

Valero Energy Corp.

800,000

22,000

Western Refining, Inc. (a)(d)

600,000

10,458

Whiting Petroleum Corp. (a)

1,000,000

67,100

 

502,764

TOTAL ENERGY

790,271

FINANCIALS - 2.3%

Capital Markets - 0.9%

Apollo Global Management LLC Class A

2,401,800

43,280

Commercial Banks - 0.7%

CIT Group, Inc. (a)

200,000

8,866

Itau Unibanco Banco Multiplo SA sponsored ADR

914,700

20,883

 

29,749

Consumer Finance - 0.1%

Green Dot Corp. Class A (d)

100,000

3,874

Real Estate Management & Development - 0.6%

CB Richard Ellis Group, Inc. Class A (a)

1,000,000

26,430

TOTAL FINANCIALS

103,333

HEALTH CARE - 11.4%

Biotechnology - 1.8%

Amgen, Inc. (a)

100,000

6,054

United Therapeutics Corp. (a)

485,300

31,336

Vertex Pharmaceuticals, Inc. (a)

800,000

43,192

 

80,582

Health Care Equipment & Supplies - 0.8%

Edwards Lifesciences Corp. (a)

175,000

15,528

IDEXX Laboratories, Inc. (a)(d)

100,000

7,872

Volcano Corp. (a)

400,000

12,572

 

35,972

Common Stocks - continued

Shares

Value (000s)

HEALTH CARE - continued

Health Care Providers & Services - 4.7%

Accretive Health, Inc.

500,000

$ 12,170

Express Scripts, Inc. (a)

477,800

28,458

HMS Holdings Corp. (a)

271,500

21,193

Humana, Inc.

625,000

50,331

McKesson Corp.

400,000

34,244

Medco Health Solutions, Inc. (a)

399,800

23,932

UnitedHealth Group, Inc.

400,000

19,580

WellPoint, Inc.

325,000

25,405

 

215,313

Health Care Technology - 0.6%

Epocrates, Inc. (a)

294,400

6,197

SXC Health Solutions Corp. (a)

400,000

23,650

 

29,847

Pharmaceuticals - 3.5%

Novo Nordisk A/S Series B sponsored ADR

500,000

63,005

Shire PLC sponsored ADR

350,000

33,457

Valeant Pharmaceuticals International, Inc. (Canada)

1,156,460

60,619

 

157,081

TOTAL HEALTH CARE

518,795

INDUSTRIALS - 13.6%

Aerospace & Defense - 0.4%

Goodrich Corp.

194,200

16,952

Airlines - 4.3%

Delta Air Lines, Inc. (a)

6,900,775

69,560

United Continental Holdings, Inc. (a)(d)

4,745,000

114,592

US Airways Group, Inc. (a)

1,074,220

9,775

 

193,927

Commercial Services & Supplies - 0.2%

Swisher Hygiene, Inc. (a)(f)

364,300

2,164

Swisher Hygiene, Inc. (a)(f)

1,167,445

6,935

 

9,099

Construction & Engineering - 0.7%

Fluor Corp.

400,000

27,572

Shaw Group, Inc. (a)

100,000

3,653

 

31,225

Electrical Equipment - 0.4%

Roper Industries, Inc.

200,000

16,694

Common Stocks - continued

Shares

Value (000s)

INDUSTRIALS - continued

Industrial Conglomerates - 0.3%

Carlisle Companies, Inc.

300,000

$ 14,580

Machinery - 5.9%

Caterpillar, Inc.

518,000

54,804

Changsha Zoomlion Heavy Industry Science & Technology Development Co. Ltd. (H Shares)

3,403,800

8,044

Cummins, Inc.

432,200

45,485

Dover Corp.

600,000

40,338

Kennametal, Inc.

800,000

33,384

PACCAR, Inc.

200,000

10,000

Parker Hannifin Corp.

627,500

55,753

Sandvik AB

650,000

12,320

Weg SA

700,000

7,989

 

268,117

Road & Rail - 0.6%

CSX Corp.

362,700

28,762

Trading Companies & Distributors - 0.8%

Air Lease Corp.:

Class A (a)(e)

500,600

14,267

Class A

398,200

11,349

Mills Estruturas e Servicos de Engenharia SA

801,000

10,706

 

36,322

TOTAL INDUSTRIALS

615,678

INFORMATION TECHNOLOGY - 20.6%

Communications Equipment - 5.0%

Alcatel-Lucent SA sponsored ADR (a)

8,000,000

45,360

Ciena Corp. (a)(d)

200,000

5,350

HTC Corp.

800,000

34,072

JDS Uniphase Corp. (a)

600,000

12,114

Juniper Networks, Inc. (a)

1,042,300

38,159

QUALCOMM, Inc.

900,000

52,731

Riverbed Technology, Inc. (a)

1,000,000

37,920

 

225,706

Computers & Peripherals - 4.3%

Apple, Inc. (a)

480,700

167,198

EMC Corp. (a)

500,000

14,235

NetApp, Inc. (a)

250,000

13,693

 

195,126

Common Stocks - continued

Shares

Value (000s)

INFORMATION TECHNOLOGY - continued

Electronic Equipment & Components - 0.2%

TE Connectivity Ltd.

200,000

$ 7,366

Internet Software & Services - 3.3%

Active Network, Inc.

179,800

3,299

Baidu.com, Inc. sponsored ADR (a)

200,000

27,142

Cornerstone Ondemand, Inc.

283,600

5,476

Demand Media, Inc. (d)

275,000

4,183

eBay, Inc. (a)

1,200,400

37,416

Facebook, Inc. Class B (f)

171,740

4,294

LinkedIn Corp. (a)

7,600

620

Rackspace Hosting, Inc. (a)

200,000

8,800

Renren, Inc. ADR

530,500

6,817

Tencent Holdings Ltd.

1,612,500

46,402

Yandex NV

59,700

1,997

YouKu.com, Inc. ADR (a)(d)

91,400

3,863

 

150,309

IT Services - 1.7%

Cognizant Technology Solutions Corp. Class A (a)

800,000

60,832

Fidelity National Information Services, Inc.

200,000

6,436

Jack Henry & Associates, Inc.

400,000

12,496

 

79,764

Semiconductors & Semiconductor Equipment - 2.5%

ARM Holdings PLC sponsored ADR (d)

600,000

17,130

Atmel Corp. (a)

300,000

4,506

Broadcom Corp. Class A

1,045,500

37,617

Freescale Semiconductor Holdings I Ltd.

