UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT No. 1
to
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-2841
Fidelity Capital 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: | October 31 |
| |
Date of reporting period: | October 31, 2008 |
The following amends the Form N-CSR filing dated January 2, 2009, Accession Number 0000275309-09-000001. This amended report on Form N-CSR relates solely to Item 1 for the Fidelity Stock Selector series.
Item 1. Reports to Stockholders
Fidelity®
Stock Selector
Annual Report
October 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | <Click Here> | Ned Johnson's message to shareholders. |
Performance | <Click Here> | How the fund has done over time. |
Management's Discussion | <Click Here> | The manager's review of fund performance, strategy and outlook. |
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. |
Report of Independent Registered Public Accounting Firm | <Click Here> | |
Trustees and Officers | <Click Here> | |
Distributions | <Click Here> | |
Proxy Voting Results | <Click Here> | |
Board Approval of Investment Advisory Contracts and Management Fees | <Click Here> | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Turmoil has been the watchword for the world's securities markets in 2008, with domestic and international stocks down sharply amid the global credit squeeze. A flight to quality boosted returns for U.S. Treasuries, one of the few asset classes with positive results heading into the latter stages of the year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended October 31, 2008 | Past 1
year | Past 5
years | Past 10
years |
Stock Selector | -38.78% | 0.41% | 1.11% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Stock Selector, a class of the fund, on October 31, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period.
Annual Report
Comments from James Catudal, Portfolio Manager of Fidelity® Stock Selector
The U.S. equity markets quaked under the rising pressure of a global credit crisis during the 12 months ending October 31, 2008. As home values sunk, credit availability decreased and liquidity became increasingly scarce, the Standard & Poor's 500SM Index fell 36.10%. All 10 sectors in the S&P 500® were negative, led by a roughly 52% decline in financials. Information technology and materials both fell more than 40%, while the historically defensive consumer staples and health care sectors performed the best, dropping slightly more than 11% and 23%, respectively. In the last two months of the period, the U.S. economy took a turn for the worse, as several large financial institutions went bankrupt, were forced into acquisitions or were taken over by the U.S. government. The Federal Reserve Board facilitated many of these and other transactions, and also lowered the federal funds target rate twice in October, on top of the other rate cuts during the year, leaving it at 1.00%. The markets continued to perform erratically, however, and the U.S. unemployment rate reached a 14-year high in the last month of the period. The Dow Jones Industrial AverageSM declined 31.24% for the 12-month period - including its worst single-day point loss in September - while the technology-heavy NASDAQ Composite® Index dropped 39.35%.
For the year ending October 31, 2008, the fund's Retail Class shares returned -38.78%, lagging the S&P 500's return. Security selection in energy was the biggest negative. Underweighting consumer staples and an overweighting and stock selection in information technology also hurt, while stock picks in health care helped. Insurance giant American International Group (AIG) was the largest detractor from results. It ran into difficulties because of its exposure to troublesome debt-related securities. Meanwhile, the retreat of oil prices late in the period led to underperformance by oil-field services company Cameron International and by McDermott International, an engineering and construction company exposed to the energy sector. Conversely, not owning Chevron hurt when it outperformed relative to the index as oil prices declined. Underweighting defensive stocks such as consumer goods company Procter & Gamble and pharmaceutical and health care products manufacturer Johnson & Johnson also detracted from returns. Elsewhere, minimal exposures to large financial companies such as Wachovia, Fannie Mae and Merrill Lynch helped relative performance, as those stocks plummeted during the credit crisis. Fannie Mae was not held at the end of the period. The investment in re-insurer ACE Ltd. contributed as well.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual 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 actual expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2008 to October 31, 2008) for Stock Selector and for the entire period (May 9, 2008 to October 31, 2008) for Class K. The hypothetical expense Example is based on an investment of $1,000 invested for the one half year period (May 1, 2008 to October 31, 2008).
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.
Annual Report
Shareholder Expense Example - continued
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Annualized Expense Ratio | Beginning
Account Value | Ending
Account Value
October 31, 2008 | Expenses Paid
During Period |
Stock Selector | .90% | | | |
Actual | | $ 1,000.00 | $ 677.60 | $ 3.80 B |
Hypothetical A | | $ 1,000.00 | $ 1,020.61 | $ 4.57 C |
Class K | .79% | | | |
Actual | | $ 1,000.00 | $ 676.60 | $ 3.18 B |
Hypothetical A | | $ 1,000.00 | $ 1,021.17 | $ 4.01C |
A 5% return per year before expenses
B Actual expenses are equal to each Class' annualized expense ratio (shown in the table above); multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period) for Stock Selector and multiplied by 176/366 (to reflect the period May 9, 2008 to October 31, 2008) for Class K.
C Hypothetical expenses are equal to each Class' annualized expense ratio (shown in the table above); multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Exxon Mobil Corp. | 3.3 | 3.2 |
Microsoft Corp. | 2.7 | 2.7 |
Wal-Mart Stores, Inc. | 2.6 | 1.6 |
United Technologies Corp. | 2.0 | 1.9 |
Bank of America Corp. | 2.0 | 1.6 |
Cisco Systems, Inc. | 2.0 | 2.4 |
Applied Materials, Inc. | 1.8 | 1.2 |
Cameron International Corp. | 1.6 | 1.8 |
AT&T, Inc. | 1.5 | 2.1 |
Apple, Inc. | 1.4 | 1.2 |
| 20.9 | |
Top Five Market Sectors as of October 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Information Technology | 19.1 | 20.2 |
Financials | 15.7 | 15.9 |
Health Care | 15.7 | 10.0 |
Energy | 11.2 | 13.2 |
Industrials | 11.1 | 14.1 |
Asset Allocation (% of fund's net assets) |
As of October 31, 2008 * | As of April 30, 2008 ** |
 | Stocks and
Equity Futures 96.7% | | | Stocks and
Equity Futures 95.1% | |
 | Convertible
Securities 0.1% | | | Convertible
Securities 0.3% | |
 | Short-Term
Investments and
Net Other Assets 3.2% | | | Short-Term
Investments and
Net Other Assets 4.6% | |
* Foreign investments | 8.5% | | ** Foreign investments | 10.0% | |
Annual Report
Investments October 31, 2008
Showing Percentage of Net Assets
Common Stocks - 94.8% |
| Shares | | Value (000s) |
CONSUMER DISCRETIONARY - 8.9% |
Auto Components - 0.2% |
The Goodyear Tire & Rubber Co. (a) | 136,800 | | $ 1,220 |
Automobiles - 0.4% |
General Motors Corp. (d) | 43,700 | | 253 |
Harley-Davidson, Inc. | 1,100 | | 27 |
Toyota Motor Corp. sponsored ADR | 34,600 | | 2,633 |
| | 2,913 |
Hotels, Restaurants & Leisure - 0.7% |
Buffalo Wild Wings, Inc. (a)(d) | 37,589 | | 1,063 |
Burger King Holdings, Inc. | 95,000 | | 1,889 |
Darden Restaurants, Inc. | 39,300 | | 871 |
Starbucks Corp. (a) | 84,750 | | 1,113 |
| | 4,936 |
Household Durables - 1.3% |
D.R. Horton, Inc. | 98,700 | | 728 |
Ethan Allen Interiors, Inc. | 25,900 | | 463 |
Pulte Homes, Inc. | 51,100 | | 569 |
Toll Brothers, Inc. (a) | 198,100 | | 4,580 |
Whirlpool Corp. | 68,400 | | 3,191 |
| | 9,531 |
Internet & Catalog Retail - 0.2% |
Amazon.com, Inc. (a) | 32,900 | | 1,883 |
Media - 2.4% |
Comcast Corp. Class A (special) (non-vtg.) | 304,000 | | 4,688 |
Lamar Advertising Co. Class A (a) | 25,300 | | 384 |
Scripps Networks Interactive, Inc. Class A | 118,740 | | 3,372 |
The Walt Disney Co. | 78,200 | | 2,025 |
Time Warner, Inc. (d) | 698,660 | | 7,049 |
| | 17,518 |
Multiline Retail - 0.5% |
Kohl's Corp. (a) | 46,400 | | 1,630 |
Target Corp. | 43,720 | | 1,754 |
| | 3,384 |
Specialty Retail - 2.6% |
Best Buy Co., Inc. | 37,600 | | 1,008 |
Dick's Sporting Goods, Inc. (a) | 46,900 | | 719 |
Lowe's Companies, Inc. | 462,200 | | 10,030 |
PetSmart, Inc. | 70,300 | | 1,384 |
Staples, Inc. | 243,082 | | 4,723 |
Common Stocks - continued |
| Shares | | Value (000s) |
CONSUMER DISCRETIONARY - continued |
Specialty Retail - continued |
Tiffany & Co., Inc. | 34,100 | | $ 936 |
Williams-Sonoma, Inc. | 70,200 | | 581 |
| | 19,381 |
Textiles, Apparel & Luxury Goods - 0.6% |
NIKE, Inc. Class B | 49,000 | | 2,824 |
Polo Ralph Lauren Corp. Class A | 30,545 | | 1,441 |
| | 4,265 |
TOTAL CONSUMER DISCRETIONARY | | 65,031 |
CONSUMER STAPLES - 8.1% |
Beverages - 0.9% |
Molson Coors Brewing Co. Class B | 25,100 | | 938 |
PepsiCo, Inc. | 57,400 | | 3,272 |
The Coca-Cola Co. | 60,700 | | 2,674 |
| | 6,884 |
Food & Staples Retailing - 3.7% |
China Nepstar Chain Drugstore Ltd. ADR | 87,000 | | 361 |
CVS Caremark Corp. | 230,200 | | 7,056 |
Sysco Corp. | 28,300 | | 741 |
Wal-Mart Stores, Inc. | 342,000 | | 19,087 |
| | 27,245 |
Food Products - 2.0% |
Hershey Co. | 15,500 | | 577 |
Kraft Foods, Inc. Class A | 101,400 | | 2,955 |
McCormick & Co., Inc. (non-vtg.) | 29,300 | | 986 |
Nestle SA sponsored ADR | 258,500 | | 9,939 |
| | 14,457 |
Household Products - 0.9% |
Colgate-Palmolive Co. | 42,350 | | 2,658 |
Procter & Gamble Co. | 58,405 | | 3,769 |
| | 6,427 |
Tobacco - 0.6% |
Philip Morris International, Inc. | 94,500 | | 4,108 |
TOTAL CONSUMER STAPLES | | 59,121 |
Common Stocks - continued |
| Shares | | Value (000s) |
ENERGY - 11.2% |
Energy Equipment & Services - 4.7% |
BJ Services Co. | 53,100 | | $ 682 |
Cameron International Corp. (a)(d) | 480,900 | | 11,667 |
Diamond Offshore Drilling, Inc. | 23,123 | | 2,053 |
FMC Technologies, Inc. (a) | 32,900 | | 1,151 |
Halliburton Co. | 192,607 | | 3,812 |
Helmerich & Payne, Inc. | 45,966 | | 1,577 |
Nabors Industries Ltd. (a) | 113,600 | | 1,634 |
Schlumberger Ltd. (NY Shares) | 147,985 | | 7,643 |
Smith International, Inc. | 118,100 | | 4,072 |
| | 34,291 |
Oil, Gas & Consumable Fuels - 6.5% |
Apache Corp. | 49,400 | | 4,067 |
Chesapeake Energy Corp. | 191,600 | | 4,209 |
EOG Resources, Inc. | 52,782 | | 4,271 |
Exxon Mobil Corp. | 326,175 | | 24,175 |
Hess Corp. | 22,900 | | 1,379 |
Peabody Energy Corp. | 35,100 | | 1,211 |
Plains Exploration & Production Co. (a) | 66,800 | | 1,884 |
Range Resources Corp. | 40,200 | | 1,697 |
Ultra Petroleum Corp. (a) | 45,110 | | 2,100 |
Valero Energy Corp. | 75,980 | | 1,564 |
Williams Companies, Inc. | 73,500 | | 1,541 |
| | 48,098 |
TOTAL ENERGY | | 82,389 |
FINANCIALS - 15.6% |
Capital Markets - 5.2% |
Ameriprise Financial, Inc. | 96,120 | | 2,076 |
Bank of New York Mellon Corp. | 231,000 | | 7,531 |
Charles Schwab Corp. | 331,200 | | 6,333 |
Goldman Sachs Group, Inc. | 59,600 | | 5,513 |
Janus Capital Group, Inc. | 200,300 | | 2,352 |
Merrill Lynch & Co., Inc. | 174,900 | | 3,251 |
Morgan Stanley | 48,198 | | 842 |
State Street Corp. | 185,846 | | 8,056 |
T. Rowe Price Group, Inc. | 49,877 | | 1,972 |
| | 37,926 |
Commercial Banks - 2.8% |
BB&T Corp. | 45,600 | | 1,635 |
Common Stocks - continued |
| Shares | | Value (000s) |
FINANCIALS - continued |
Commercial Banks - continued |
East West Bancorp, Inc. | 31,300 | | $ 543 |
Fifth Third Bancorp | 117,765 | | 1,278 |
KeyCorp | 126,700 | | 1,550 |
PNC Financial Services Group, Inc. | 51,000 | | 3,400 |
Synovus Financial Corp. (d) | 48,400 | | 500 |
U.S. Bancorp, Delaware | 88,700 | | 2,644 |
Wachovia Corp. | 424,400 | | 2,720 |
Wells Fargo & Co. | 183,553 | | 6,250 |
| | 20,520 |
Consumer Finance - 0.4% |
American Express Co. | 14,400 | | 396 |
Capital One Financial Corp. | 24,800 | | 970 |
Discover Financial Services | 46,100 | | 565 |
