COMMENTS RECEIVED ON NOVEMBER 30, 2004
FROM CHRISTIAN SANDOE
FIDELITY CAPITAL TRUST (File Nos. 002-61760 and 811-02841)
Fidelity Capital Appreciation Fund, Fidelity Disciplined Equity Fund, Fidelity Focused Stock Fund, Fidelity Small Cap Independence Fund, Fidelity Stock Selector Fund, and Fidelity Value Fund
POST-EFFECTIVE AMENDMENT NO. 85
NEWBURY STREET TRUST (File Nos. 002-78458 and 811-03518)
Treasury Fund, Prime Fund, and Tax-Exempt Fund
POST-EFFECTIVE AMENDMENT NO. 45
1. All funds
Performance Charts, Fee Tables, Financial Highlights, and Trustee Compensation Tables (prospectuses and statements of additional information (SAIs))
C: Please submit completed performance charts, fee tables, financial highlights, and the trustee compensation tables when the information becomes available.
R: The requested information will be faxed to you when it becomes available.
2. Fidelity Capital Appreciation Fund, Fidelity Focused Stock Fund, and Fidelity Disciplined Equity Fund
"Investment Summary" (prospectuses)
"Principal Investment Strategies"
C: What is the fund's market capitalization strategy?
R: The funds do not have a principal investment strategy of investing in securities of companies with a particular market capitalization.
3. Fidelity Disciplined Equity Fund
"Investment Summary" (prospectus)
"Principal Investment Strategies"
C: The Staff would like an explanation of the significance of the fund's name on the fund's strategy.
R: Use of the term "equity" in the fund's name drives its name test policy. The term "disciplined" reflects FMR's disciplined approach, which involves using computer-aided quantitative analysis supported by fundamental analysis, in buying and selling portfolio securities for the fund.
Fidelity Capital Trust (File Nos. 002-61760 and 811-02841), Post-Effective Amendment No. 85; Newbury Street Trust (File Nos. 002-78458 and 811-03518), Post-Effective Amendment No. 45
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4. Fidelity Small Cap Independence Fund
"Investment Summary" (prospectus)
"Principal Investment Strategies"
"Normally investing at least 80% of assets in securities of companies with small market capitalizations (which, for purposes of this fund, are those companies with market capitalizations similar to companies in the Russell 2000 Index or the Standard & Poor's SmallCap 600 Index (S&P SmallCap 600))."
C: The Staff would like us to add disclosure showing the market capitalization ranges for the Russell 2000 Index and the S&P SmallCap 600 Index as of a recent date.
R: As the capitalization range of an index varies over time, we believe it is more appropriate to identify well-publicized indices by name rather than giving a snapshot of the capitalization range of an index as of a single date. Therefore, we propose not to modify the disclosure.
5. Fidelity Value Fund
"Performance" (prospectus)
C: The Staff questions why language regarding the Standard's and Poor's 500 Index is included if the Russell MidCap Value Index is the Fund's MD&A Index.
R: We include a description of the Standard and Poor's 500 Index because it is referenced in the "Fund Management" section of the prospectus for purposes of calculating the fund's performance adjustment. For the period prior to December 1, 2002, the fund compares its performance to the Standard and Poor's 500 Index.
6. Advisor B and C Class of Treasury Fund, Fidelity Tax-Free Money Market Fund (the retail class of Tax-Exempt Fund), Fidelity Disciplined Equity Fund, Fidelity Focused Stock Fund, and Fidelity Small Cap Independence Fund
"Fee Table" (prospectuses)
C: The "Shareholder fees" and "Annual operating expenses" information should be presented as one table with all footnotes following the table in its entirety. The Staff believes that inserting footnotes after the "Shareholder fees" information results in two tables instead of one.
R: As we have previously discussed with the Staff, we believe that the information included under the subheadings "Shareholder fees" and "Annual operating expenses" in the "Fee Table" section of the prospectus is presented in a manner consistent with Item 3 of Form N-1A. The footnotes that support the information under each subheading are provided in the closest proximity possible to that information to facilitate shareholder understanding of the information presented. We note that General Instruction C.1(a) to Form N-1A states that a fund should use document design techniques that promote effective communication, and we believe this format most effectively communicates the information presented.