939,600

17,383

NVIDIA Corp. (a)

500,000

10,020

NXP Semiconductors NV

972,000

27,731

 

114,387

Software - 3.6%

Ariba, Inc. (a)

500,000

16,770

Citrix Systems, Inc. (a)

100,000

8,762

Informatica Corp. (a)

1,250,200

73,337

RealPage, Inc.

275,941

8,126

Rovi Corp. (a)

500,000

28,980

Taleo Corp. Class A (a)

500,000

18,665

VMware, Inc. Class A (a)

100,000

9,732

 

164,372

TOTAL INFORMATION TECHNOLOGY

937,030

Common Stocks - continued

Shares

Value (000s)

MATERIALS - 11.2%

Chemicals - 7.9%

Celanese Corp. Class A

450,000

$ 23,441

CF Industries Holdings, Inc.

375,000

57,668

Dow Chemical Co.

1,892,200

68,365

Ferro Corp. (a)

369,400

4,839

FMC Corp.

500,000

42,175

LyondellBasell Industries NV Class A

1,600,000

70,096

PPG Industries, Inc.

350,000

31,045

Rockwood Holdings, Inc. (a)

528,300

27,783

Umicore SA

200,000

11,019

Uralkali JSC GDR (Reg. S)

550,000

23,529

 

359,960

Metals & Mining - 3.3%

Alcoa, Inc.

2,026,600

34,067

First Quantum Minerals Ltd.

50,000

6,799

Freeport-McMoRan Copper & Gold, Inc.

500,000

25,820

Molycorp, Inc. (d)

142,900

9,493

Stillwater Mining Co. (a)

1,352,500

27,388

United States Steel Corp. (d)

1,000,000

46,110

 

149,677

TOTAL MATERIALS

509,637

TOTAL COMMON STOCKS

(Cost $3,513,331)

4,527,424

Money Market Funds - 2.9%

 

 

 

 

Fidelity Cash Central Fund, 0.14% (b)

17,606,148

17,606

Fidelity Securities Lending Cash Central Fund, 0.14% (b)(c)

112,893,400

112,893

TOTAL MONEY MARKET FUNDS

(Cost $130,499)

130,499

TOTAL INVESTMENT PORTFOLIO - 102.5%

(Cost $3,643,830)

4,657,923

NET OTHER ASSETS (LIABILITIES) - (2.5)%

(115,345)

NET ASSETS - 100%

$ 4,542,578

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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.

(d) Security or a portion of the security is on loan at period end.

(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $14,267,000 or 0.3% of net assets.

(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 $13,393,000 or 0.3% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost (000s)

Facebook, Inc. Class B

3/31/11

$ 4,294

Swisher Hygiene, Inc.

3/22/11 - 4/15/11

$ 10,811

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

$ 9

Fidelity Securities Lending Cash Central Fund

645

Total

$ 654

Other Information

The following is a summary of the inputs used, as of May 31, 2011, 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 in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description
(Amounts in thousands)

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 878,844

$ 878,844

$ -

$ -

Consumer Staples

173,836

173,836

-

-

Energy

790,271

790,271

-

-

Financials

103,333

103,333

-

-

Health Care

518,795

518,795

-

-

Industrials

615,678

606,579

9,099

-

Information Technology

937,030

932,736

-

4,294

Materials

509,637

509,637

-

-

Money Market Funds

130,499

130,499

-

-

Total Investments in Securities:

$ 4,657,923

$ 4,644,530

$ 9,099

$ 4,294

The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:

(Amounts in thousands)

 

Investments in Securities:

Beginning Balance

$ 10,262

Total Realized Gain (Loss)

-

Total Unrealized Gain (Loss)

-

Cost of Purchases

4,294

Proceeds of Sales

-

Amortization/Accretion

-

Transfers in to Level 3

-

Transfers out of Level 3

(10,262)

Ending Balance

$ 4,294

The change in unrealized gain (loss) for the period attributable to Level 3 securities held at May 31, 2011

$ -

The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.

Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited)

United States of America

80.0%

Netherlands

2.2%

Brazil

2.1%

Canada

1.9%

Cayman Islands

1.9%

Netherlands Antilles

1.8%

Denmark

1.4%

France

1.2%

China

1.2%

Germany

1.0%

Others (Individually Less Than 1%)

5.3%

 

100.0%

Income Tax Information

At November 30, 2010, the Fund had a capital loss carryforward of approximately $1,483,260,000 of which $710,362,000 and $772,898,000 will expire in fiscal 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $111,645) - See accompanying schedule:

Unaffiliated issuers (cost $3,513,331)

$ 4,527,424

 

Fidelity Central Funds (cost $130,499)

130,499

 

Total Investments (cost $3,643,830)

 

$ 4,657,923

Foreign currency held at value (cost $553)

558

Receivable for investments sold

36,218

Receivable for fund shares sold

1,299

Dividends receivable

5,127

Distributions receivable from Fidelity Central Funds

263

Prepaid expenses

2

Other receivables

127

Total assets

4,701,517

 

 

 

Liabilities

Payable for investments purchased

$ 39,160

Payable for fund shares redeemed

4,593

Accrued management fee

1,384

Other affiliated payables

730

Other payables and accrued expenses

179

Collateral on securities loaned, at value

112,893

Total liabilities

158,939

 

 

 

Net Assets

$ 4,542,578

Net Assets consist of:

 

Paid in capital

$ 4,585,437

Undistributed net investment income

3,321

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

(1,060,275)

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

1,014,095

Net Assets

$ 4,542,578

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Independence:
Net Asset Value, offering price and redemption price
per share ($4,230,232 ÷ 161,251 shares)

$ 26.23

 

 

 

Class K:
Net Asset Value, offering price and redemption price per share ($312,346 ÷ 11,891 shares)

$ 26.27

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

 Amounts in thousands

Six months ended May 31, 2011 (Unaudited)

 

  

  

Investment Income

  

  

Dividends

 

$ 17,449

Income from Fidelity Central Funds

 

654

Total income

 

18,103

 

 

 

Expenses

Management fee
Basic fee

$ 12,522

Performance adjustment

(2,370)

Transfer agent fees

3,845

Accounting and security lending fees

541

Custodian fees and expenses

118

Independent trustees' compensation

11

Appreciation in deferred trustee compensation account

1

Registration fees

58

Audit

39

Legal

10

Interest

1

Miscellaneous

25

Total expenses before reductions

14,801

Expense reductions

(115)