SLM Corp. (a) | 104,700 | | 1,117 |
| | 3,048 |
Diversified Financial Services - 3.8% |
Bank of America Corp. | 596,320 | | 14,413 |
Citigroup, Inc. | 176,700 | | 2,412 |
CME Group, Inc. | 7,682 | | 2,167 |
JPMorgan Chase & Co. | 220,800 | | 9,108 |
| | 28,100 |
Insurance - 3.4% |
ACE Ltd. | 120,600 | | 6,918 |
AFLAC, Inc. | 68,500 | | 3,033 |
American International Group, Inc. | 63,742 | | 122 |
Berkshire Hathaway, Inc. Class A (a) | 55 | | 6,352 |
Everest Re Group Ltd. | 42,311 | | 3,161 |
Hartford Financial Services Group, Inc. | 22,800 | | 235 |
MetLife, Inc. | 77,300 | | 2,568 |
Prudential Financial, Inc. | 13,600 | | 408 |
W.R. Berkley Corp. | 92,500 | | 2,430 |
| | 25,227 |
TOTAL FINANCIALS | | 114,821 |
HEALTH CARE - 15.7% |
Biotechnology - 4.4% |
Amgen, Inc. (a) | 136,237 | | 8,159 |
Biogen Idec, Inc. (a) | 73,770 | | 3,139 |
Common Stocks - continued |
| Shares | | Value (000s) |
HEALTH CARE - continued |
Biotechnology - continued |
Celgene Corp. (a) | 56,132 | | $ 3,607 |
Cephalon, Inc. (a) | 47,100 | | 3,378 |
Genentech, Inc. (a) | 42,260 | | 3,505 |
Genzyme Corp. (a) | 29,200 | | 2,128 |
Gilead Sciences, Inc. (a) | 72,648 | | 3,331 |
MannKind Corp. (a) | 55,800 | | 210 |
Myriad Genetics, Inc. (a) | 26,600 | | 1,678 |
PDL BioPharma, Inc. | 215,291 | | 2,099 |
Vertex Pharmaceuticals, Inc. (a) | 54,000 | | 1,415 |
| | 32,649 |
Health Care Equipment & Supplies - 3.6% |
Alcon, Inc. | 7,200 | | 634 |
American Medical Systems Holdings, Inc. (a) | 40,935 | | 443 |
Baxter International, Inc. | 142,300 | | 8,608 |
Becton, Dickinson & Co. | 2,545 | | 177 |
C.R. Bard, Inc. | 21,065 | | 1,859 |
China Medical Technologies, Inc. sponsored ADR (d) | 28,400 | | 692 |
Covidien Ltd. | 161,444 | | 7,150 |
Medtronic, Inc. | 118,600 | | 4,783 |
Mindray Medical International Ltd. sponsored ADR (d) | 32,000 | | 690 |
St. Jude Medical, Inc. (a) | 42,900 | | 1,631 |
| | 26,667 |
Health Care Providers & Services - 2.5% |
Brookdale Senior Living, Inc. | 27,109 | | 234 |
Henry Schein, Inc. (a) | 136,800 | | 6,404 |
Medco Health Solutions, Inc. (a) | 138,800 | | 5,267 |
Tenet Healthcare Corp. (a) | 298,164 | | 1,306 |
UnitedHealth Group, Inc. | 146,048 | | 3,466 |
Universal Health Services, Inc. Class B | 33,500 | | 1,408 |
| | 18,085 |
Pharmaceuticals - 5.2% |
Abbott Laboratories | 126,000 | | 6,949 |
Allergan, Inc. | 21,600 | | 857 |
Barr Pharmaceuticals, Inc. (a) | 25,300 | | 1,626 |
Bristol-Myers Squibb Co. | 205,245 | | 4,218 |
Johnson & Johnson | 164,750 | | 10,106 |
Merck & Co., Inc. | 175,394 | | 5,428 |
Schering-Plough Corp. | 111,300 | | 1,613 |
Shire PLC sponsored ADR | 33,800 | | 1,333 |
Common Stocks - continued |
| Shares | | Value (000s) |
HEALTH CARE - continued |
Pharmaceuticals - continued |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 27,900 | | $ 1,196 |
Wyeth | 145,380 | | 4,678 |
| | 38,004 |
TOTAL HEALTH CARE | | 115,405 |
INDUSTRIALS - 11.1% |
Aerospace & Defense - 3.5% |
Honeywell International, Inc. | 117,660 | | 3,583 |
Lockheed Martin Corp. | 42,700 | | 3,632 |
Precision Castparts Corp. | 53,100 | | 3,441 |
United Technologies Corp. | 270,320 | | 14,857 |
| | 25,513 |
Air Freight & Logistics - 0.8% |
C.H. Robinson Worldwide, Inc. | 65,000 | | 3,366 |
FedEx Corp. | 37,800 | | 2,471 |
| | 5,837 |
Airlines - 0.5% |
Alaska Air Group, Inc. (a) | 38,000 | | 939 |
Delta Air Lines, Inc. (a)(d) | 45,625 | | 501 |
UAL Corp. | 147,900 | | 2,153 |
| | 3,593 |
Building Products - 0.3% |
Masco Corp. | 146,900 | | 1,491 |
Owens Corning (a) | 50,700 | | 798 |
| | 2,289 |
Electrical Equipment - 1.0% |
Alstom SA | 3,700 | | 183 |
Evergreen Solar, Inc. (a) | 392,500 | | 1,488 |
Q-Cells AG (a)(d) | 30,900 | | 1,216 |
Sunpower Corp. Class A (a)(d) | 31,700 | | 1,238 |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 60,200 | | 1,054 |
Vestas Wind Systems AS (a) | 48,800 | | 1,999 |
| | 7,178 |
Industrial Conglomerates - 1.6% |
General Electric Co. | 391,545 | | 7,639 |
Common Stocks - continued |
| Shares | | Value (000s) |
INDUSTRIALS - continued |
Industrial Conglomerates - continued |
McDermott International, Inc. (a) | 210,200 | | $ 3,601 |
Textron, Inc. | 43,100 | | 763 |
| | 12,003 |
Machinery - 1.7% |
Caterpillar, Inc. | 53,400 | | 2,038 |
Danaher Corp. | 60,700 | | 3,596 |
Eaton Corp. | 102,800 | | 4,585 |
Ingersoll-Rand Co. Ltd. Class A | 105,100 | | 1,939 |
| | 12,158 |
Professional Services - 0.1% |
Manpower, Inc. | 35,300 | | 1,099 |
Road & Rail - 1.6% |
Landstar System, Inc. | 75,545 | | 2,915 |
Norfolk Southern Corp. | 37,000 | | 2,218 |
Union Pacific Corp. | 100,400 | | 6,704 |
| | 11,837 |
TOTAL INDUSTRIALS | | 81,507 |
INFORMATION TECHNOLOGY - 19.1% |
Communications Equipment - 4.5% |
Cisco Systems, Inc. (a) | 805,940 | | 14,322 |
Comverse Technology, Inc. (a) | 175,200 | | 1,274 |
Corning, Inc. | 329,860 | | 3,572 |
Harris Corp. | 67,200 | | 2,416 |
Infinera Corp. (a) | 19,700 | | 153 |
Juniper Networks, Inc. (a) | 127,280 | | 2,385 |
QUALCOMM, Inc. | 203,980 | | 7,804 |
Research In Motion Ltd. (a) | 17,152 | | 865 |
| | 32,791 |
Computers & Peripherals - 2.8% |
Apple, Inc. (a) | 98,700 | | 10,619 |
Hewlett-Packard Co. | 251,592 | | 9,631 |
SanDisk Corp. (a) | 74,800 | | 665 |
| | 20,915 |
Internet Software & Services - 1.9% |
DealerTrack Holdings, Inc. (a) | 25,900 | | 278 |
eBay, Inc. (a) | 79,853 | | 1,219 |
Google, Inc. Class A (sub. vtg.) (a) | 27,053 | | 9,722 |
Common Stocks - continued |
| Shares | | Value (000s) |
INFORMATION TECHNOLOGY - continued |
Internet Software & Services - continued |
Move, Inc. (a) | 409,546 | | $ 688 |
Sohu.com, Inc. (a) | 12,800 | | 703 |
Yahoo!, Inc. (a) | 76,810 | | 985 |
| | 13,595 |
IT Services - 1.3% |
Paychex, Inc. | 91,580 | | 2,614 |
Satyam Computer Services Ltd. sponsored ADR | 126,800 | | 1,995 |
The Western Union Co. | 48,900 | | 746 |
Visa, Inc. | 80,500 | | 4,456 |
| | 9,811 |
Semiconductors & Semiconductor Equipment - 3.7% |
Applied Materials, Inc. | 1,001,700 | | 12,932 |
ARM Holdings PLC sponsored ADR | 155,700 | | 735 |
ASML Holding NV (NY Shares) | 97,500 | | 1,711 |
Broadcom Corp. Class A (a) | 83,900 | | 1,433 |
FormFactor, Inc. (a) | 22,500 | | 392 |
Intel Corp. | 87,500 | | 1,400 |
Intersil Corp. Class A | 20,400 | | 279 |
KLA-Tencor Corp. | 76,000 | | 1,767 |
Lam Research Corp. (a) | 127,200 | | 2,844 |
Micron Technology, Inc. (a) | 216,300 | | 1,019 |
Samsung Electronics Co. Ltd. | 640 | | 271 |
Texas Instruments, Inc. | 116,500 | | 2,279 |
| | 27,062 |
Software - 4.9% |
Adobe Systems, Inc. (a) | 135,800 | | 3,618 |
Electronic Arts, Inc. (a) | 38,200 | | 870 |
Microsoft Corp. | 892,160 | | 19,922 |
Oracle Corp. (a) | 510,750 | | 9,342 |
Quest Software, Inc. (a) | 188,300 | | 2,495 |
| | 36,247 |
TOTAL INFORMATION TECHNOLOGY | | 140,421 |
MATERIALS - 2.0% |
Chemicals - 1.4% |
Albemarle Corp. | 57,430 | | 1,398 |
Monsanto Co. | 94,300 | | 8,391 |
Common Stocks - continued |
| Shares | | Value (000s) |
MATERIALS - continued |
Chemicals - continued |
Praxair, Inc. | 1,200 | | $ 78 |
W.R. Grace & Co. (a) | 70,600 | | 636 |
| | 10,503 |
Containers & Packaging - 0.2% |
Crown Holdings, Inc. (a) | 53,200 | | 1,074 |
Metals & Mining - 0.4% |
Alcoa, Inc. | 41,800 | | 481 |
Barrick Gold Corp. | 111,000 | | 2,537 |
Timminco Ltd. (a) | 32,600 | | 184 |
| | 3,202 |
TOTAL MATERIALS | | 14,779 |
TELECOMMUNICATION SERVICES - 2.1% |
Diversified Telecommunication Services - 1.7% |
AT&T, Inc. | 415,268 | | 11,117 |
Level 3 Communications, Inc. (a) | 459,700 | | 483 |
Verizon Communications, Inc. | 15,700 | | 466 |
| | 12,066 |
Wireless Telecommunication Services - 0.4% |
American Tower Corp. Class A (a) | 83,214 | | 2,689 |
Sprint Nextel Corp. | 90,400 | | 283 |
| | 2,972 |
TOTAL TELECOMMUNICATION SERVICES | | 15,038 |
UTILITIES - 1.0% |
Electric Utilities - 1.0% |
Exelon Corp. | 128,500 | | 6,970 |
TOTAL COMMON STOCKS (Cost $808,488) | 695,482 |
Convertible Preferred Stocks - 0.1% |
| Shares | | Value (000s) |
FINANCIALS - 0.1% |
Commercial Banks - 0.1% |
East West Bancorp, Inc. Series A, 8.00% (Cost $800) | 800 | | $ 904 |
U.S. Treasury Obligations - 0.3% |
| Principal Amount (000s) | | |
U.S. Treasury Bills, yield at date of purchase 0.64% to 1.67% 12/4/08 to 1/29/09 (e)
(Cost $2,206) | | $ 2,210 | | 2,208 |
Money Market Funds - 4.5% |
| Shares | | |
Fidelity Cash Central Fund, 1.81% (b) | 26,585,019 | | 26,585 |
Fidelity Securities Lending Cash Central Fund, 2.67% (b)(c) | 6,203,369 | | 6,203 |
TOTAL MONEY MARKET FUNDS (Cost $32,788) | 32,788 |
TOTAL INVESTMENT PORTFOLIO - 99.7% (Cost $844,282) | | 731,382 |
NET OTHER ASSETS - 0.3% | | 2,343 |
NET ASSETS - 100% | $ 733,725 |
Futures Contracts |
| Expiration Date | | Underlying Face Amount at Value (000s) | | Unrealized Appreciation/
(Depreciation) (000s) |
Purchased |
Equity Index Contracts |
287 CME E-mini S&P 500 Index Contracts | Dec. 2008 | | $ 13,881 | | $ (1,176) |
|
The face value of futures purchased as a percentage of net assets - 1.9% |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $2,208,000. |
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 | $ 1,409 |
Fidelity Securities Lending Cash Central Fund | 129 |
Total | $ 1,538 |
Income Tax Information |
At October 31, 2008, the fund had a capital loss carryforward of approximately $127,420,000 all of which will expire on October 31, 2016. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2008 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $6,191) - See accompanying schedule: Unaffiliated issuers (cost $811,494) | $ 698,594 | |
Fidelity Central Funds (cost $32,788) | 32,788 | |
Total Investments (cost $844,282) | | $ 731,382 |
Receivable for investments sold | | 21,987 |
Receivable for fund shares sold | | 549 |
Dividends receivable | | 871 |
Distributions receivable from Fidelity Central Funds | | 56 |
Receivable for daily variation on futures contracts | | 83 |
Other receivables | | 4 |
Total assets | | 754,932 |
| | |
Liabilities | | |
Payable for investments purchased | $ 13,949 | |
Payable for fund shares redeemed | 487 | |
Accrued management fee | 327 | |
Other affiliated payables | 178 | |
Other payables and accrued expenses | 63 | |
Collateral on securities loaned, at value | 6,203 | |
Total liabilities | | 21,207 |
| | |
Net Assets | | $ 733,725 |
Net Assets consist of: | | |
Paid in capital | | $ 998,488 |
Undistributed net investment income | | 6,281 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (156,967) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (114,077) |
Net Assets | | $ 733,725 |
| | |
Stock Selector:
Net Asset Value, offering price and redemption price per share ($698,288 ÷ 37,163 shares) | | $ 18.79 |
| | |
Class K:
Net Asset Value, offering price and redemption price per share ($35,437 ÷ 1,884 shares) | | $ 18.81 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Operations
Amounts in thousands | Year ended October 31, 2008 |
| | |
Investment Income | | |
Dividends | | $ 15,232 |
Interest | | 62 |
Income from Fidelity Central Funds | | 1,538 |
Total income | | 16,832 |
| | |
Expenses | | |
Management fee
Basic fee | $ 5,526 | |
Performance adjustment | 1,044 | |
Transfer agent fees | 2,059 | |
Accounting and security lending fees | 333 | |
Custodian fees and expenses | 60 | |
Independent trustees' compensation | 4 | |
Registration fees | 73 | |
Audit | 62 | |
Legal | 6 | |
Miscellaneous | 42 | |
Total expenses before reductions | 9,209 | |
Expense reductions | (25) | 9,184 |
Net investment income (loss) | | 7,648 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (147,817) | |
Foreign currency transactions | (4) | |
Futures contracts | (4,543) | |
Total net realized gain (loss) | | (152,364) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (300,889) | |
Assets and liabilities in foreign currencies | (3) | |
Futures contracts | (1,176) | |
Total change in net unrealized appreciation (depreciation) | | (302,068) |
Net gain (loss) | | (454,432) |
Net increase (decrease) in net assets resulting from operations | | $ (446,784) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Changes in Net Assets
Amounts in thousands | Year ended
October 31,
2008 | Year ended