7. All funds
"Fee Table" (prospectuses)
C: The disclosure following the fee table concerning the reimbursement of certain expenses should be set forth as a footnote to the fee table rather than text pursuant to General Instruction C.3(b).
Fidelity Capital Trust (File Nos. 002-61760 and 811-02841), Post-Effective Amendment No. 85; Newbury Street Trust (File Nos. 002-78458 and 811-03518), Post-Effective Amendment No. 45
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R: The disclosure at issue follows the fee table and a footnote disclosing expense reimbursement arrangements, if any. The disclosure relates both to the total annual operating expenses in the fee table as well as to the footnote disclosing the expense reimbursement arrangements, if any, and the actual annual operating expenses that include the effect of the expense reimbursements. We believe that presenting disclosure in narrative form rather than in an additional footnote to the fee table, or as additional disclosure in the expense reimbursement arrangement footnote, if any, provides a clearer presentation for the shareholder. We believe that the disclosure complies with the requirements of Form N-1A and, accordingly, we propose not to modify it.
8. Treasury Fund
"Investment Details" (prospectuses)
"Principal Investment Strategies"
"FMR normally invests at least 80% of the fund's assets in U.S. Treasury securities and repurchase agreements for those securities.FMR does not enter into reverse repurchase agreements for the fund."
C: The Staff noted that the underlined text should be deleted as it is a negative strategy and therefore not a principal investment strategy pursuant to Instruction 3 of Item 4(b)(1) of Form N-1A.
R: We believe it is permissible to include this disclosure and propose to retain it, as we feel it is helpful to shareholders of the funds. While Instruction 3 to Item 4 of Form N-1A indicates that a negative strategy is not a principal investment strategy and therefore may not be included in the Item 2 section of the prospectus, General Instruction C.(3)(b) permits a fund to include in its prospectus (except in the Item 2 and Item 3 sections of the prospectus) information that is not otherwise required, provided the information is not incomplete, inaccurate, or misleading, and the disclosure does not obscure or impede understanding of the information that is required to be included. We feel the disclosure provides shareholders with additional significant information about the funds' strategies.
9. Treasury Fund
"Investment Details" (prospectuses)
"Description of Principal Security Types"
"U.S. Government securities are high-quality securities issued or guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S. Government. U.S. Government securities may be backed by the full faith and credit of the U.S. Treasury, the right to borrow from the U.S. Treasury, or the agency or instrumentality issuing or guaranteeing the security. "
C: The Staff questions why, under the "Description of Principal Security Types" heading, the fund includes a description of U.S. Government securities, but not Treasury securities in particular, given that this is a Treasury fund.
R: To comply with Item 4(b) of Form N-1A's requirement that we describe the type or types of securities in which the fund principally invests, we have opted to use the broad term "U.S. Government Securities," which includes "Treasury" securities as well as other types of Government securities. We believe this is a reasonable approach.
10. Fidelity Small Cap Independence Fund
"Investment Details" (prospectus)
"Principal Investment Strategies"
"FMR normally invests at least 80% of the fund's assets in securities of companies with small market capitalizations. Although a universal definition of small market capitalization companies does not exist, for purposes of this fund, FMR generally defines small market capitalization companies as those whose market capitalization is similar to the market capitalization of companies in the Russell 2000 Index or the S&P SmallCap 600. A company's market capitalization is based on its current market capitalization or its market capitalization at the time of the fund's investment.Companies whose capitalization is above this level after purchase continue to be considered to have a small market capitalization for purposes of the 80% policy. The size of the companies in each index changes with market conditions and the composition of the index.''
C: The Staff would like us to confirm that any securities that are no longer characterized as small cap after purchase will not continue to be counted toward the fund's 80% name test and that we will purchase small cap securities (small cap funds) to bring the fund back into compliance with the name test.