14,686

Net investment income (loss)

3,417

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

437,051

Foreign currency transactions

(556)

Total net realized gain (loss)

 

436,495

Change in net unrealized appreciation (depreciation) on:

Investment securities

88,080

Assets and liabilities in foreign currencies

20

Total change in net unrealized appreciation (depreciation)

 

88,100

Net gain (loss)

524,595

Net increase (decrease) in net assets resulting from operations

$ 528,012

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Changes in Net Assets

 Amounts in thousands

Six months ended May 31, 2011 (Unaudited)

Year ended November 30, 2010

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 3,417

$ (6,017)

Net realized gain (loss)

436,495

605,914

Change in net unrealized appreciation (depreciation)

88,100

204,885

Net increase (decrease) in net assets resulting
from operations

528,012

804,782

Distributions to shareholders from net investment income

-

(7,207)

Distributions to shareholders from net realized gain

-

(1,044)

Total distributions

-

(8,251)

Share transactions - net increase (decrease)

(217,067)

(566,877)

Total increase (decrease) in net assets

310,945

229,654

 

 

 

Net Assets

Beginning of period

4,231,633

4,001,979

End of period (including undistributed net investment income of $3,321 and accumulated net investment loss of $96, respectively)

$ 4,542,578

$ 4,231,633

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Independence

 

Six months ended May 31, 2011

Years ended November 30,

  

(Unaudited)

2010

2009

2008

2007

2006

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 23.29

$ 19.10

$ 14.17

$ 27.60

$ 22.03

$ 19.46

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) D

  .02

  (.03)

  .06

  .08

  .07

  .08

Net realized and unrealized gain (loss)

  2.92

  4.26

  4.96

  (12.75)

  5.60

  2.54

Total from investment operations

  2.94

  4.23

  5.02

  (12.67)

  5.67

  2.62

Distributions from net investment income

  -

  (.03)

  (.09)

  (.01)

  (.10)

  (.05)

Distributions from net realized gain

  -

  (.01)

  -

  (.75)

  -

  -

Total distributions

  -

  (.04)

  (.09)

  (.76)

  (.10)

  (.05)

Net asset value, end of period

$ 26.23

$ 23.29

$ 19.10

$ 14.17

$ 27.60

$ 22.03

Total Return B, C

  12.62%

  22.18%

  35.62%

  (47.19)%

  25.85%

  13.49%

Ratios to Average Net Assets E, G

 

 

 

 

 

Expenses before reductions

  .67% A

  .92%

  .92%

  .91%

  .90%

  .87%

Expenses net of fee waivers, if any

  .67% A

  .92%

  .92%

  .91%

  .90%

  .87%

Expenses net of all reductions

  .66% A

  .92%

  .91%

  .90%

  .89%

  .86%

Net investment income (loss)

  .14% A

  (.16)%

  .36%

  .34%

  .31%

  .41%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (in millions)

$ 4,230

$ 3,988

$ 3,824

$ 3,407

$ 5,899

$ 4,723

Portfolio turnover rate F

  103% A

  103%

  173%

  173%

  175%

  169%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class K

 

Six months ended
May 31, 2011

Years ended November 30,

  

(Unaudited)

2010

2009

2008 G

Selected Per-Share Data

 

 

 

 

Net asset value, beginning of period

$ 23.31

$ 19.12

$ 14.18

$ 28.56

Income from Investment Operations

 

 

 

 

Net investment income (loss) D

  .03

  - I

  .09

  .09

Net realized and unrealized gain (loss)

  2.93

  4.26

  4.96

  (14.47)

Total from investment operations

  2.96

  4.26

  5.05

  (14.38)

Distributions from net investment income

  -

  (.07)

  (.11)

  -

Distributions from net realized gain

  -

  (.01)

  -

  -

Total distributions

  -

  (.07) J

  (.11)

  -

Net asset value, end of period

$ 26.27

$ 23.31

$ 19.12

$ 14.18

Total Return B, C

  12.70%

  22.37%

  35.94%

  (50.35)%

Ratios to Average Net Assets E, H

 

 

 

 

Expenses before reductions

  .54% A

  .78%

  .73%

  .79% A

Expenses net of fee waivers, if any

  .54% A

  .78%

  .73%

  .79%A

Expenses net of all reductions

  .53% A

  .77%

  .72%

  .78%A

Net investment income (loss)

  .27% A

  (.01)%

  .56%

  1.04%A

Supplemental Data

 

 

 

 

Net assets, end of period (in millions)

$ 312

$ 243

$ 178

$ 78

Portfolio turnover rate F

  103% A

  103%

  173%

  173%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.01 per share.

J Total distributions of $.07 per share is comprised of distributions from net investment income of $.067 and distributions from net realized gain of $.005 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended May 31, 2011 (Unaudited)

(Amounts in thousands except ratios)

1. Organization.

Fidelity Independence Fund (the Fund) is a fund of Fidelity Financial Trust (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Independence and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.

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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

Expenses. 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, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are 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. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to futures transactions, foreign currency transactions, market discount, partnerships, deferred trustees compensation, net operating loss, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.

The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:

Gross unrealized appreciation

$ 1,077,024

Gross unrealized depreciation

(65,401)

Net unrealized appreciation (depreciation) on securities and other investments

$ 1,011,623

 

 

Tax cost

$ 3,646,300

Semiannual Report

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be November 30, 2012.

New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $2,302,643 and $2,515,049, respectively.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of Independence as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .45% of the Fund's average net assets.

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Independence. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:

 

Amount

% of
Average
Net Assets *

Independence

$ 3,774

.18

Class K

71

.05

 

$ 3,845

 

* Annualized

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $28 for the period.

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:

Borrower or Lender

Average Daily
Loan Balance

Weighted Average Interest Rate

Interest Expense

Borrower

$ 6,723

.40%

$ 1

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $8 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent 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. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $213. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and 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 $645, and includes $1 from securities loaned to FCM.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $115 for the period.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
May 31, 2011

Year ended
November 30, 2010

From net investment income

 

 

Independence

$ -

$ 6,585

Class K

-

622

Total

$ -

$ 7,207

From net realized gain

 

 

Independence

$ -

$ 998

Class K

-

46

Total

$ -

$ 1,044

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended May 31,
2011

Year ended November 30,
2010

Six months ended May 31,
2011

Year ended November 30,
2010

Independence

 

 

 

 

Shares sold

7,439

11,119

$ 186,141

$ 231,763

Reinvestment of distributions

-

385

-

7,469

Shares redeemed

(17,412)

(40,468)

(440,215)

(829,719)

Net increase (decrease)

(9,973)

(28,964)

$ (254,074)

$ (590,487)

Class K

 

 

 

 

Shares sold

2,909

5,967

$ 73,814

$ 122,003

Reinvestment of distributions

-

35

-

669

Shares redeemed

(1,460)

(4,890)

(36,807)

(99,062)

Net increase (decrease)

1,449

1,112

$ 37,007

$ 23,610

Semiannual Report

12. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research
(U.K.) Inc.