October 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 7,648 | $ 5,593 |
Net realized gain (loss) | (152,364) | 58,432 |
Change in net unrealized appreciation (depreciation) | (302,068) | 93,429 |
Net increase (decrease) in net assets resulting
from operations | (446,784) | 157,454 |
Distributions to shareholders from net investment income | (4,996) | (3,953) |
Distributions to shareholders from net realized gain | (46,217) | (912) |
Total distributions | (51,213) | (4,865) |
Share transactions - net increase (decrease) | 226,652 | (564) |
Total increase (decrease) in net assets | (271,345) | 152,025 |
| | |
Net Assets | | |
Beginning of period | 1,005,070 | 853,045 |
End of period (including undistributed net investment income of $6,281 and undistributed net investment income of $4,008, respectively) | $ 733,725 | $ 1,005,070 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Stock Selector
| | | | | |
Years ended October 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 32.37 | $ 27.24 | $ 23.74 | $ 21.41 | $ 19.96 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .20 | .19 | .16 | .25 E | .10 |
Net realized and unrealized gain (loss) | (12.14) | 5.10 | 3.46 | 2.33 | 1.47 |
Total from investment operations | (11.94) | 5.29 | 3.62 | 2.58 | 1.57 |
Distributions from net investment income | (.16) | (.13) | (.12) | (.25) | (.12) |
Distributions from net realized gain | (1.48) | (.03) | - | - | - |
Total distributions | (1.64) | (.16) | (.12) | (.25) | (.12) |
Net asset value, end of period | $ 18.79 | $ 32.37 | $ 27.24 | $ 23.74 | $ 21.41 |
Total Return A | (38.78)% | 19.52% | 15.29% | 12.12% | 7.91% |
Ratios to Average Net Assets C, F | | | | | |
Expenses before reductions | .93% | .87% | .88% | .84% | .85% |
Expenses net of fee waivers, if any | .93% | .87% | .88% | .84% | .85% |
Expenses net of all reductions | .93% | .87% | .87% | .79% | .81% |
Net investment income (loss) | .77% | .64% | .61% | 1.11% E | .46% |
Supplemental Data | | | | | |
Net assets, end of period (in millions) | $ 698 | $ 1,005 | $ 853 | $ 770 | $ 777 |
Portfolio turnover rate D | 121% | 91% | 109% | 136% | 134% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .49%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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.
Annual Report
Financial Highlights - Class K
Year ended October 31, | 2008 G |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 27.80 |
Income from Investment Operations | |
Net investment income (loss) D | .06 |
Net realized and unrealized gain (loss) | (9.05) |
Total from investment operations | (8.99) |
Net asset value, end of period | $ 18.81 |
Total Return B, C | (32.34)% |
Ratios to Average Net Assets E, H | |
Expenses before reductions | .79% A |
Expenses net of fee waivers, if any | .79% A |
Expenses net of all reductions | .78% A |
Net investment income (loss) | .63% A |
Supplemental Data | |
Net assets, end of period (in millions) | $ 35 |
Portfolio turnover rate F | 121% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to October 31, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2008
(Amounts in thousands except ratios)
1. Organization.
Fidelity Stock Selector (the Fund) is a fund of Fidelity Capital 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. On January 17, 2008, the Board of Trustees of the Fund approved the creation of an additional class of shares. The Fund commenced sale of shares of Class K and the existing class was designated Stock Selector on May 9, 2008. The fund offers Stock Selector 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 also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
Notes to Financial Statements - 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. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is
Annual Report
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service (IRS). Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, foreign currency transactions, market discount, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 37,447 | |
Unrealized depreciation | (181,071) | |
Net unrealized appreciation (depreciation) | (143,624) | |
Undistributed ordinary income | 6,280 | |
Capital loss carryforward | (127,420) | |
| | |
Cost for federal income tax purposes | $ 875,006 | |
The tax character of distributions paid was as follows:
| October 31, 2008 | October 31, 2007 |
Ordinary Income | $ 13,116 | $ 3,953 |
Long-term Capital Gains | 38,097 | 912 |
Total | $ 51,213 | $ 4,865 |
New Accounting Pronouncements. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for reporting periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance.
Annual Report
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Futures Contracts. The Fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Securities deposited to meet margin requirements are identified in the Schedule of Investments. Futures contracts involve, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,312,172 and $1,143,449, respectively.
Annual Report
Notes to Financial Statements - 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 the retail class of the Fund, Stock Selector as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .66% 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 account size and type of account of the shareholders of Stock Selector and asset-based fees of .05% of average net assets for Class K. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc (FSC), also an affiliate of FMR was the transfer agent for Stock Selector shares. For the period, the transfer agent fees for Stock Selector were equivalent to an annual rate of .21% of average net assets. For the period, the total transfer agent fees paid by each class were as follows:
| Amount |
Stock Selector | $ 2,056 |
Class K | 3 |
Total | $ 2,059 |
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 $22 for the period.
Annual Report
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $2 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $129.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Stock Selector's operating expenses. During the period, this reimbursement reduced the class' expenses by $13.
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 $9 for the period. In addition, through arrangements with the Fund's custodian, and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction | |
Stock Selector | $ 2 | |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $299, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2008 | 2007 |
From net investment income | | |
Stock Selector | $ 4,996 | $ 3,953 |
From net realized gain | | |
Stock Selector | $ 46,217 | $ 912 |
Annual Report
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended October 31, | 2008 A | 2007 | 2008 A | 2007 |
Stock Selector | | | | |
Shares sold | 14,653 | 5,039 | $ 387,105 | $ 152,793 |
Conversion to Class K | (1,889) | - | (46,383) | - |
Reinvestment of distributions | 1,639 | 169 | 49,243 | 4,662 |
Shares redeemed | (8,287) | (5,476) | (209,646) | (158,019) |
Net increase (decrease) | 6,116 | (268) | $ 180,319 | $ (564) |
Class K | | | | |
Shares sold | 68 | - | $ 1,398 | $ - |
Conversion from Stock Selector | 1,888 | - | 46,383 | - |
Shares redeemed | (72) | - | (1,448) | - |
Net increase (decrease) | 1,884 | - | $ 46,333 | $ - |
A Share transactions for Class K are for the period May 9, 2008 (commencement of sale of shares) to October 31, 2008.
Annual Report
To the Trustees of Fidelity Capital Trust and Shareholders of Fidelity Stock Selector:
We have audited the accompanying statement of assets and liabilities of Fidelity Stock Selector (the Fund), a fund of Fidelity Capital Trust, including the schedule of investments, as of October 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2008, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Stock Selector as of October 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 22, 2008
Annual Report
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 220 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 379 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Edward C. Johnson 3d (78) |
| Year of Election or Appointment: 1978 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation |
Dennis J. Dirks (60) |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (55) |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) |
| Year of Election or Appointment: Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Peter S. Lynch (64) |
| Year of Election or Appointment: 2003 Member of the Advisory Board of the Fidelity Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) |
| Year of Election or Appointment: 2007 Vice President of Fidelity's Equity Funds. Mr. Donovan also serves as President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Bruce T. Herring (43) |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as Group Chief Investments Officer of FMR. Previously, Mr. Herring served as a portfolio manager for Fidelity U.S. Equity Funds. |
Scott C. Goebel (40) |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (46) |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of Fidelity Distributors Corporation (FDC) (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) |
| Year of Election or Appointment: 2004 Assistant Treasurer of the Fidelity funds. Mr. Lydecker is an employee of Fidelity Investments. |
Paul M. Murphy (61) |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (50) |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
The fund designates 78% of dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 84% of the dividends distributed in December, during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 |
To elect a Board of Trustees.A |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 23,119,124,829.71 | 94.630 |
Withheld | 1,311,945,572.61 | 5.370 |
TOTAL | 24,431,070,402.32 | 100.000 |
Dennis J. Dirks |
Affirmative | 23,264,895,678.33 | 95.227 |
Withheld | 1,166,174,723.99 | 4.773 |
TOTAL | 24,431,070,402.32 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 23,048,702,160.33 | 94.342 |
Withheld | 1,382,368,241.99 | 5.658 |
TOTAL | 24,431,070,402.32 | 100.000 |
Alan J. Lacy |
Affirmative | 23,227,703,560.69 | 95.074 |
Withheld | 1,203,366,841.63 | 4.926 |
TOTAL | 24,431,070,402.32 | 100.000 |
Ned C. Lautenbach |
Affirmative | 23,204,734,087.83 | 94.980 |
Withheld | 1,226,336,314.49 | 5.020 |
TOTAL | 24,431,070,402.32 | 100.000 |
Joseph Mauriello |
Affirmative | 23,241,851,999.48 | 95.132 |
Withheld | 1,189,218,402.84 | 4.868 |
TOTAL | 24,431,070,402.32 | 100.000 |
Cornelia M. Small |
Affirmative | 23,238,535,444.69 | 95.119 |
Withheld | 1,192,534,957.63 | 4.881 |
TOTAL | 24,431,070,402.32 | 100.000 |
| # of
Votes | % of
Votes |
William S. Stavropoulos |
Affirmative | 23,115,529,078.86 | 94.615 |
Withheld | 1,315,541,323.46 | 5.385 |
TOTAL | 24,431,070,402.32 | 100.000 |
David M. Thomas |
Affirmative | 23,252,717,495.51 | 95.177 |
Withheld | 1,178,352,906.81 | 4.823 |
TOTAL | 24,431,070,402.32 | 100.000 |
Michael E. Wiley |
Affirmative | 23,205,390,737.79 | 94.983 |
Withheld | 1,225,679,664.53 | 5.017 |
TOTAL | 24,431,070,402.32 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 18,156,725,598.66 | 74.318 |
Against | 4,525,430,963.48 | 18.523 |
Abstain | 1,194,721,132.34 | 4.890 |
Broker
Non-Votes | 554,192,707.84 | 2.269 |
TOTAL | 24,431,070,402.32 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Stock Selector
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24 hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance, as well as the fund's relative investment performance measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, the fund's cumulative total returns, the cumulative total returns of a broad-based securities market index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Morningstar, Inc. as having an investment style similar to that of the fund based on underlying portfolio holdings. (The fund did not offer Class K as of December 31, 2007.) The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the peer group whose performance was equal to or lower than that of the fund.