R: The 80% investment requirement applies at the time a fund invests its assets, which, as the Name Test Rule proposing release notes, is consistent with other investment requirements under the Investment Company Act of 1940. Therefore, if a security meets the 80% name test requirement at the time of purchase, any subsequent changes in net assets or other circumstances will not be considered when determining whether the investment complies with the fund's investment policies. Additional purchases of a security that was characterized as small cap at the time of initial purchase but that is no longer so characterized would not be counted toward the fund's 80% name test. In addition, if at the time of the proposed investment the fund no longer met its 80% investment requirement, the fund, as the Name Test Rule requires, would make future investments in a manner that would bring it into compliance with the 80% requirement.
11. Fidelity Capital Appreciation Fund, Fidelity Disciplined Equity Fund, Fidelity Focused Stock Fund, Fidelity Small Cap Independence Fund, Fidelity Stock Selector Fund, and Fidelity Value Fund
"Investment Details" (prospectuses)
"Principal Investment Strategies"
"In addition to the principal investment strategies discussed above, FMR may lend the fund's securities to broker-dealers or other institutions to earn income for the fund.
FMR may also use various techniques, such as buying and selling futures contracts and exchange traded funds, to increase or decrease the fund's exposure to changing security prices or other factors that affect security values. If FMR's strategies do not work as intended, the fund may not achieve its objective."
C: The Staff requests that we add these techniques to the risk/return summary, or if they are not principal, delete them from this section.
R: Item 2 of Form N-1A requires that the risk/return summary be limited to disclosure of the fund's "principal" investment strategies and "principal" risks. The techniques identified in the disclosure at issue are not currently considered "principal" strategies for the funds, and therefore we have not added them to the risk/return summary.
We believe that the phrase "In addition to the principal investment strategies discussed above," added to disclosure pursuant to the Staff's previous comments, adequately conveys that the strategies that follow are not currently considered principal. In addition, General Instruction C.(3)(b) permits a fund to include in its prospectus (except in the Item 2 and Item 3 sections of the prospectus) information that is not otherwise required, provided the information is not incomplete, inaccurate, or misleading, and the disclosure does not obscure or impede understanding of the information that is required to be included. We feel the disclosure provides shareholders with additional significant information about the funds' strategies.
Fidelity Capital Trust (File Nos. 002-61760 and 811-02841), Post-Effective Amendment No. 85; Newbury Street Trust (File Nos. 002-78458 and 811-03518), Post-Effective Amendment No. 45
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12. All funds
"Board Approval of Existing Investment Advisory Contracts" (SAIs)
C: The Staff believes that consistent with the second sentence of the Instruction to Item 12(b)(10) of Form N-1A, additional disclosure is needed in this section to relate the factors to the specific circumstances of a fund and the investment advisory contract. Specifically, in the discussion of a fund's performance and expenses, the Staff suggests that we consider adding numerical comparisons of a fund's performance and expenses to an applicable peer group of similar funds.
R: We have submitted to the Staff a proposal that addresses the Staff's request to add fund-specific numerical performance and expense data to the disclosure. In light of the SEC's adoption in June 2004 of the final rule concerning the approval of investment advisory contracts, we are working on revised disclosure to comply with the rule and expect to have additional discussion with the Staff about this disclosure
13. All funds
"Proxy Voting Guidelines" (SAIs)
"The FMR Legal Department consults with the appropriate analysts or portfolio managers regarding the voting decisions of non-routine proposals that are not addressed by the Proxy Voting Guidelines.Each of the President or General Counsel of FMR or the General Counsel of FMR Corp is authorized to take a final decision."
C: The Staff believes that the disclosure is sufficient to communicate how conflicts of interest are avoided, but requests that we add disclosure addressing how an identified conflict of interest would be handled.
R: In a future review of the Proxy Voting Guidelines with the Board of Trustees, we expect to propose adding disclosure as the Staff suggests.
14. All funds
Tandy (prospectuses and SAIs )
C: The Staff would like us to affirm the following three statements:
1) The fund is responsible for the adequacy and accuracy of the disclosure in the filings.
2) Staff comments or changes to disclosure in response to Staff comments in the filings reviewed by the Staff do not foreclose the Commission from taking any action with respect to the filing.
3) The fund may not assert Staff comments as a defense in any proceeding initiated by the Commission or any other person under the Federal Securities Laws.
R: We affirm the aforementioned statements.