Fidelity Management & Research
(Hong Kong) Limited

Fidelity Management & Research
(Japan) Inc.

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional
Operations Company, Inc.

Boston, MA

Fidelity Service Company, Inc.

Boston, MA

Custodian

The Northern Trust Company

Chicago, Illinois

The Fidelity Telephone Connection

Mutual Fund 24-Hour Service

Exchanges/Redemptions
and Account Assistance 1-800-544-6666

Product Information 1-800-544-6666

Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)

TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)

Fidelity Automated Service
Telephone (FAST®) fid98
1-800-544-5555

fid98
Automated line for quickest service 

FRE-USAN-0711
1.786813.108

fid101

Fidelity®
Independence
Fund -
Class K

Semiannual Report

May 31, 2011

(2_fidelity_logos) (Registered_Trademark)

Contents

Chairman's Message

<Click Here>

The Chairman's message to shareholders.

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) website at http://www.sec.gov. You may also call 1-800-835-5092 to request a free copy of the proxy voting guidelines.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.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.

Semiannual Report

Chairman's Message

(photo_of_James_C_Curvey)

Dear Shareholder:

Amid indications the U.S. economy had turned a corner, U.S. equities continued their generally upward trend through the end of May, overcoming bouts of short-term volatility following unrest in North Africa and the natural disaster in Japan. Still, questions remained about the longer-term outlook, most notably inflationary pressure and persistently high unemployment. Financial markets are always unpredictable, of course, but there also are several time-tested investment principles that can help put the odds in your favor.

One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There can be tax advantages and cost benefits to consider as well. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.

You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).

A third principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.

We invite you to contact us via the Internet, through our Investor Centers or by phone. It is our privilege to provide you the information you need to make the investments that are right for you.

Sincerely,


(The acting chairman's signature appears here.)

James C. Curvey
Acting Chairman

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (December 1, 2010 to May 31, 2011).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

Semiannual Report

Shareholder Expense Example - continued

 

Annualized Expense Ratio

Beginning
Account Value
December 1, 2010

Ending
Account Value
May 31, 2011

Expenses Paid
During Period*
December 1, 2010
to May 31, 2011

Independence

.67%

 

 

 

Actual

 

$ 1,000.00

$ 1,126.20

$ 3.55

HypotheticalA

 

$ 1,000.00

$ 1,021.59

$ 3.38

Class K

.54%

 

 

 

Actual

 

$ 1,000.00

$ 1,127.00

$ 2.86

HypotheticalA

 

$ 1,000.00

$ 1,022.24

$ 2.72

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of May 31, 2011

 

% of fund's
net assets

% of fund's net assets
6 months ago

Apple, Inc.

3.7

5.5

Chevron Corp.

2.7

0.0

United Continental Holdings, Inc.

2.5

2.6

Deckers Outdoor Corp.

1.8

1.5

Schlumberger Ltd.

1.8

1.9

Green Mountain Coffee Roasters, Inc.

1.7

0.0

Halliburton Co.

1.7

0.0

Informatica Corp.

1.6

1.3

LyondellBasell Industries NV Class A

1.6

0.8

Delta Air Lines, Inc.

1.6

3.4

 

20.7

Top Five Market Sectors as of May 31, 2011

 

% of fund's
net assets

% of fund's net assets
6 months ago

Information Technology

20.6

25.9

Consumer Discretionary

19.3

22.8

Energy

17.4

8.8

Industrials

13.6

17.5

Health Care

11.4

7.3

Asset Allocation (% of fund's net assets)

As of May 31, 2011 *

As of November 30, 2010 **

fid84

Stocks 99.6%

 

fid84

Stocks 99.7%

 

fid93

Short-Term
Investments and
Net Other Assets 0.4%

 

fid93

Short-Term
Investments and
Net Other Assets 0.3%

 

* Foreign investments

20.0%

 

** Foreign investments

17.6%

 

fid210

Semiannual Report

Investments May 31, 2011 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 99.6%

Shares

Value (000s)

CONSUMER DISCRETIONARY - 19.3%

Auto Components - 0.6%

BorgWarner, Inc. (a)

400,000

$ 29,004

Automobiles - 1.8%

Bayerische Motoren Werke AG (BMW)

500,000

44,226

Ford Motor Co. (a)

2,500,000

37,300

 

81,526

Diversified Consumer Services - 1.1%

Anhanguera Educacional Participacoes SA

465,700

9,980

Weight Watchers International, Inc.

500,000

40,120

 

50,100

Hotels, Restaurants & Leisure - 2.8%

Arcos Dorados Holdings, Inc.

530,000

12,058

Chipotle Mexican Grill, Inc. (a)

100,000

28,907

Las Vegas Sands Corp. (a)

469,000

19,482

Panera Bread Co. Class A (a)

450,000

56,264

Starwood Hotels & Resorts Worldwide, Inc.

150,000

9,147

 

125,858

Household Durables - 0.6%

Gafisa SA sponsored ADR

2,584,000

28,527

Internet & Catalog Retail - 1.5%

Amazon.com, Inc. (a)

89,800

17,663

Priceline.com, Inc. (a)

97,000

49,973

 

67,636

Media - 1.0%

Comcast Corp. Class A

1,000,000

25,240

Focus Media Holding Ltd. ADR (a)(d)

600,000

18,750

 

43,990

Multiline Retail - 1.2%

Lojas Renner SA

100,000

3,795

Macy's, Inc.

1,770,800

51,141

Marisa Lojas SA

100,000

1,699

 

56,635

Specialty Retail - 2.2%

China ZhengTong Auto Services Holdings Ltd.

4,660,000

5,369

Tiffany & Co., Inc.

400,000

30,264

Williams-Sonoma, Inc.