Annual Report
Fidelity Stock Selector
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of the fund compared favorably to its benchmark for all the periods shown.
The Board also considered that the fund's management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund's investment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board-approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board considered two proprietary management fee comparisons for the 12-month periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps, and without giving effect to the fund's performance adjustment. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 9% means that 91% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked and the impact of the fund's performance adjustment, is also included in the chart and considered by the Board.
Annual Report
Fidelity Stock Selector
The Board noted that the fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2007. The Board also noted the effect of the fund's positive performance adjustment on the fund's management fee ranking. The Board noted that the performance adjustment for each year represents calculations for performance periods that differ from the periods shown in the performance charts above.
In connection with the renewal of the fund's management contract, the Board also approved non-material amendments to the fund's management contract to clarify certain provisions regarding the calculation of the fund's performance adjustment.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the fund's total expenses, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses, as well as the impact of the fund's performance adjustment. As part of its review, the Board also considered current and historical total expenses of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board noted that the fund's total expenses ranked below its competitive median for 2007.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the fund's total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Annual Report
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual 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
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Limited
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
Brown Brothers Harriman & Co.
Boston, MA
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®)
1-800-544-5555
Automated line for quickest service
FSS-ANN-1208-01
1.538295.111
Fidelity®
Stock Selector -
Class K
Annual Report
October 31, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | <Click Here> | Ned Johnson's message to shareholders. |
Performance | <Click Here> | How the fund has done over time. |
Management's Discussion | <Click Here> | The manager's review of fund performance, strategy and outlook. |
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. |
Report of Independent Registered Public Accounting Firm | <Click Here> | |
Trustees and Officers | <Click Here> | |
Distributions | <Click Here> | |
Proxy Voting Results | <Click Here> | |
Board Approval of Investment Advisory Contracts and Management Fees | <Click Here> | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
Annual Report
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Turmoil has been the watchword for the world's securities markets in 2008, with domestic and international stocks down sharply amid the global credit squeeze. A flight to quality boosted returns for U.S. Treasuries, one of the few asset classes with positive results heading into the latter stages of the year. Financial markets are always unpredictable, but there are a number of time-tested principles that can put the historical odds in your favor.
One of the basic tenets is to invest for the long term. Over time, riding out the markets' inevitable ups and downs has proven much more effective than selling into panic or chasing the hottest trend. Even missing only a few of the markets' best days can significantly diminish investor returns. Patience also affords the benefits of compounding - of earning interest on additional income or reinvested dividends and capital gains. There are tax advantages and cost benefits to consider as well. The more you sell, the more taxes you pay, and the more you trade, the higher the costs. While staying the course doesn't eliminate risk, it can considerably lessen the effect of short-term declines.
You can further manage your investing risk through diversification. And today, more than ever, geographic diversification should be taken into account. Studies indicate that asset allocation is the single most important determinant of a portfolio's long-term success. The right mix of stocks, bonds and cash - aligned to your particular risk tolerance and investment objective - is very important. Age-appropriate rebalancing is also an essential aspect of asset allocation. For younger investors, an emphasis on equities - which historically have been the best-performing asset class over time - is encouraged. As investors near their specific goal, such as retirement or sending a child to college, consideration may be given to replacing volatile assets (e.g. common stocks) with more-stable fixed investments (bonds or savings plans).
A third investment principle - investing regularly - can help lower the average cost of your purchases. Investing a certain amount of money each month or quarter helps ensure you won't pay for all your shares at market highs. This strategy - known as dollar cost averaging - also reduces unconstructive "emotion" from investing, helping shareholders avoid selling weak performers just prior to an upswing, or chasing a hot performer just before a correction.
We invite you to contact us via the Internet, through our Investor Centers or over the phone. It is our privilege to provide you the information you need to make the investments that are right for you.
Sincerely,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Annual Report
Average annual total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The $10,000 table and the fund's returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
Periods ended October 31, 2008 | Past 1
year | Past 5
years | Past 10
years |
Class KA | -38.72% | 0.43% | 1.12% |
A The initial offering of Class K shares took place on May 9, 2008. Returns prior to May 9, 2008 are those of Stock Selector, the original class of the fund.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Stock Selector - Class K on October 31, 1998. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500SM Index (S&P 500®) performed over the same period. The initial offering of Class K took place on May 9, 2008. See above for additional information regarding the performance of Class K.
Annual Report
Comments from James Catudal, Portfolio Manager of Fidelity® Stock Selector
The U.S. equity markets quaked under the rising pressure of a global credit crisis during the 12 months ending October 31, 2008. As home values sunk, credit availability decreased and liquidity became increasingly scarce, the Standard & Poor's 500SM Index fell 36.10%. All 10 sectors in the S&P 500® were negative, led by a roughly 52% decline in financials. Information technology and materials both fell more than 40%, while the historically defensive consumer staples and health care sectors performed the best, dropping slightly more than 11% and 23%, respectively. In the last two months of the period, the U.S. economy took a turn for the worse, as several large financial institutions went bankrupt, were forced into acquisitions or were taken over by the U.S. government. The Federal Reserve Board facilitated many of these and other transactions, and also lowered the federal funds target rate twice in October, on top of the other rate cuts during the year, leaving it at 1.00%. The markets continued to perform erratically, however, and the U.S. unemployment rate reached a 14-year high in the last month of the period. The Dow Jones Industrial AverageSM declined 31.24% for the 12-month period - including its worst single-day point loss in September - while the technology-heavy NASDAQ Composite® Index dropped 39.35%.
For the year ending October 31, 2008, the fund's Class K shares underperformed the S&P 500's return. (For specific class-level returns, please see the performance section of this shareholder report.) Security selection in energy was the biggest negative. Underweighting consumer staples and an overweighting and stock selection in information technology also hurt, while stock picks in health care helped. Insurance giant American International Group (AIG) was the largest detractor from results. It ran into difficulties because of its exposure to troublesome debt-related securities. Meanwhile, the retreat of oil prices late in the period led to underperformance by oil-field services company Cameron International and by McDermott International, an engineering and construction company exposed to the energy sector. Conversely, not owning Chevron hurt when it outperformed relative to the index as oil prices declined. Underweighting defensive stocks such as consumer goods company Procter & Gamble and pharmaceutical and health care products manufacturer Johnson & Johnson also detracted from returns. Elsewhere, minimal exposures to large financial companies such as Wachovia, Fannie Mae and Merrill Lynch helped relative performance, as those stocks plummeted in the credit crisis. Fannie Mae was not held at the end of the period. The investment in re-insurer ACE Ltd. contributed as well.
The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Annual 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 actual expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (May 1, 2008 to October 31, 2008) for Stock Selector and for the entire period (May 9, 2008 to October 31, 2008) for Class K. The hypothetical expense Example is based on an investment of $1,000 invested for the one half year period (May 1, 2008 to October 31, 2008).
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.
Annual Report
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Annualized Expense Ratio | Beginning
Account Value | Ending
Account Value
October 31, 2008 | Expenses Paid
During Period |
Stock Selector | .90% | | | |
Actual | | $ 1,000.00 | $ 677.60 | $ 3.80 B |
Hypothetical A | | $ 1,000.00 | $ 1,020.61 | $ 4.57 C |
Class K | .79% | | | |
Actual | | $ 1,000.00 | $ 676.60 | $ 3.18 B |
Hypothetical A | | $ 1,000.00 | $ 1,021.17 | $ 4.01C |
A 5% return per year before expenses
B Actual expenses are equal to each Class' annualized expense ratio (shown in the table above); multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period) for Stock Selector and multiplied by 176/366 (to reflect the period May 9, 2008 to October 31, 2008) for Class K.
C Hypothetical expenses are equal to each Class' annualized expense ratio (shown in the table above); multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).
Annual Report
Investment Changes (Unaudited)
Top Ten Stocks as of October 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Exxon Mobil Corp. | 3.3 | 3.2 |
Microsoft Corp. | 2.7 | 2.7 |
Wal-Mart Stores, Inc. | 2.6 | 1.6 |
United Technologies Corp. | 2.0 | 1.9 |
Bank of America Corp. | 2.0 | 1.6 |
Cisco Systems, Inc. | 2.0 | 2.4 |
Applied Materials, Inc. | 1.8 | 1.2 |
Cameron International Corp. | 1.6 | 1.8 |
AT&T, Inc. | 1.5 | 2.1 |
Apple, Inc. | 1.4 | 1.2 |
| 20.9 | |
Top Five Market Sectors as of October 31, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Information Technology | 19.1 | 20.2 |
Financials | 15.7 | 15.9 |
Health Care | 15.7 | 10.0 |
Energy | 11.2 | 13.2 |
Industrials | 11.1 | 14.1 |
Asset Allocation (% of fund's net assets) |
As of October 31, 2008 * | As of April 30, 2008 ** |