1,636,100

64,053

 

99,686

Textiles, Apparel & Luxury Goods - 6.5%

Arezzo Industria e Comercio SA

596,000

9,822

Common Stocks - continued

Shares

Value (000s)

CONSUMER DISCRETIONARY - continued

Textiles, Apparel & Luxury Goods - continued

Burberry Group PLC

800,000

$ 17,358

Coach, Inc.

900,000

57,294

Deckers Outdoor Corp. (a)

900,000

81,990

Fossil, Inc. (a)

500,000

52,920

LVMH Moet Hennessy - Louis Vuitton

50,000

8,697

Phillips-Van Heusen Corp.

625,800

41,284

The Swatch Group AG (Bearer)

40,000

19,899

Vera Bradley, Inc.

133,889

6,618

 

295,882

TOTAL CONSUMER DISCRETIONARY

878,844

CONSUMER STAPLES - 3.8%

Beverages - 0.6%

Hansen Natural Corp. (a)

400,000

28,660

Food & Staples Retailing - 0.1%

Droga Raia SA

197,000

3,496

Food Products - 1.7%

Green Mountain Coffee Roasters, Inc. (a)

966,500

79,611

Personal Products - 1.4%

Estee Lauder Companies, Inc. Class A

371,600

38,093

Hengan International Group Co. Ltd.

2,781,000

23,976

 

62,069

TOTAL CONSUMER STAPLES

173,836

ENERGY - 17.4%

Energy Equipment & Services - 6.3%

Baker Hughes, Inc.

850,000

62,841

Carbo Ceramics, Inc. (d)

300,000

45,081

Halliburton Co.

1,550,000

77,733

Saipem SpA

400,000

21,103

Schlumberger Ltd.

942,006

80,749

 

287,507

Oil, Gas & Consumable Fuels - 11.1%

Alpha Natural Resources, Inc. (a)(d)

300,000

16,437

Chevron Corp.

1,150,000

120,647

Concho Resources, Inc. (a)

666,300

63,039

Continental Resources, Inc. (a)(d)

725,000

48,010

Denbury Resources, Inc. (a)

500,000

10,980

Common Stocks - continued

Shares

Value (000s)

ENERGY - continued

Oil, Gas & Consumable Fuels - continued

Kosmos Energy Ltd.

367,500

$ 7,038

Massey Energy Co.

90,000

5,940

OAO Gazprom sponsored ADR

300,000

4,425

Oasis Petroleum, Inc. (a)(d)

600,000

18,150

Occidental Petroleum Corp.

300,000

32,355

Pioneer Natural Resources Co.

750,000

68,865

Tesoro Corp. (a)

300,000

7,320

Valero Energy Corp.

800,000

22,000

Western Refining, Inc. (a)(d)

600,000

10,458

Whiting Petroleum Corp. (a)

1,000,000

67,100

 

502,764

TOTAL ENERGY

790,271

FINANCIALS - 2.3%

Capital Markets - 0.9%

Apollo Global Management LLC Class A

2,401,800

43,280

Commercial Banks - 0.7%

CIT Group, Inc. (a)

200,000

8,866

Itau Unibanco Banco Multiplo SA sponsored ADR

914,700

20,883

 

29,749

Consumer Finance - 0.1%

Green Dot Corp. Class A (d)

100,000

3,874

Real Estate Management & Development - 0.6%

CB Richard Ellis Group, Inc. Class A (a)

1,000,000

26,430

TOTAL FINANCIALS

103,333

HEALTH CARE - 11.4%

Biotechnology - 1.8%

Amgen, Inc. (a)

100,000

6,054

United Therapeutics Corp. (a)

485,300

31,336

Vertex Pharmaceuticals, Inc. (a)

800,000

43,192

 

80,582

Health Care Equipment & Supplies - 0.8%

Edwards Lifesciences Corp. (a)

175,000

15,528

IDEXX Laboratories, Inc. (a)(d)

100,000

7,872

Volcano Corp. (a)

400,000

12,572

 

35,972

Common Stocks - continued

Shares

Value (000s)

HEALTH CARE - continued

Health Care Providers & Services - 4.7%

Accretive Health, Inc.

500,000

$ 12,170

Express Scripts, Inc. (a)

477,800

28,458

HMS Holdings Corp. (a)

271,500

21,193

Humana, Inc.

625,000

50,331

McKesson Corp.

400,000

34,244

Medco Health Solutions, Inc. (a)

399,800

23,932

UnitedHealth Group, Inc.

400,000

19,580

WellPoint, Inc.

325,000

25,405

 

215,313

Health Care Technology - 0.6%

Epocrates, Inc. (a)

294,400

6,197

SXC Health Solutions Corp. (a)

400,000

23,650

 

29,847

Pharmaceuticals - 3.5%

Novo Nordisk A/S Series B sponsored ADR

500,000

63,005

Shire PLC sponsored ADR

350,000

33,457

Valeant Pharmaceuticals International, Inc. (Canada)

1,156,460

60,619

 

157,081

TOTAL HEALTH CARE

518,795

INDUSTRIALS - 13.6%

Aerospace & Defense - 0.4%

Goodrich Corp.

194,200

16,952

Airlines - 4.3%

Delta Air Lines, Inc. (a)

6,900,775

69,560

United Continental Holdings, Inc. (a)(d)

4,745,000

114,592

US Airways Group, Inc. (a)

1,074,220

9,775

 

193,927

Commercial Services & Supplies - 0.2%

Swisher Hygiene, Inc. (a)(f)

364,300

2,164

Swisher Hygiene, Inc. (a)(f)

1,167,445

6,935

 

9,099

Construction & Engineering - 0.7%

Fluor Corp.

400,000

27,572

Shaw Group, Inc. (a)

100,000

3,653

 

31,225

Electrical Equipment - 0.4%

Roper Industries, Inc.

200,000

16,694

Common Stocks - continued

Shares

Value (000s)

INDUSTRIALS - continued

Industrial Conglomerates - 0.3%

Carlisle Companies, Inc.

300,000

$ 14,580

Machinery - 5.9%

Caterpillar, Inc.

518,000

54,804

Changsha Zoomlion Heavy Industry Science & Technology Development Co. Ltd. (H Shares)

3,403,800

8,044

Cummins, Inc.

432,200

45,485

Dover Corp.

600,000

40,338

Kennametal, Inc.

800,000

33,384

PACCAR, Inc.

200,000

10,000

Parker Hannifin Corp.

627,500

55,753

Sandvik AB

650,000

12,320

Weg SA

700,000

7,989

 

268,117

Road & Rail - 0.6%

CSX Corp.