| Stocks and
Equity Futures 96.7% | | | Stocks and
Equity Futures 95.1% | |
| Convertible
Securities 0.1% | | | Convertible
Securities 0.3% | |
| Short-Term
Investments and
Net Other Assets 3.2% | | | Short-Term
Investments and
Net Other Assets 4.6% | |
* Foreign investments | 8.5% | | ** Foreign investments | 10.0% | |
Annual Report
Investments October 31, 2008
Showing Percentage of Net Assets
Common Stocks - 94.8% |
| Shares | | Value (000s) |
CONSUMER DISCRETIONARY - 8.9% |
Auto Components - 0.2% |
The Goodyear Tire & Rubber Co. (a) | 136,800 | | $ 1,220 |
Automobiles - 0.4% |
General Motors Corp. (d) | 43,700 | | 253 |
Harley-Davidson, Inc. | 1,100 | | 27 |
Toyota Motor Corp. sponsored ADR | 34,600 | | 2,633 |
| | 2,913 |
Hotels, Restaurants & Leisure - 0.7% |
Buffalo Wild Wings, Inc. (a)(d) | 37,589 | | 1,063 |
Burger King Holdings, Inc. | 95,000 | | 1,889 |
Darden Restaurants, Inc. | 39,300 | | 871 |
Starbucks Corp. (a) | 84,750 | | 1,113 |
| | 4,936 |
Household Durables - 1.3% |
D.R. Horton, Inc. | 98,700 | | 728 |
Ethan Allen Interiors, Inc. | 25,900 | | 463 |
Pulte Homes, Inc. | 51,100 | | 569 |
Toll Brothers, Inc. (a) | 198,100 | | 4,580 |
Whirlpool Corp. | 68,400 | | 3,191 |
| | 9,531 |
Internet & Catalog Retail - 0.2% |
Amazon.com, Inc. (a) | 32,900 | | 1,883 |
Media - 2.4% |
Comcast Corp. Class A (special) (non-vtg.) | 304,000 | | 4,688 |
Lamar Advertising Co. Class A (a) | 25,300 | | 384 |
Scripps Networks Interactive, Inc. Class A | 118,740 | | 3,372 |
The Walt Disney Co. | 78,200 | | 2,025 |
Time Warner, Inc. (d) | 698,660 | | 7,049 |
| | 17,518 |
Multiline Retail - 0.5% |
Kohl's Corp. (a) | 46,400 | | 1,630 |
Target Corp. | 43,720 | | 1,754 |
| | 3,384 |
Specialty Retail - 2.6% |
Best Buy Co., Inc. | 37,600 | | 1,008 |
Dick's Sporting Goods, Inc. (a) | 46,900 | | 719 |
Lowe's Companies, Inc. | 462,200 | | 10,030 |
PetSmart, Inc. | 70,300 | | 1,384 |
Staples, Inc. | 243,082 | | 4,723 |
Common Stocks - continued |
| Shares | | Value (000s) |
CONSUMER DISCRETIONARY - continued |
Specialty Retail - continued |
Tiffany & Co., Inc. | 34,100 | | $ 936 |
Williams-Sonoma, Inc. | 70,200 | | 581 |
| | 19,381 |
Textiles, Apparel & Luxury Goods - 0.6% |
NIKE, Inc. Class B | 49,000 | | 2,824 |
Polo Ralph Lauren Corp. Class A | 30,545 | | 1,441 |
| | 4,265 |
TOTAL CONSUMER DISCRETIONARY | | 65,031 |
CONSUMER STAPLES - 8.1% |
Beverages - 0.9% |
Molson Coors Brewing Co. Class B | 25,100 | | 938 |
PepsiCo, Inc. | 57,400 | | 3,272 |
The Coca-Cola Co. | 60,700 | | 2,674 |
| | 6,884 |
Food & Staples Retailing - 3.7% |
China Nepstar Chain Drugstore Ltd. ADR | 87,000 | | 361 |
CVS Caremark Corp. | 230,200 | | 7,056 |
Sysco Corp. | 28,300 | | 741 |
Wal-Mart Stores, Inc. | 342,000 | | 19,087 |
| | 27,245 |
Food Products - 2.0% |
Hershey Co. | 15,500 | | 577 |
Kraft Foods, Inc. Class A | 101,400 | | 2,955 |
McCormick & Co., Inc. (non-vtg.) | 29,300 | | 986 |
Nestle SA sponsored ADR | 258,500 | | 9,939 |
| | 14,457 |
Household Products - 0.9% |
Colgate-Palmolive Co. | 42,350 | | 2,658 |
Procter & Gamble Co. | 58,405 | | 3,769 |
| | 6,427 |
Tobacco - 0.6% |
Philip Morris International, Inc. | 94,500 | | 4,108 |
TOTAL CONSUMER STAPLES | | 59,121 |
Common Stocks - continued |
| Shares | | Value (000s) |
ENERGY - 11.2% |
Energy Equipment & Services - 4.7% |
BJ Services Co. | 53,100 | | $ 682 |
Cameron International Corp. (a)(d) | 480,900 | | 11,667 |
Diamond Offshore Drilling, Inc. | 23,123 | | 2,053 |
FMC Technologies, Inc. (a) | 32,900 | | 1,151 |
Halliburton Co. | 192,607 | | 3,812 |
Helmerich & Payne, Inc. | 45,966 | | 1,577 |
Nabors Industries Ltd. (a) | 113,600 | | 1,634 |
Schlumberger Ltd. (NY Shares) | 147,985 | | 7,643 |
Smith International, Inc. | 118,100 | | 4,072 |
| | 34,291 |
Oil, Gas & Consumable Fuels - 6.5% |
Apache Corp. | 49,400 | | 4,067 |
Chesapeake Energy Corp. | 191,600 | | 4,209 |
EOG Resources, Inc. | 52,782 | | 4,271 |
Exxon Mobil Corp. | 326,175 | | 24,175 |
Hess Corp. | 22,900 | | 1,379 |
Peabody Energy Corp. | 35,100 | | 1,211 |
Plains Exploration & Production Co. (a) | 66,800 | | 1,884 |
Range Resources Corp. | 40,200 | | 1,697 |
Ultra Petroleum Corp. (a) | 45,110 | | 2,100 |
Valero Energy Corp. | 75,980 | | 1,564 |
Williams Companies, Inc. | 73,500 | | 1,541 |
| | 48,098 |
TOTAL ENERGY | | 82,389 |
FINANCIALS - 15.6% |
Capital Markets - 5.2% |
Ameriprise Financial, Inc. | 96,120 | | 2,076 |
Bank of New York Mellon Corp. | 231,000 | | 7,531 |
Charles Schwab Corp. | 331,200 | | 6,333 |
Goldman Sachs Group, Inc. | 59,600 | | 5,513 |
Janus Capital Group, Inc. | 200,300 | | 2,352 |
Merrill Lynch & Co., Inc. | 174,900 | | 3,251 |
Morgan Stanley | 48,198 | | 842 |
State Street Corp. | 185,846 | | 8,056 |
T. Rowe Price Group, Inc. | 49,877 | | 1,972 |
| | 37,926 |
Commercial Banks - 2.8% |
BB&T Corp. | 45,600 | | 1,635 |
Common Stocks - continued |
| Shares | | Value (000s) |
FINANCIALS - continued |
Commercial Banks - continued |
East West Bancorp, Inc. | 31,300 | | $ 543 |
Fifth Third Bancorp | 117,765 | | 1,278 |
KeyCorp | 126,700 | | 1,550 |
PNC Financial Services Group, Inc. | 51,000 | | 3,400 |
Synovus Financial Corp. (d) | 48,400 | | 500 |
U.S. Bancorp, Delaware | 88,700 | | 2,644 |
Wachovia Corp. | 424,400 | | 2,720 |
Wells Fargo & Co. | 183,553 | | 6,250 |
| | 20,520 |
Consumer Finance - 0.4% |
American Express Co. | 14,400 | | 396 |
Capital One Financial Corp. | 24,800 | | 970 |
Discover Financial Services | 46,100 | | 565 |
SLM Corp. (a) | 104,700 | | 1,117 |
| | 3,048 |
Diversified Financial Services - 3.8% |
Bank of America Corp. | 596,320 | | 14,413 |
Citigroup, Inc. | 176,700 | | 2,412 |
CME Group, Inc. | 7,682 | | 2,167 |
JPMorgan Chase & Co. | 220,800 | | 9,108 |
| | 28,100 |
Insurance - 3.4% |
ACE Ltd. | 120,600 | | 6,918 |
AFLAC, Inc. | 68,500 | | 3,033 |
American International Group, Inc. | 63,742 | | 122 |
Berkshire Hathaway, Inc. Class A (a) | 55 | | 6,352 |
Everest Re Group Ltd. | 42,311 | | 3,161 |
Hartford Financial Services Group, Inc. | 22,800 | | 235 |
MetLife, Inc. | 77,300 | | 2,568 |
Prudential Financial, Inc. | 13,600 | | 408 |
W.R. Berkley Corp. | 92,500 | | 2,430 |
| | 25,227 |
TOTAL FINANCIALS | | 114,821 |
HEALTH CARE - 15.7% |
Biotechnology - 4.4% |
Amgen, Inc. (a) | 136,237 | | 8,159 |
Biogen Idec, Inc. (a) | 73,770 | | 3,139 |
Common Stocks - continued |
| Shares | | Value (000s) |
HEALTH CARE - continued |
Biotechnology - continued |
Celgene Corp. (a) | 56,132 | | $ 3,607 |
Cephalon, Inc. (a) | 47,100 | | 3,378 |
Genentech, Inc. (a) | 42,260 | | 3,505 |
Genzyme Corp. (a) | 29,200 | | 2,128 |
Gilead Sciences, Inc. (a) | 72,648 | | 3,331 |
MannKind Corp. (a) | 55,800 | | 210 |
Myriad Genetics, Inc. (a) | 26,600 | | 1,678 |
PDL BioPharma, Inc. | 215,291 | | 2,099 |
Vertex Pharmaceuticals, Inc. (a) | 54,000 | | 1,415 |
| | 32,649 |
Health Care Equipment & Supplies - 3.6% |
Alcon, Inc. | 7,200 | | 634 |
American Medical Systems Holdings, Inc. (a) | 40,935 | | 443 |
Baxter International, Inc. | 142,300 | | 8,608 |
Becton, Dickinson & Co. | 2,545 | | 177 |
C.R. Bard, Inc. | 21,065 | | 1,859 |
China Medical Technologies, Inc. sponsored ADR (d) | 28,400 | | 692 |
Covidien Ltd. | 161,444 | | 7,150 |
Medtronic, Inc. | 118,600 | | 4,783 |
Mindray Medical International Ltd. sponsored ADR (d) | 32,000 | | 690 |
St. Jude Medical, Inc. (a) | 42,900 | | 1,631 |
| | 26,667 |
Health Care Providers & Services - 2.5% |
Brookdale Senior Living, Inc. | 27,109 | | 234 |
Henry Schein, Inc. (a) | 136,800 | | 6,404 |
Medco Health Solutions, Inc. (a) | 138,800 | | 5,267 |
Tenet Healthcare Corp. (a) | 298,164 | | 1,306 |
UnitedHealth Group, Inc. | 146,048 | | 3,466 |
Universal Health Services, Inc. Class B | 33,500 | | 1,408 |
| | 18,085 |
Pharmaceuticals - 5.2% |
Abbott Laboratories | 126,000 | | 6,949 |
Allergan, Inc. | 21,600 | | 857 |
Barr Pharmaceuticals, Inc. (a) | 25,300 | | 1,626 |
Bristol-Myers Squibb Co. | 205,245 | | 4,218 |
Johnson & Johnson | 164,750 | | 10,106 |
Merck & Co., Inc. | 175,394 | | 5,428 |
Schering-Plough Corp. | 111,300 | | 1,613 |
Shire PLC sponsored ADR | 33,800 | | 1,333 |
Common Stocks - continued |
| Shares | | Value (000s) |
HEALTH CARE - continued |
Pharmaceuticals - continued |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 27,900 | | $ 1,196 |
Wyeth | 145,380 | | 4,678 |
| | 38,004 |
TOTAL HEALTH CARE | | 115,405 |
INDUSTRIALS - 11.1% |
Aerospace & Defense - 3.5% |
Honeywell International, Inc. | 117,660 | | 3,583 |
Lockheed Martin Corp. | 42,700 | | 3,632 |
Precision Castparts Corp. | 53,100 | | 3,441 |
United Technologies Corp. | 270,320 | | 14,857 |
| | 25,513 |
Air Freight & Logistics - 0.8% |
C.H. Robinson Worldwide, Inc. | 65,000 | | 3,366 |
FedEx Corp. | 37,800 | | 2,471 |
| | 5,837 |
Airlines - 0.5% |
Alaska Air Group, Inc. (a) | 38,000 | | 939 |
Delta Air Lines, Inc. (a)(d) | 45,625 | | 501 |
UAL Corp. | 147,900 | | 2,153 |
| | 3,593 |
Building Products - 0.3% |
Masco Corp. | 146,900 | | 1,491 |
Owens Corning (a) | 50,700 | | 798 |
| | 2,289 |
Electrical Equipment - 1.0% |
Alstom SA | 3,700 | | 183 |
Evergreen Solar, Inc. (a) | 392,500 | | 1,488 |
Q-Cells AG (a)(d) | 30,900 | | 1,216 |
Sunpower Corp. Class A (a)(d) | 31,700 | | 1,238 |
Suntech Power Holdings Co. Ltd. sponsored ADR (a) | 60,200 | | 1,054 |
Vestas Wind Systems AS (a) | 48,800 | | 1,999 |
| | 7,178 |
Industrial Conglomerates - 1.6% |
General Electric Co. | 391,545 | | 7,639 |
Common Stocks - continued |
| Shares | | Value (000s) |
INDUSTRIALS - continued |
Industrial Conglomerates - continued |
McDermott International, Inc. (a) | 210,200 | | $ 3,601 |
Textron, Inc. | 43,100 | | 763 |
| | 12,003 |
Machinery - 1.7% |
Caterpillar, Inc. | 53,400 | | 2,038 |
Danaher Corp. | 60,700 | | 3,596 |
Eaton Corp. | 102,800 | | 4,585 |
Ingersoll-Rand Co. Ltd. Class A | 105,100 | | 1,939 |
| | 12,158 |
Professional Services - 0.1% |
Manpower, Inc. | 35,300 | | 1,099 |
Road & Rail - 1.6% |
Landstar System, Inc. | 75,545 | | 2,915 |
Norfolk Southern Corp. | 37,000 | | 2,218 |
Union Pacific Corp. | 100,400 | | 6,704 |
| | 11,837 |
TOTAL INDUSTRIALS | | 81,507 |
INFORMATION TECHNOLOGY - 19.1% |
Communications Equipment - 4.5% |
Cisco Systems, Inc. (a) | 805,940 | | 14,322 |
Comverse Technology, Inc. (a) | 175,200 | | 1,274 |
Corning, Inc. | 329,860 | | 3,572 |
Harris Corp. | 67,200 | | 2,416 |
Infinera Corp. (a) | 19,700 | | 153 |
Juniper Networks, Inc. (a) | 127,280 | | 2,385 |
QUALCOMM, Inc. | 203,980 | | 7,804 |
Research In Motion Ltd. (a) | 17,152 | | 865 |
| | 32,791 |
Computers & Peripherals - 2.8% |
Apple, Inc. (a) | 98,700 | | 10,619 |
Hewlett-Packard Co. | 251,592 | | 9,631 |
SanDisk Corp. (a) | 74,800 | | 665 |
| | 20,915 |
Internet Software & Services - 1.9% |
DealerTrack Holdings, Inc. (a) | 25,900 | | 278 |
eBay, Inc. (a) | 79,853 | | 1,219 |
Google, Inc. Class A (sub. vtg.) (a) | 27,053 | | 9,722 |
Common Stocks - continued |
| Shares | | Value (000s) |
INFORMATION TECHNOLOGY - continued |
Internet Software & Services - continued |
Move, Inc. (a) | 409,546 | | $ 688 |
Sohu.com, Inc. (a) | 12,800 | | 703 |
Yahoo!, Inc. (a) | 76,810 | | 985 |
| | 13,595 |
IT Services - 1.3% |
Paychex, Inc. | 91,580 | | 2,614 |
Satyam Computer Services Ltd. sponsored ADR | 126,800 | | 1,995 |
The Western Union Co. | 48,900 | | 746 |
Visa, Inc. | 80,500 | | 4,456 |
| | 9,811 |
Semiconductors & Semiconductor Equipment - 3.7% |
Applied Materials, Inc. | 1,001,700 | | 12,932 |
ARM Holdings PLC sponsored ADR | 155,700 | | 735 |
ASML Holding NV (NY Shares) | 97,500 | | 1,711 |
Broadcom Corp. Class A (a) | 83,900 | | 1,433 |
FormFactor, Inc. (a) | 22,500 | | 392 |
Intel Corp. | 87,500 | | 1,400 |
Intersil Corp. Class A | 20,400 | | 279 |
KLA-Tencor Corp. | 76,000 | | 1,767 |
Lam Research Corp. (a) | 127,200 | | 2,844 |
Micron Technology, Inc. (a) | 216,300 | | 1,019 |
Samsung Electronics Co. Ltd. | 640 | | 271 |
Texas Instruments, Inc. | 116,500 | | 2,279 |
| | 27,062 |
Software - 4.9% |
Adobe Systems, Inc. (a) | 135,800 | | 3,618 |
Electronic Arts, Inc. (a) | 38,200 | | 870 |
Microsoft Corp. | 892,160 | | 19,922 |
Oracle Corp. (a) | 510,750 | | 9,342 |
Quest Software, Inc. (a) | 188,300 | | 2,495 |
| | 36,247 |
TOTAL INFORMATION TECHNOLOGY | | 140,421 |
MATERIALS - 2.0% |
Chemicals - 1.4% |
Albemarle Corp. | 57,430 | | 1,398 |
Monsanto Co. | 94,300 | | 8,391 |
Common Stocks - continued |
| Shares | | Value (000s) |
MATERIALS - continued |
Chemicals - continued |
Praxair, Inc. | 1,200 | | $ 78 |
W.R. Grace & Co. (a) | 70,600 | | 636 |
| | 10,503 |
Containers & Packaging - 0.2% |
Crown Holdings, Inc. (a) | 53,200 | | 1,074 |
Metals & Mining - 0.4% |
Alcoa, Inc. | 41,800 | | 481 |
Barrick Gold Corp. | 111,000 | | 2,537 |
Timminco Ltd. (a) | 32,600 | | 184 |
| | 3,202 |
TOTAL MATERIALS | | 14,779 |
TELECOMMUNICATION SERVICES - 2.1% |
Diversified Telecommunication Services - 1.7% |
AT&T, Inc. | 415,268 | | 11,117 |
Level 3 Communications, Inc. (a) | 459,700 | | 483 |
Verizon Communications, Inc. | 15,700 | | 466 |
| | 12,066 |
Wireless Telecommunication Services - 0.4% |
American Tower Corp. Class A (a) | 83,214 | | 2,689 |
Sprint Nextel Corp. | 90,400 | | 283 |
| | 2,972 |
TOTAL TELECOMMUNICATION SERVICES | | 15,038 |
UTILITIES - 1.0% |
Electric Utilities - 1.0% |
Exelon Corp. | 128,500 | | 6,970 |
TOTAL COMMON STOCKS (Cost $808,488) | 695,482 |
Convertible Preferred Stocks - 0.1% |
| Shares | | Value (000s) |
FINANCIALS - 0.1% |
Commercial Banks - 0.1% |
East West Bancorp, Inc. Series A, 8.00% (Cost $800) | 800 | | $ 904 |
U.S. Treasury Obligations - 0.3% |
| Principal Amount (000s) | | |
U.S. Treasury Bills, yield at date of purchase 0.64% to 1.67% 12/4/08 to 1/29/09 (e)
(Cost $2,206) | | $ 2,210 | | 2,208 |
Money Market Funds - 4.5% |
| Shares | | |
Fidelity Cash Central Fund, 1.81% (b) | 26,585,019 | | 26,585 |
Fidelity Securities Lending Cash Central Fund, 2.67% (b)(c) | 6,203,369 | | 6,203 |
TOTAL MONEY MARKET FUNDS (Cost $32,788) | 32,788 |
TOTAL INVESTMENT PORTFOLIO - 99.7% (Cost $844,282) | | 731,382 |
NET OTHER ASSETS - 0.3% | | 2,343 |
NET ASSETS - 100% | $ 733,725 |
Futures Contracts |
| Expiration Date | | Underlying Face Amount at Value (000s) | | Unrealized Appreciation/
(Depreciation) (000s) |
Purchased |
Equity Index Contracts |
287 CME E-mini S&P 500 Index Contracts | Dec. 2008 | | $ 13,881 | | $ (1,176) |
|
The face value of futures purchased as a percentage of net assets - 1.9% |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $2,208,000. |
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 | $ 1,409 |
Fidelity Securities Lending Cash Central Fund | 129 |
Total | $ 1,538 |
Income Tax Information |
At October 31, 2008, the fund had a capital loss carryforward of approximately $127,420,000 all of which will expire on October 31, 2016. |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Assets and Liabilities
Amounts in thousands (except per-share amounts) | October 31, 2008 |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $6,191) - See accompanying schedule: Unaffiliated issuers (cost $811,494) | $ 698,594 | |
Fidelity Central Funds (cost $32,788) | 32,788 | |
Total Investments (cost $844,282) | | $ 731,382 |
Receivable for investments sold | | 21,987 |
Receivable for fund shares sold | | 549 |
Dividends receivable | | 871 |
Distributions receivable from Fidelity Central Funds | | 56 |
Receivable for daily variation on futures contracts | | 83 |
Other receivables | | 4 |
Total assets | | 754,932 |
| | |
Liabilities | | |
Payable for investments purchased | $ 13,949 | |
Payable for fund shares redeemed | 487 | |
Accrued management fee | 327 | |
Other affiliated payables | 178 | |
Other payables and accrued expenses | 63 | |
Collateral on securities loaned, at value | 6,203 | |
Total liabilities | | 21,207 |
| | |
Net Assets | | $ 733,725 |
Net Assets consist of: | | |
Paid in capital | | $ 998,488 |
Undistributed net investment income | | 6,281 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (156,967) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (114,077) |
Net Assets | | $ 733,725 |
| | |
Stock Selector:
Net Asset Value, offering price and redemption price per share ($698,288 ÷ 37,163 shares) | | $ 18.79 |
| | |
Class K:
Net Asset Value, offering price and redemption price per share ($35,437 ÷ 1,884 shares) | | $ 18.81 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Statement of Operations
Amounts in thousands | Year ended October 31, 2008 |
| | |
Investment Income | | |
Dividends | | $ 15,232 |
Interest | | 62 |
Income from Fidelity Central Funds | | 1,538 |
Total income | | 16,832 |
| | |
Expenses | | |
Management fee
Basic fee | $ 5,526 | |
Performance adjustment | 1,044 | |
Transfer agent fees | 2,059 | |
Accounting and security lending fees | 333 | |
Custodian fees and expenses | 60 | |
Independent trustees' compensation | 4 | |
Registration fees | 73 | |
Audit | 62 | |
Legal | 6 | |
Miscellaneous | 42 | |
Total expenses before reductions | 9,209 | |
Expense reductions | (25) | 9,184 |
Net investment income (loss) | | 7,648 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (147,817) | |
Foreign currency transactions | (4) | |
Futures contracts | (4,543) | |
Total net realized gain (loss) | | (152,364) |
Change in net unrealized appreciation (depreciation) on: Investment securities | (300,889) | |
Assets and liabilities in foreign currencies | (3) | |
Futures contracts | (1,176) | |
Total change in net unrealized appreciation (depreciation) | | (302,068) |
Net gain (loss) | | (454,432) |
Net increase (decrease) in net assets resulting from operations | | $ (446,784) |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Statements - continued
Statement of Changes in Net Assets
Amounts in thousands | Year ended
October 31,
2008 | Year ended
October 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 7,648 | $ 5,593 |
Net realized gain (loss) | (152,364) | 58,432 |
Change in net unrealized appreciation (depreciation) | (302,068) | 93,429 |
Net increase (decrease) in net assets resulting
from operations | (446,784) | 157,454 |
Distributions to shareholders from net investment income | (4,996) | (3,953) |
Distributions to shareholders from net realized gain | (46,217) | (912) |
Total distributions | (51,213) | (4,865) |
Share transactions - net increase (decrease) | 226,652 | (564) |
Total increase (decrease) in net assets | (271,345) | 152,025 |
| | |
Net Assets | | |
Beginning of period | 1,005,070 | 853,045 |
End of period (including undistributed net investment income of $6,281 and undistributed net investment income of $4,008, respectively) | $ 733,725 | $ 1,005,070 |
See accompanying notes which are an integral part of the financial statements.
Annual Report
Financial Highlights - Stock Selector
| | | | | |
Years ended October 31, | 2008 | 2007 | 2006 | 2005 | 2004 |
Selected Per-Share Data | | | | | |
Net asset value, beginning of period | $ 32.37 | $ 27.24 | $ 23.74 | $ 21.41 | $ 19.96 |
Income from Investment Operations | | | | | |
Net investment income (loss) B | .20 | .19 | .16 | .25 E | .10 |
Net realized and unrealized gain (loss) | (12.14) | 5.10 | 3.46 | 2.33 | 1.47 |
Total from investment operations | (11.94) | 5.29 | 3.62 | 2.58 | 1.57 |
Distributions from net investment income | (.16) | (.13) | (.12) | (.25) | (.12) |
Distributions from net realized gain | (1.48) | (.03) | - | - | - |
Total distributions | (1.64) | (.16) | (.12) | (.25) | (.12) |
Net asset value, end of period | $ 18.79 | $ 32.37 | $ 27.24 | $ 23.74 | $ 21.41 |
Total Return A | (38.78)% | 19.52% | 15.29% | 12.12% | 7.91% |
Ratios to Average Net Assets C, F | | | | | |
Expenses before reductions | .93% | .87% | .88% | .84% | .85% |
Expenses net of fee waivers, if any | .93% | .87% | .88% | .84% | .85% |
Expenses net of all reductions | .93% | .87% | .87% | .79% | .81% |
Net investment income (loss) | .77% | .64% | .61% | 1.11% E | .46% |
Supplemental Data | | | | | |
Net assets, end of period (in millions) | $ 698 | $ 1,005 | $ 853 | $ 770 | $ 777 |
Portfolio turnover rate D | 121% | 91% | 109% | 136% | 134% |
A Total returns would have been lower had certain expenses not been reduced during the periods shown.
B Calculated based on average shares outstanding during the period.
C Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
D Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
E Investment income per share reflects a special dividend which amounted to $.14 per share. Excluding the special dividend, the ratio of net investment income (loss) to average net assets would have been .49%.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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.
Annual Report
Financial Highlights - Class K
Year ended October 31, | 2008 G |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 27.80 |
Income from Investment Operations | |
Net investment income (loss) D | .06 |
Net realized and unrealized gain (loss) | (9.05) |
Total from investment operations | (8.99) |
Net asset value, end of period | $ 18.81 |
Total Return B, C | (32.34)% |
Ratios to Average Net Assets E, H | |
Expenses before reductions | .79% A |
Expenses net of fee waivers, if any | .79% A |
Expenses net of all reductions | .78% A |
Net investment income (loss) | .63% A |
Supplemental Data | |
Net assets, end of period (in millions) | $ 35 |
Portfolio turnover rate F | 121% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
G For the period May 9, 2008 (commencement of sale of shares) to October 31, 2008.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
See accompanying notes which are an integral part of the financial statements.
Annual Report
Notes to Financial Statements
For the period ended October 31, 2008
(Amounts in thousands except ratios)
1. Organization.
Fidelity Stock Selector (the Fund) is a fund of Fidelity Capital 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. On January 17, 2008, the Board of Trustees of the Fund approved the creation of an additional class of shares. The Fund commenced sale of shares of Class K and the existing class was designated Stock Selector on May 9, 2008. The fund offers Stock Selector 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 also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Annual Report
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. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
3. Significant Accounting Policies - continued
Investment Transactions and Income - continued
calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service (IRS). Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. In addition, the Fund will claim a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Annual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to futures transactions, foreign currency transactions, market discount, deferred trustees compensation, capital loss carryforwards, and losses deferred due to wash sales.
The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:
Unrealized appreciation | $ 37,447 | |
Unrealized depreciation | (181,071) | |
Net unrealized appreciation (depreciation) | (143,624) | |
Undistributed ordinary income | 6,280 | |
Capital loss carryforward | (127,420) | |
| | |
Cost for federal income tax purposes | $ 875,006 | |
The tax character of distributions paid was as follows:
| October 31, 2008 | October 31, 2007 |
Ordinary Income | $ 13,116 | $ 3,953 |
Long-term Capital Gains | 38,097 | 912 |
Total | $ 51,213 | $ 4,865 |
New Accounting Pronouncements. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and results in expanded disclosures about fair value measurements.