362,700

28,762

Trading Companies & Distributors - 0.8%

Air Lease Corp.:

Class A (a)(e)

500,600

14,267

Class A

398,200

11,349

Mills Estruturas e Servicos de Engenharia SA

801,000

10,706

 

36,322

TOTAL INDUSTRIALS

615,678

INFORMATION TECHNOLOGY - 20.6%

Communications Equipment - 5.0%

Alcatel-Lucent SA sponsored ADR (a)

8,000,000

45,360

Ciena Corp. (a)(d)

200,000

5,350

HTC Corp.

800,000

34,072

JDS Uniphase Corp. (a)

600,000

12,114

Juniper Networks, Inc. (a)

1,042,300

38,159

QUALCOMM, Inc.

900,000

52,731

Riverbed Technology, Inc. (a)

1,000,000

37,920

 

225,706

Computers & Peripherals - 4.3%

Apple, Inc. (a)

480,700

167,198

EMC Corp. (a)

500,000

14,235

NetApp, Inc. (a)

250,000

13,693

 

195,126

Common Stocks - continued

Shares

Value (000s)

INFORMATION TECHNOLOGY - continued

Electronic Equipment & Components - 0.2%

TE Connectivity Ltd.

200,000

$ 7,366

Internet Software & Services - 3.3%

Active Network, Inc.

179,800

3,299

Baidu.com, Inc. sponsored ADR (a)

200,000

27,142

Cornerstone Ondemand, Inc.

283,600

5,476

Demand Media, Inc. (d)

275,000

4,183

eBay, Inc. (a)

1,200,400

37,416

Facebook, Inc. Class B (f)

171,740

4,294

LinkedIn Corp. (a)

7,600

620

Rackspace Hosting, Inc. (a)

200,000

8,800

Renren, Inc. ADR

530,500

6,817

Tencent Holdings Ltd.

1,612,500

46,402

Yandex NV

59,700

1,997

YouKu.com, Inc. ADR (a)(d)

91,400

3,863

 

150,309

IT Services - 1.7%

Cognizant Technology Solutions Corp. Class A (a)

800,000

60,832

Fidelity National Information Services, Inc.

200,000

6,436

Jack Henry & Associates, Inc.

400,000

12,496

 

79,764

Semiconductors & Semiconductor Equipment - 2.5%

ARM Holdings PLC sponsored ADR (d)

600,000

17,130

Atmel Corp. (a)

300,000

4,506

Broadcom Corp. Class A

1,045,500

37,617

Freescale Semiconductor Holdings I Ltd.

939,600

17,383

NVIDIA Corp. (a)

500,000

10,020

NXP Semiconductors NV

972,000

27,731

 

114,387

Software - 3.6%

Ariba, Inc. (a)

500,000

16,770

Citrix Systems, Inc. (a)

100,000

8,762

Informatica Corp. (a)

1,250,200

73,337

RealPage, Inc.

275,941

8,126

Rovi Corp. (a)

500,000

28,980

Taleo Corp. Class A (a)

500,000

18,665

VMware, Inc. Class A (a)

100,000

9,732

 

164,372

TOTAL INFORMATION TECHNOLOGY

937,030

Common Stocks - continued

Shares

Value (000s)

MATERIALS - 11.2%

Chemicals - 7.9%

Celanese Corp. Class A

450,000

$ 23,441

CF Industries Holdings, Inc.

375,000

57,668

Dow Chemical Co.

1,892,200

68,365

Ferro Corp. (a)

369,400

4,839

FMC Corp.

500,000

42,175

LyondellBasell Industries NV Class A

1,600,000

70,096

PPG Industries, Inc.

350,000

31,045

Rockwood Holdings, Inc. (a)

528,300

27,783

Umicore SA

200,000

11,019

Uralkali JSC GDR (Reg. S)

550,000

23,529

 

359,960

Metals & Mining - 3.3%

Alcoa, Inc.

2,026,600

34,067

First Quantum Minerals Ltd.

50,000

6,799

Freeport-McMoRan Copper & Gold, Inc.

500,000

25,820

Molycorp, Inc. (d)

142,900

9,493

Stillwater Mining Co. (a)

1,352,500

27,388

United States Steel Corp. (d)

1,000,000

46,110

 

149,677

TOTAL MATERIALS

509,637

TOTAL COMMON STOCKS

(Cost $3,513,331)

4,527,424

Money Market Funds - 2.9%

 

 

 

 

Fidelity Cash Central Fund, 0.14% (b)

17,606,148

17,606

Fidelity Securities Lending Cash Central Fund, 0.14% (b)(c)

112,893,400

112,893

TOTAL MONEY MARKET FUNDS

(Cost $130,499)

130,499

TOTAL INVESTMENT PORTFOLIO - 102.5%

(Cost $3,643,830)

4,657,923

NET OTHER ASSETS (LIABILITIES) - (2.5)%

(115,345)

NET ASSETS - 100%

$ 4,542,578

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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.

(d) Security or a portion of the security is on loan at period end.

(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $14,267,000 or 0.3% of net assets.

(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 $13,393,000 or 0.3% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost (000s)

Facebook, Inc. Class B

3/31/11

$ 4,294

Swisher Hygiene, Inc.

3/22/11 - 4/15/11

$ 10,811

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

$ 9

Fidelity Securities Lending Cash Central Fund

645

Total

$ 654

Other Information

The following is a summary of the inputs used, as of May 31, 2011, 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 in the tables below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description
(Amounts in thousands)

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 878,844

$ 878,844

$ -

$ -

Consumer Staples

173,836

173,836

-

-

Energy

790,271

790,271

-

-

Financials

103,333

103,333

-

-

Health Care

518,795

518,795

-

-

Industrials

615,678

606,579

9,099

-

Information Technology

937,030

932,736

-

4,294

Materials

509,637

509,637

-

-

Money Market Funds

130,499

130,499

-

-

Total Investments in Securities:

$ 4,657,923

$ 4,644,530

$ 9,099

$ 4,294

The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:

(Amounts in thousands)

 

Investments in Securities:

Beginning Balance

$ 10,262

Total Realized Gain (Loss)

-

Total Unrealized Gain (Loss)

-

Cost of Purchases

4,294

Proceeds of Sales

-

Amortization/Accretion

-

Transfers in to Level 3

-

Transfers out of Level 3

(10,262)

Ending Balance

$ 4,294

The change in unrealized gain (loss) for the period attributable to Level 3 securities held at May 31, 2011

$ -

The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.

Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited)

United States of America

80.0%

Netherlands

2.2%

Brazil

2.1%

Canada

1.9%

Cayman Islands

1.9%

Netherlands Antilles

1.8%

Denmark

1.4%

France

1.2%

China

1.2%

Germany

1.0%

Others (Individually Less Than 1%)

5.3%

 

100.0%

Income Tax Information

At November 30, 2010, the Fund had a capital loss carryforward of approximately $1,483,260,000 of which $710,362,000 and $772,898,000 will expire in fiscal 2016 and 2017, respectively. Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $111,645) - See accompanying schedule:

Unaffiliated issuers (cost $3,513,331)

$ 4,527,424

 

Fidelity Central Funds (cost $130,499)

130,499

 

Total Investments (cost $3,643,830)

 

$ 4,657,923

Foreign currency held at value (cost $553)

558

Receivable for investments sold

36,218

Receivable for fund shares sold

1,299

Dividends receivable

5,127

Distributions receivable from Fidelity Central Funds

263

Prepaid expenses

2

Other receivables

127

Total assets

4,701,517

 

 

 

Liabilities

Payable for investments purchased

$ 39,160

Payable for fund shares redeemed

4,593

Accrued management fee

1,384

Other affiliated payables

730

Other payables and accrued expenses

179

Collateral on securities loaned, at value

112,893

Total liabilities

158,939

 

 

 

Net Assets

$ 4,542,578

Net Assets consist of:

 

Paid in capital

$ 4,585,437

Undistributed net investment income

3,321

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

(1,060,275)

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

1,014,095

Net Assets

$ 4,542,578

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Assets and Liabilities - continued

 Amounts in thousands (except per-share amounts)

May 31, 2011 (Unaudited)

 

 

 

Independence:
Net Asset Value, offering price and redemption price
per share ($4,230,232 ÷ 161,251 shares)

$ 26.23

 

 

 

Class K:
Net Asset Value, offering price and redemption price per share ($312,346 ÷ 11,891 shares)

$ 26.27

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

 Amounts in thousands

Six months ended May 31, 2011 (Unaudited)

 

  

  

Investment Income

  

  

Dividends

 

$ 17,449

Income from Fidelity Central Funds

 

654

Total income

 

18,103

 

 

 

Expenses

Management fee
Basic fee

$ 12,522

Performance adjustment

(2,370)

Transfer agent fees

3,845

Accounting and security lending fees

541

Custodian fees and expenses

118

Independent trustees' compensation

11

Appreciation in deferred trustee compensation account

1

Registration fees

58

Audit

39

Legal

10

Interest

1

Miscellaneous

25

Total expenses before reductions

14,801

Expense reductions

(115)

14,686

Net investment income (loss)

3,417

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

437,051

Foreign currency transactions

(556)

Total net realized gain (loss)

 

436,495

Change in net unrealized appreciation (depreciation) on:

Investment securities

88,080

Assets and liabilities in foreign currencies

20

Total change in net unrealized appreciation (depreciation)

 

88,100

Net gain (loss)

524,595

Net increase (decrease) in net assets resulting from operations

$ 528,012

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Changes in Net Assets

 Amounts in thousands

Six months ended May 31, 2011 (Unaudited)

Year ended November 30, 2010

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 3,417

$ (6,017)

Net realized gain (loss)

436,495

605,914

Change in net unrealized appreciation (depreciation)

88,100

204,885

Net increase (decrease) in net assets resulting
from operations

528,012

804,782

Distributions to shareholders from net investment income

-

(7,207)

Distributions to shareholders from net realized gain

-

(1,044)

Total distributions

-

(8,251)

Share transactions - net increase (decrease)

(217,067)

(566,877)

Total increase (decrease) in net assets

310,945

229,654

 

 

 

Net Assets

Beginning of period

4,231,633

4,001,979

End of period (including undistributed net investment income of $3,321 and accumulated net investment loss of $96, respectively)

$ 4,542,578

$ 4,231,633

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Independence

 

Six months ended May 31, 2011

Years ended November 30,

  

(Unaudited)

2010

2009

2008

2007

2006

Selected Per-Share Data

 

 

 

 

 

Net asset value, beginning of period

$ 23.29

$ 19.10

$ 14.17

$ 27.60

$ 22.03

$ 19.46

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) D

  .02

  (.03)

  .06

  .08

  .07

  .08

Net realized and unrealized gain (loss)

  2.92

  4.26

  4.96

  (12.75)

  5.60

  2.54

Total from investment operations

  2.94

  4.23

  5.02

  (12.67)

  5.67

  2.62

Distributions from net investment income

  -

  (.03)

  (.09)

  (.01)

  (.10)

  (.05)

Distributions from net realized gain

  -

  (.01)

  -

  (.75)

  -

  -

Total distributions

  -

  (.04)

  (.09)

  (.76)

  (.10)

  (.05)

Net asset value, end of period

$ 26.23

$ 23.29

$ 19.10

$ 14.17

$ 27.60

$ 22.03

Total Return B, C

  12.62%

  22.18%

  35.62%

  (47.19)%

  25.85%

  13.49%

Ratios to Average Net Assets E, G

 

 

 

 

 

Expenses before reductions

  .67% A

  .92%

  .92%

  .91%

  .90%

  .87%

Expenses net of fee waivers, if any

  .67% A

  .92%

  .92%

  .91%

  .90%

  .87%

Expenses net of all reductions

  .66% A

  .92%

  .91%

  .90%

  .89%

  .86%

Net investment income (loss)

  .14% A

  (.16)%

  .36%

  .34%

  .31%

  .41%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (in millions)

$ 4,230

$ 3,988

$ 3,824

$ 3,407

$ 5,899

$ 4,723

Portfolio turnover rate F

  103% A

  103%

  173%

  173%

  175%

  169%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Class K

 

Six months ended
May 31, 2011

Years ended November 30,

  

(Unaudited)

2010

2009

2008 G

Selected Per-Share Data

 

 

 

 

Net asset value, beginning of period

$ 23.31

$ 19.12

$ 14.18

$ 28.56

Income from Investment Operations

 

 

 

 

Net investment income (loss) D

  .03

  - I

  .09

  .09

Net realized and unrealized gain (loss)

  2.93

  4.26

  4.96

  (14.47)

Total from investment operations

  2.96

  4.26

  5.05

  (14.38)

Distributions from net investment income

  -

  (.07)

  (.11)

  -

Distributions from net realized gain

  -

  (.01)

  -

  -

Total distributions

  -

  (.07) J

  (.11)

  -

Net asset value, end of period

$ 26.27

$ 23.31

$ 19.12

$ 14.18

Total Return B, C

  12.70%

  22.37%

  35.94%

  (50.35)%

Ratios to Average Net Assets E, H

 

 

 

 

Expenses before reductions

  .54% A

  .78%

  .73%

  .79% A

Expenses net of fee waivers, if any

  .54% A

  .78%

  .73%

  .79%A

Expenses net of all reductions

  .53% A

  .77%

  .72%

  .78%A

Net investment income (loss)

  .27% A

  (.01)%

  .56%

  1.04%A

Supplemental Data

 

 

 

 

Net assets, end of period (in millions)

$ 312

$ 243

$ 178

$ 78

Portfolio turnover rate F

  103% A

  103%

  173%

  173%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

D Calculated based on average shares outstanding during the period.