In addition, in March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for reporting periods beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Futures Contracts. The Fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Securities deposited to meet margin requirements are identified in the Schedule of Investments. Futures contracts involve, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,312,172 and $1,143,449, respectively.
Annual Report
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 the retail class of the Fund, Stock Selector as compared to an appropriate benchmark index. For the period, the total annual management fee rate, including the performance adjustment, was .66% 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 account size and type of account of the shareholders of Stock Selector and asset-based fees of .05% of average net assets for Class K. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. Prior to January 1, 2008, Fidelity Service Company, Inc (FSC), also an affiliate of FMR was the transfer agent for Stock Selector shares. For the period, the transfer agent fees for Stock Selector were equivalent to an annual rate of .21% of average net assets. For the period, the total transfer agent fees paid by each class were as follows:
| Amount |
Stock Selector | $ 2,056 |
Class K | 3 |
Total | $ 2,059 |
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 $22 for the period.
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $2 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $129.
9. Expense Reductions.
FMR voluntarily agreed to reimburse a portion of Stock Selector's operating expenses. During the period, this reimbursement reduced the class' expenses by $13.
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 $9 for the period. In addition, through arrangements with the Fund's custodian, and each class' transfer agent, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1. During the period, credits reduced each class' transfer agent expense as noted in the table below.
| Transfer Agent
expense reduction | |
Stock Selector | $ 2 | |
Annual Report
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $299, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Years ended October 31, | 2008 | 2007 |
From net investment income | | |
Stock Selector | $ 4,996 | $ 3,953 |
From net realized gain | | |
Stock Selector | $ 46,217 | $ 912 |
Annual Report
Notes to Financial Statements - continued
(Amounts in thousands except ratios)
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
Years ended October 31, | 2008 A | 2007 | 2008 A | 2007 |
Stock Selector | | | | |
Shares sold | 14,653 | 5,039 | $ 387,105 | $ 152,793 |
Conversion to Class K | (1,889) | - | (46,383) | - |
Reinvestment of distributions | 1,639 | 169 | 49,243 | 4,662 |
Shares redeemed | (8,287) | (5,476) | (209,646) | (158,019) |
Net increase (decrease) | 6,116 | (268) | $ 180,319 | $ (564) |
Class K | | | | |
Shares sold | 68 | - | $ 1,398 | $ - |
Conversion from Stock Selector | 1,888 | - | 46,383 | - |
Shares redeemed | (72) | - | (1,448) | - |
Net increase (decrease) | 1,884 | - | $ 46,333 | $ - |
A Share transactions for Class K are for the period May 9, 2008 (commencement of sale of shares) to October 31, 2008.
Annual Report
To the Trustees of Fidelity Capital Trust and Shareholders of Fidelity Stock Selector:
We have audited the accompanying statement of assets and liabilities of Fidelity Stock Selector (the Fund), a fund of Fidelity Capital Trust, including the schedule of investments, as of October 31, 2008, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2008, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Stock Selector as of October 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 22, 2008
Annual Report
The Trustees, Member of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for Edward C. Johnson 3d and James C. Curvey, each of the Trustees oversees 220 funds advised by FMR or an affiliate. Messrs. Johnson and Curvey oversee 379 funds advised by FMR or an affiliate.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) (Independent Trustee), shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. The executive officers and Advisory Board Member hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Interested Trustees*:
Correspondence intended for each Trustee who is an interested person may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Edward C. Johnson 3d (78) |
| Year of Election or Appointment: 1978 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR LLC; Chairman and a Director of FMR; Chairman and a Director of Fidelity Research & Analysis Company (FRAC); Chairman and a Director of Fidelity Investments Money Management, Inc.; and Chairman and a Director of FMR Co., Inc. In addition, Mr. Johnson serves as Chairman and Director of FIL Limited. Previously, Mr. Johnson served as President of FMR LLC (2006-2007). |
James C. Curvey (73) |
| Year of Election or Appointment: 2007 Mr. Curvey also serves as Trustee (2007-present) of other investment companies advised by FMR. Mr. Curvey is a Director of FMR and FMR Co., Inc. (2007-present). Mr. Curvey is also Vice Chairman (2006-present) and Director of FMR LLC. In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the Trustees of Villanova University. |
* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR. FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Independent Trustees:
Correspondence intended for each Independent Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Age; Principal Occupation |
Dennis J. Dirks (60) |
| Year of Election or Appointment: 2005 Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC) (1999-2003). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) (1999-2003) and President and Board member of the National Securities Clearing Corporation (NSCC) (1999-2003). In addition, Mr. Dirks served as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), and as Chief Executive Officer and Board member of the Government Securities Clearing Corporation (2001-2003) and Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation (2001-2003). Mr. Dirks also serves as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-present). |
Alan J. Lacy (55) |
| Year of Election or Appointment: 2008 Mr. Lacy serves as Senior Adviser (2007-present) of Oak Hill Capital Partners, L.P. (a private equity firm). Mr. Lacy also served as Chief Executive Officer (2000-2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation and Sears, Roebuck and Co. (retail). In addition, Mr. Lacy serves as a member of the Board of Directors of The Western Union Company (global money transfer, 2006-present) and Bristol-Myers Squibb (global pharmaceuticals, 2007-present). Mr. Lacy is a Trustee of the National Parks Conservation Association and The Field Museum of Natural History. |
Ned C. Lautenbach (64) |
| Year of Election or Appointment: 2000 Mr. Lautenbach is Chairman of the Independent Trustees (2006-present). Mr. Lautenbach is an Advisory Partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm). Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. Mr. Lautenbach serves as a Director of Eaton Corporation (diversified industrial) as well as the Philharmonic Center for the Arts in Naples, Florida. He also is a member of the Board of Trustees of Fairfield University (2005-present), as well as a member of the Council on Foreign Relations. Previously, Mr. Lautenbach served as a Director of Sony Corporation (2006-2007). |
Joseph Mauriello (64) |
| Year of Election or Appointment: Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services firm, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Capital Ltd. (global insurance and re-insurance company, 2006-present) and of Arcadia Resources Inc. (health care services and products, 2007-present). He also served as a Director of the Hamilton Funds of the Bank of New York (2006-2007). |
Cornelia M. Small (64) |
| Year of Election or Appointment: 2005 Ms. Small is a member of the Investment Committee, and Chair (2008-present) and a member of the Board of Trustees of Smith College. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson of the Investment Committee (2002-2008) of Smith College and as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy. In addition, she served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments. |
William S. Stavropoulos (69) |
| Year of Election or Appointment: 2001 Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President (1993-2000; 2002-2003), CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, he is a Director of Teradata Corporation (data warehousing and technology solutions, 2008-present), Chemical Financial Corporation, Maersk Inc. (industrial conglomerate), Tyco International, Inc. (multinational manufacturing and services, 2007-present), and a member of the Advisory Board for Metalmark Capital (private equity investment firm, 2005-present). He is a special advisor to Clayton, Dubilier & Rice, Inc. (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science. |
David M. Thomas (59) |
| Year of Election or Appointment: 2008 Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). In addition, Mr. Thomas serves as a member of the Board of Directors of Fortune Brands, Inc. (consumer products holding company), and Interpublic Group of Companies, Inc. (marketing communication, 2004-present). |
Michael E. Wiley (58) |
| Year of Election or Appointment: 2008 Mr. Wiley also serves as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-present). He serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), and a Director of Bill Barrett Corporation (exploration and production company, 2005-present). In addition, he also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Sr. Energy Advisor of Katzenbach Partners, LLC (consulting firm, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment firm), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services company, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production company, 2001-2005). |
Advisory Board Member and Executive Officers**:
Correspondence intended for each executive officer and Mr. Lynch may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.
Name, Age; Principal Occupation |
Peter S. Lynch (64) |
| Year of Election or Appointment: 2003 Member of the Advisory Board of the Fidelity Funds. Mr. Lynch is Vice Chairman and a Director of FMR, and Vice Chairman (2001-present) and a Director of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). In addition, he serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006). |
Kenneth B. Robins (39) |
| Year of Election or Appointment: 2008 President and Treasurer of Fidelity's Equity and High Income Funds. Mr. Robins is an employee of Fidelity Investments (2004-present). Before joining Fidelity Investments, Mr. Robins worked at KPMG LLP, where he was a partner in KPMG's department of professional practice (2002-2004). |
Walter C. Donovan (46) |
| Year of Election or Appointment: 2007 Vice President of Fidelity's Equity Funds. Mr. Donovan also serves as President of FMR and FMR Co., Inc., and Executive Vice President of Fidelity Investments Money Management, Inc. (2007-present). Previously, Mr. Donovan served as Executive Vice President of FMR and FMR Co., Inc. (2005-2007) and Senior Vice President of FMR (2003-2005) and FMR Co., Inc. (2004-2005). |
Bruce T. Herring (43) |
| Year of Election or Appointment: 2006 Vice President of certain Equity Funds. Mr. Herring also serves as Group Chief Investments Officer of FMR. Previously, Mr. Herring served as a portfolio manager for Fidelity U.S. Equity Funds. |
Scott C. Goebel (40) |
| Year of Election or Appointment: 2008 Secretary and Chief Legal Officer (CLO) of the Fidelity funds. Mr. Goebel also serves as General Counsel, Secretary, and Senior Vice President of FMR (2008-present); Deputy General Counsel of FMR LLC; Chief Legal Secretary of Fidelity Management & Research (Hong Kong) Limited (2008-present) and Assistant Secretary of Fidelity Management & Research (Japan) Inc. (2008-present). Previously, Mr. Goebel served as Assistant Secretary of the Funds (2007-2008) and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007). |
John B. McGinty, Jr. (46) |
| Year of Election or Appointment: 2008 Assistant Secretary of Fidelity's Equity and High Income Funds. Mr. McGinty is an employee of Fidelity Investments (2004-present). Mr. McGinty also serves as Senior Vice President, Secretary, and Chief Legal Officer of Fidelity Distributors Corporation (FDC) (2007-present). Before joining Fidelity Investments, Mr. McGinty practiced law at Ropes & Gray, LLP. |
Holly C. Laurent (54) |
| Year of Election or Appointment: 2008 Anti-Money Laundering (AML) Officer of the Fidelity funds. Ms. Laurent is an employee of Fidelity Investments. Previously, Ms. Laurent was Senior Vice President and Head of Legal for Fidelity Business Services India Pvt. Ltd. (2006-2008), Senior Vice President, Deputy General Counsel and Group Head for FMR LLC (2005-2006). |
Christine Reynolds (50) |
| Year of Election or Appointment: 2008 Chief Financial Officer of the Fidelity funds. Ms. Reynolds became President of Fidelity Pricing and Cash Management Services (FPCMS) in August 2008. She served as Chief Operating Officer of FPCMS from 2007 through July 2008. Previously, Ms. Reynolds served as President, Treasurer, and Anti-Money Laundering officer of the Fidelity funds (2004-2007). Before joining Fidelity Investments, Ms. Reynolds worked at PricewaterhouseCoopers LLP (PwC) (1980-2002), where she was an audit partner with PwC's investment management practice. |
Kenneth A. Rathgeber (61) |
| Year of Election or Appointment: 2004 Chief Compliance Officer of Fidelity's Equity and High Income Funds. Mr. Rathgeber is Chief Compliance Officer of Fidelity Management & Research (Hong Kong) Limited (2008-present), Fidelity Management & Research (Japan) Inc. (2008-present), FMR (2005-present), FMR Co., Inc. (2005-present), Fidelity Management & Research (U.K.) Inc. (2005-present), Fidelity Research & Analysis Company (2005-present), Fidelity Investments Money Management, Inc. (2005-present), and Strategic Advisers, Inc. (2005-present). |
Bryan A. Mehrmann (47) |
| Year of Election or Appointment: 2005 Deputy Treasurer of the Fidelity funds. Mr. Mehrmann is an employee of Fidelity Investments. Previously, Mr. Mehrmann served as Vice President of Fidelity Investments Institutional Services Group (FIIS)/Fidelity Investments Institutional Operations Corporation, Inc. (FIIOC) Client Services (1998-2004). |
Adrien E. Deberghes (41) |
| Year of Election or Appointment: 2008 Deputy Treasurer of Fidelity's Equity and High Income Funds. Mr. Deberghes is an employee of Fidelity Investments (2008-present). Previously, Mr. Deberghes served as Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). |
Robert G. Byrnes (41) |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Byrnes is an employee of Fidelity Investments (2005-present). Previously, Mr. Byrnes served as Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (2003-2005). Before joining Fidelity Investments, Mr. Byrnes worked at Deutsche Asset Management where he served as Vice President of the Investment Operations Group (2000-2003). |
Peter L. Lydecker (54) |
| Year of Election or Appointment: 2004 Assistant Treasurer of the Fidelity funds. Mr. Lydecker is an employee of Fidelity Investments. |
Paul M. Murphy (61) |
| Year of Election or Appointment: 2007 Assistant Treasurer of the Fidelity funds. Mr. Murphy is an employee of Fidelity Investments (2007-present). Previously, Mr. Murphy served as Chief Financial Officer of the Fidelity Funds (2005-2006), Vice President and Associate General Counsel of FMR (2007), and Senior Vice President of Fidelity Pricing and Cash Management Services (FPCMS) (1994-2007). |
Gary W. Ryan (50) |
| Year of Election or Appointment: 2005 Assistant Treasurer of the Fidelity funds. Mr. Ryan is an employee of Fidelity Investments. Previously, Mr. Ryan served as Vice President of Fund Reporting in Fidelity Pricing and Cash Management Services (FPCMS) (1999-2005). |
** FMR Corp. merged with and into FMR LLC on October 1, 2007. Any references to FMR LLC for prior periods are deemed to be references to the prior entity.