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 Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

G For the period May 9, 2008 (commencement of sale of shares) to November 30, 2008.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.01 per share.

J Total distributions of $.07 per share is comprised of distributions from net investment income of $.067 and distributions from net realized gain of $.005 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended May 31, 2011 (Unaudited)

(Amounts in thousands except ratios)

1. Organization.

Fidelity Independence Fund (the Fund) is a fund of Fidelity Financial Trust (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund offers Independence and Class K shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent fees incurred. Certain expense reductions may also differ by class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Fund uses independent pricing services approved by the Board of Trustees to value its investments. When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The value used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of May 31, 2011, as well as a roll forward of Level 3 securities, is included at the end of the Fund's Schedule of Investments. Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-traded funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy in these circumstances. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and are categorized as Level 3 in the hierarchy.

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.

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 rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

3. Significant Accounting Policies - continued

Expenses. 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, including distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. A fund's federal tax return is subject to examination by the Internal Revenue Service (IRS) for a period of three years. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are 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. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to futures transactions, foreign currency transactions, market discount, partnerships, deferred trustees compensation, net operating loss, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.

The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:

Gross unrealized appreciation

$ 1,077,024

Gross unrealized depreciation

(65,401)

Net unrealized appreciation (depreciation) on securities and other investments

$ 1,011,623

 

 

Tax cost

$ 3,646,300

Semiannual Report

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Under the recently enacted Regulated Investment Company Modernization Act of 2010 (the Act), the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to any losses incurred in pre-enactment taxable years, which generally expire after eight years from when they are incurred. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. The Fund's first fiscal year end subject to the Act will be November 30, 2012.

New Accounting Pronouncement. In May 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-04, Fair Value Measurement (Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update changes the wording used to describe the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. The update is effective during interim and annual periods beginning after December 15, 2011. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $2,302,643 and $2,515,049, respectively.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. In addition, the management fee is subject to a performance adjustment (up to a maximum of ± .20% of the Fund's average net assets over a 36 month performance period). The upward or downward adjustment to the management fee is based on the relative investment performance of Independence as compared to an appropriate benchmark index. For the period, the total annualized management fee rate, including the performance adjustment, was .45% of the Fund's average net assets.

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of Independence. FIIOC receives an asset-based fee of Class K's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class were as follows:

 

Amount

% of
Average
Net Assets *

Independence

$ 3,774

.18

Class K

71

.05

 

$ 3,845

 

* Annualized

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $28 for the period.

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:

Borrower or Lender

Average Daily
Loan Balance

Weighted Average Interest Rate

Interest Expense

Borrower

$ 6,723

.40%

$ 1

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.0 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $8 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. The lending agent 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. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $213. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and 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 $645, and includes $1 from securities loaned to FCM.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

(Amounts in thousands except ratios)

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $115 for the period.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
May 31, 2011

Year ended
November 30, 2010

From net investment income

 

 

Independence

$ -

$ 6,585

Class K

-

622

Total

$ -

$ 7,207

From net realized gain

 

 

Independence

$ -

$ 998

Class K

-

46

Total

$ -

$ 1,044

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended May 31,
2011

Year ended November 30,
2010

Six months ended May 31,
2011

Year ended November 30,
2010

Independence

 

 

 

 

Shares sold

7,439

11,119

$ 186,141

$ 231,763

Reinvestment of distributions

-

385

-

7,469

Shares redeemed

(17,412)

(40,468)

(440,215)

(829,719)

Net increase (decrease)

(9,973)

(28,964)

$ (254,074)

$ (590,487)

Class K

 

 

 

 

Shares sold

2,909

5,967

$ 73,814

$ 122,003

Reinvestment of distributions

-

35

-

669

Shares redeemed

(1,460)

(4,890)

(36,807)

(99,062)

Net increase (decrease)

1,449

1,112

$ 37,007

$ 23,610

Semiannual Report

12. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company

Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research
(U.K.) Inc.

Fidelity Management & Research
(Hong Kong) Limited

Fidelity Management & Research
(Japan) Inc.

General Distributor

Fidelity Distributors Corporation

Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional
Operations Company, Inc.

Boston, MA

Fidelity Service Company, Inc.

Boston, MA

Custodian

The Northern Trust Company

Chicago, Illinois 

FRE-K-USAN-0711
1.863218.102

fid101

Item 2. Code of Ethics

Not applicable.

Item 3. Audit Committee Financial Expert

Not applicable.

Item 4. Principal Accountant Fees and Services

Not applicable.

Item 5. Audit Committee of Listed Registrants

Not applicable.

Item 6. Investments

(a) Not applicable.

(b) Not applicable

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Not applicable.

Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders

There were no material changes to the procedures by which shareholders may recommend nominees to the Fidelity Financial Trust's Board of Trustees.

Item 11. Controls and Procedures

(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the Fidelity Financial Trust's (the "Trust") disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.

(a)(ii) There was no change in the Trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.

Item 12. Exhibits

(a)

(1)

Not applicable.

(a)

(2)

Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.

(a)

(3)

Not applicable.

(b)

 

Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Fidelity Financial Trust

By:

/s/ Kenneth B. Robins

 

Kenneth B. Robins

 

President and Treasurer

 

 

Date:

July 22, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:

/s/ Kenneth B. Robins

 

Kenneth B. Robins

 

President and Treasurer

 

 

Date:

July 22, 2011

By:

/s/ Christine Reynolds

 

Christine Reynolds

 

Chief Financial Officer

 

 

Date:

July 22, 2011