Annual Report
The fund designates 78% of dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
The fund designates 84% of the dividends distributed in December, during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2009 of amounts for use in preparing 2008 income tax returns.
Annual Report
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 |
To elect a Board of Trustees.A |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 23,119,124,829.71 | 94.630 |
Withheld | 1,311,945,572.61 | 5.370 |
TOTAL | 24,431,070,402.32 | 100.000 |
Dennis J. Dirks |
Affirmative | 23,264,895,678.33 | 95.227 |
Withheld | 1,166,174,723.99 | 4.773 |
TOTAL | 24,431,070,402.32 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 23,048,702,160.33 | 94.342 |
Withheld | 1,382,368,241.99 | 5.658 |
TOTAL | 24,431,070,402.32 | 100.000 |
Alan J. Lacy |
Affirmative | 23,227,703,560.69 | 95.074 |
Withheld | 1,203,366,841.63 | 4.926 |
TOTAL | 24,431,070,402.32 | 100.000 |
Ned C. Lautenbach |
Affirmative | 23,204,734,087.83 | 94.980 |
Withheld | 1,226,336,314.49 | 5.020 |
TOTAL | 24,431,070,402.32 | 100.000 |
Joseph Mauriello |
Affirmative | 23,241,851,999.48 | 95.132 |
Withheld | 1,189,218,402.84 | 4.868 |
TOTAL | 24,431,070,402.32 | 100.000 |
Cornelia M. Small |
Affirmative | 23,238,535,444.69 | 95.119 |
Withheld | 1,192,534,957.63 | 4.881 |
TOTAL | 24,431,070,402.32 | 100.000 |
| # of
Votes | % of
Votes |
William S. Stavropoulos |
Affirmative | 23,115,529,078.86 | 94.615 |
Withheld | 1,315,541,323.46 | 5.385 |
TOTAL | 24,431,070,402.32 | 100.000 |
David M. Thomas |
Affirmative | 23,252,717,495.51 | 95.177 |
Withheld | 1,178,352,906.81 | 4.823 |
TOTAL | 24,431,070,402.32 | 100.000 |
Michael E. Wiley |
Affirmative | 23,205,390,737.79 | 94.983 |
Withheld | 1,225,679,664.53 | 5.017 |
TOTAL | 24,431,070,402.32 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 18,156,725,598.66 | 74.318 |
Against | 4,525,430,963.48 | 18.523 |
Abstain | 1,194,721,132.34 | 4.890 |
Broker
Non-Votes | 554,192,707.84 | 2.269 |
TOTAL | 24,431,070,402.32 | 100.000 |
A Denotes trust-wide proposal and voting results.
Annual Report
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity Stock Selector
Each year, typically in July, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract and sub-advisory agreements (together, the Advisory Contracts) for the fund. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information throughout the year.
The Board meets regularly and, acting directly and through its separate committees, requests and receives information concerning, and considers at each of its meetings factors that are relevant to, its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. At the time of the renewal, the Board had 12 standing committees, each composed of Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. Each committee has a written charter outlining the structure and purposes of the committee. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of Advisory Contracts.
At its July 2008 meeting, the Board of Trustees, including the Independent Trustees, unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expenses; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; (iv) the extent to which economies of scale would be realized as the fund grows; and (v) whether fee levels reflect these economies of scale, if any, for the benefit of fund shareholders. The Board also approved agreements with foreign sub-advisers Fidelity Management & Research (Japan) Inc. and Fidelity Management & Research (Hong Kong) Limited, as well as amendments to the fund's agreement with Fidelity Management & Research (U.K.) Inc.
In considering whether to renew the Advisory Contracts for the fund, the Board ultimately reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts and the compensation to be received by Fidelity under the management contract is consistent with Fidelity's fiduciary duty under applicable law. The Board's decision to renew the Advisory Contracts was not based on any single factor noted above, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, is aware that shareholders in the fund have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that the fund's shareholders, with the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, managed by Fidelity.
Annual Report
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, FMR, and the sub-advisers (together, the Investment Advisers), including the backgrounds of the fund's investment personnel and the fund's investment objective and discipline. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the portfolio manager compensation program and whether this structure provides appropriate incentives.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines. The Board considered Fidelity's extensive global research capabilities that enable the Investment Advisers to aggregate data from various sources in an effort to produce positive investment results. The Board also considered that Fidelity's portfolio managers and analysts have access to daily portfolio attribution that allows for monitoring of a fund's portfolio, as well as an electronic communication system that provides immediate real-time access to research concerning issuers and credit enhancers.
Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services. The Board further considered that Fidelity voluntarily pays for market data out of its own resources.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24 hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services. For example, fund shareholders are offered the privilege of exchanging shares of the fund for shares of other Fidelity funds, as set forth in the fund's prospectus, without paying a sales charge. The Board noted that Fidelity has taken a number of actions over the previous year that benefited particular funds, including (i) dedicating additional resources to investment research and to restructure the investment research teams; (ii) contractually agreeing to reduce the management fees on Fidelity's Institutional Money Market Funds and launching Class IV and Institutional Class of certain of these funds; (iii) reducing the transfer agent fees for the Fidelity Select Portfolios and Investor Class of the VIP funds; and (iv) launching Class K of 29 equity funds as a lower-fee class available to certain employer-sponsored retirement plans.
Investment Performance. The Board considered whether the fund has operated within its investment objective, as well as its record of compliance with its investment restrictions. It also reviewed the fund's absolute investment performance, as well as the fund's relative investment performance measured against (i) a broad-based securities market index, and (ii) a peer group of mutual funds deemed appropriate by the Board over multiple periods. The following charts considered by the Board show, over the one-, three-, and five-year periods ended December 31, 2007, the fund's cumulative total returns, the cumulative total returns of a broad-based securities market index ("benchmark"), and a range of cumulative total returns of a peer group of mutual funds identified by Morningstar, Inc. as having an investment style similar to that of the fund based on underlying portfolio holdings. (The fund did not offer Class K as of December 31, 2007.) The box within each chart shows the 25th percentile return (bottom of box) and the 75th percentile return (top of box) of the peer group. Returns shown above the box are in the first quartile and returns shown below the box are in the fourth quartile. The percentage beaten number noted below each chart corresponds to the percentile box and represents the percentage of funds in the peer group whose performance was equal to or lower than that of the fund.
Annual Report
Fidelity Stock Selector
The Board reviewed the fund's relative investment performance against its peer group and stated that the performance of the fund was in the first quartile for all the periods shown. The Board also stated that the investment performance of the fund compared favorably to its benchmark for all the periods shown.
The Board also considered that the fund's management fee is subject to upward or downward adjustment depending upon whether, and to what extent, the fund's investment performance for the performance period exceeds, or is exceeded by, the record (over the same period) of a Board-approved performance adjustment index. The Board realizes that the performance adjustment provides FMR with a strong economic incentive to seek to achieve superior performance for the fund's shareholders and helps to more closely align the interests of FMR and the fund's shareholders.
The Board considered that FMR has taken steps to refocus and strengthen equity research, equity portfolio management, and compliance.
Based on its review, and giving particular weight to the nature and quality of the resources dedicated by the Investment Advisers to maintain and improve relative performance, the Board concluded that the nature, extent, and quality of the services provided to the fund will benefit the fund's shareholders, particularly in light of the Board's view that the fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered the fund's management fee and total expenses compared to "mapped groups" of competitive funds and classes. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable management fee characteristics. Combining Lipper investment objective categories aids the Board's management fee and total expense comparisons by broadening the competitive group used for comparison and by reducing the number of universes to which various Fidelity funds are compared. The Board also considered supplemental information about how the fund's management fee and total expenses ranked relative to groups based on Lipper classifications, which take into account a fund's market capitalization and style.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board considered two proprietary management fee comparisons for the 12-month periods shown in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing relative to the total universe of comparable funds available to investors, in terms of gross management fees before expense reimbursements or caps, and without giving effect to the fund's performance adjustment. "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a TMG % of 9% means that 91% of the funds in the Total Mapped Group had higher management fees than the fund. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to non-Fidelity funds similar in size to the fund within the Total Mapped Group. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee characteristics, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee ranked and the impact of the fund's performance adjustment, is also included in the chart and considered by the Board.
Annual Report
Fidelity Stock Selector
The Board noted that the fund's management fee ranked below the median of its Total Mapped Group and below the median of its ASPG for 2007. The Board also noted the effect of the fund's positive performance adjustment on the fund's management fee ranking. The Board noted that the performance adjustment for each year represents calculations for performance periods that differ from the periods shown in the performance charts above.
In connection with the renewal of the fund's management contract, the Board also approved non-material amendments to the fund's management contract to clarify certain provisions regarding the calculation of the fund's performance adjustment.
Based on its review, the Board concluded that the fund's management fee was fair and reasonable in light of the services that the fund receives and the other factors considered.
In its review of the fund's total expenses, the Board considered the fund's management fee as well as other fund expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees. The Board also noted the effects of any waivers and reimbursements on fees and expenses, as well as the impact of the fund's performance adjustment. As part of its review, the Board also considered current and historical total expenses of the fund compared to competitive fund median expenses. The fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.
Annual Report
Board Approval of Investment Advisory Contracts and
Management Fees - continued
The Board noted that the fund's total expenses ranked below its competitive median for 2007.
In its review of total expenses, the Board also considered Fidelity fee structures and other information on clients that FMR and its affiliates service in other competitive markets, such as other mutual funds advised or subadvised by FMR or its affiliates, pension plan clients, and other institutional clients.
Based on its review, the Board concluded that the fund's total expenses were reasonable in light of the services that the fund and its shareholders receive and the other factors considered.
Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and its shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.
On an annual basis, FMR presents to the Board Fidelity's profitability for the fund. Fidelity calculates the profitability for each fund, as well as aggregate profitability for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the audited books and records of Fidelity. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.
PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of the results of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of Fidelity's methodologies used in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures surrounding the mathematical accuracy of fund profitability and its conformity to allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board believes that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.
The Board has also reviewed Fidelity's non-fund businesses and any fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.
The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and determined that the amount of profit is a fair entrepreneurial profit for the management of the fund.
Annual Report
Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale through increased services to the fund, through waivers or reimbursements, or through fee or expense reductions.
The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total fund assets under FMR's management increase, and for higher group fee rates as total fund assets under FMR's management decrease. FMR determines the group fee rates based on a tiered asset "breakpoint" schedule. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will achieve a certain level of economies of scale as assets under FMR's management increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.
The Board further concluded that any potential economies of scale are being shared between fund shareholders and Fidelity in an appropriate manner.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including (i) fund performance trends and actions to be taken by FMR to improve certain funds' overall performance; (ii) portfolio manager changes that have occurred during the past year; (iii) Fidelity's fund profitability methodology, the profitability of certain fund service providers, and profitability trends for certain funds; (iv) Fidelity's compensation structure for portfolio managers and key personnel, including its effects on fund profitability and the extent to which portfolio manager compensation is linked to fund performance; (v) Fidelity's fee structures and rationale for recommending different fees among categories of funds; and (vi) Fidelity's rationale for recommending which funds should have a performance adjustment component as part of their management fees.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.
Annual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)
Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)
Fidelity's Web Site
www.fidelity.com
* When you call the quotes line, please remember that a fund's yield and return will vary and, except for money market funds, share price will also vary. This means that you may have a gain or loss when you sell your shares. There is no assurance that money market funds will be able to maintain a stable $1 share price; an investment in a money market fund is not insured or guaranteed by the U.S. government. Total returns are historical and include changes in share price, reinvestment of dividends and capital gains, and the effects of any sales charges.
Annual 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
Annual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research
(U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments
Japan Limited
FIL Investment Advisors
FIL Investment Advisors
(U.K.) Ltd.
Fidelity Management & Research
(Hong Kong) Limited
Fidelity Management & Research
(Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated Service
Telephone (FAST®) 1-800-544-5555
Automated line for quickest service
FSS-K-ANN-1208-01
1.863290.100
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 Capital Trust
By: | /s/Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
| |
Date: | April 16, 2009 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
| |
Date: | April 16, 2009 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
| |
Date: | April 16, 2009 |
